Contrary to popular belief, the 2018 Farm Bill did not, through its enactment, free the U.S. hemp industry from volatility and uncertainty. State regulations still vary widely. Law enforcement authorities can still crack down on hemp businesses without much warning, as Big Sky Scientific learned earlier this year. In the case of Big Sky Scientific LLC v. Idaho State Police, et al., police seized nearly 7,000 pounds of industrial hemp the company was transporting because hemp remains a controlled substance under state law. The business of growing hemp in these times of unpredictable and severe weather brings ever-increasing costs and risks. And don’t forget: While farmers across the country may be rushing to harvest hemp, the regulations within the Farm Bill (formally named the Agriculture Improvement Act of 2018) have only just been released for public comment.

Still, little doubt exists that the new law will have a huge impact on hemp growing—and hemp insurance—in the U.S. While the 2014 Farm Bill authorized states to launch pilot industrial hemp research programs, the 2018 Farm Bill took legalization a giant step further by removing hemp from its Schedule I Status under the Controlled Substances Act. Hemp with no more than 0.3% tetrahydrocannabinol (THC) is now a permissible agricultural crop for commercial production.

That designation means that for the first time ever, hemp is eligible to be covered under the U.S. Department of Agriculture’s (USDA) federal crop insurance program. Growing crops do not constitute “covered” property, so farmers who want to insure their most precious assets while they’re still growing in the ground must purchase crop insurance. Thanks to the 2018 Farm Bill, hemp growers will be able to purchase federally subsidized crop policies based on yield or revenue to cover the loss of crops brought on by drought, freeze, disease and most other natural causes (save for hail).

As of press time, according to the draft rules released for public comment by the USDA, the Federal Crop Insurance Corporation (FCIC) must offer hemp farmers coverage under the whole farm revenue protection insurance policy by the 2020 crop year.

Some hemp growers are already eligible, however. Farmers producing hemp for fiber, flower or seeds can obtain crop insurance coverage under the Whole-Farm Revenue Protection (WFRP) program for the 2020 crop year—but it is only available to those who are part of state or university research pilot programs as authorized by the 2014 Farm Bill. Everyone else must await final USDA regulations implementing the 2018 Farm Bill.

This all sounds complicated, right? And we have not even delved into crop hail insurance, which is not government subsidized and is sold by private insurers.

For all these reasons and more, preparing insurance budgets and finding cost-effective policies remains a daunting task.

“Hemp was only legalized federally in the U.S. with the passage of the 2018 Farm Bill, so 2019 will really be the first growing season for many farmers,” says Neil Hitchcock, an insurance broker and chief executive officer at Skyfront Bermuda Limited. That presents challenges for insurers, Hitchcock says.

“From an underwriter’s pricing standpoint, they want to look at the past performance of any book of business,” he says. “Underwriters and insurers want reams and reams of data—and if that data isn’t available, they get very nervous because they don’t know how to price it.”

In other words, if there’s no historic crop yield and no farming history to speak of, an underwriter can’t properly calculate the potential crop insurance risk. That could result in two unfortunate outcomes for hemp growers: the insurer decides not to write a policy out of fear of unknown risks, or the insurer prices the policy high as a conservative hedge against those unknown risks.

Not even Canada can help insurers gauge U.S.-based crop risk. Though industrial hemp has been legal in Canada since 1998, generating 20 years of insurance data from which to draw, Canadian weather is vastly different than what is seen in most of the U.S. and, as such, affects hemp crops differently, says Jonathan Miller, general counsel for the U.S. Hemp Roundtable, a coalition of hemp companies advocating for pro-hemp policies. So, U.S. insurers remain uncertain about how to mitigate risk to seeds, seedlings and mature plants.

Given that crop insurance is top of mind for many existing and emerging hemp companies, Hemp Grower spoke to leading experts to get their insights into options for insuring hemp businesses during the 2018 Farm Bill transition period. Here are three tips to ensure a profit by insuring crops.

1. Think like any other business

While federal crop insurance is still unavailable for many farmers, in the meantime, hemp companies are encouraged to secure traditional business coverage, says Corey Tobin, a cannabis and hemp insurance specialist with the brokerage Bolton & Company. Because every industry is different, the baseline of traditional business coverage varies widely. For hemp growers, the following list should be considered an essential (but non-exhaustive) checklist, according to experts surveyed by Hemp Grower:

• property/casualty insurance;
• product liability;
• general liability;
• inventory coverage;
• employment practices liability insurance;
• directors and officers liability;
• cyber liability;
• employee benefits; and
• workers’ compensation.

Tobin notes in particular that a must-have for all hemp companies across the supply chain is adequate product liability coverage. Hemp finds its way into an expansive array of goods, from oils, fuel and paint to cereal, bread and protein shakes. Product liability would cover every manner of hemp businesses in the event that the hemp itself somehow causes illness or injury.

In addition to traditional business coverage, many hemp farmers purchase crop hail coverage from private insurers. (This is separate from federally subsidized Multiple Peril Crop Insurance, or MPCI, which covers loss of crop yields from drought, excessive moisture, freeze and disease.) Assuming you are one of the hemp farmers still ineligible for federal crop insurance, the private market is the only option, which can become a costly and frustrating proposition.

According to experts surveyed for this article, private crop insurance for all of the protections noted, including hail, is not widely available and is often prohibitively expensive. By Tobin’s calculation, annual premiums for a $1 million policy could be as high as $150,000. Regardless of whether business owners decide to stomach the high costs for crop insurance, Tobin advises that hemp farmers should still avail themselves of inventory coverage. “The second that crop is harvested and transferred into a warehouse, you can cover that product with inventory insurance,” he says. “Securing coverage for a crop that’s still planted and growing is very expensive.”

Josh Smart, practice leader and chief sales officer of Hub International Limited’s Agribusiness & Farm Specialty Practice, says some clients tend to be so focused on insuring the hemp they lose sight of what happens after the hemp is cut and harvested.

“Work with a broker that understands the seed-to-sale process,” Smart says. “There are transportation exposures, storage of the harvested and dried biomass and business income insurance exposures.”

Spencer Mahoney, an insurance adviser at CCIG and head of the firm’s cannabis practice, agreed that with the passage of the Farm Bill, there is now a clear-cut case for business insurance—not just everyday property and casualty coverage, but also a comprehensive lineup that can help ensure a hemp business stays in business. Mahoney has observed that many hemp growers still have gaps in their coverage and that few insurance carriers have flexible insurance products for the unique business challenges faced by the fledgling industry.

However, Mahoney says growers often overlook directors and officers (D&O) liability, which protects the heads of companies from investor lawsuits for alleged operational failures and mismanagement. Hemp businesses may be overlooking D&O because many are small or independently run (a family farm, for example), and some have the perception that D&O is not really needed. But, as Mahoney explains, “D&O is important to protect the board and the investors and should be considered a top priority for any serious cannabis or hemp business.”

Another reason for the slow adoption of D&O insurance is its cost. Major carriers are waiting to get engaged in the market until they feel the hemp industry has matured from the standpoint of claims management, Mahoney says. That lack of competition means premiums are higher relative to other industries.

2. Manage risk one state at a time

In sections of the 2018 Farm Bill legalizing hemp, Congress struck a compromise between federal and state regulations: States can act as the primary regulators of hemp production within their borders so long as state regulations comply with the USDA’s federal requirements.

With this hybrid state-federal regulatory regime, hemp business owners must be intimately familiar with state regulations on hemp distribution, transportation, quality control, testing, reporting, record-keeping (track and trace), labeling/warnings, advertising and marketing, and disposal in states in which they operate. They must also make sure their insurance policies reflect these state-specific risks, says Ian Stewart, a partner with the law firm Wilson Elser and a co-chair of the company’s cannabis law practice.

The good news is that by now, this state-by-state strategy should be familiar to hemp growers who began cultivation following the 2014 Farm Bill. Both the 2014 and 2018 laws envisioned overlapping state and federal authority to regulate hemp. And until the USDA finishes writing regulations, the 2014 regulatory framework rules the day.

3. Don’t forget your risk mitigation roots

Because hemp was legalized only recently, major branded insurance companies have yet to offer products tailored to the unique needs and risks of hemp growing. That’s changing, Mahoney says, but it will take some time before competitive, comprehensive, turnkey solutions exist.

Until then, he says, hemp companies must take out lines of coverage where they can while maintaining a spirit of resourcefulness and risk mitigation by any means necessary.

“The people in this industry are used to people telling them ‘no’ or ‘we can’t do that,’” Mahoney says. “These people are very resilient. They’ve gone through a lot of regulation and change. Somebody tells them no, and they know they have to get it done themselves.”

To be sure, declining coverage is never advisable and should only be considered as a last resort, Mahoney says. In some cases, hemp business owners are declining private crop insurance because of the high costs, he says. But while the availability of insurance coverage for hemp businesses remains limited, there are insurers that are willing to underwrite such businesses, he says. And insurance will be critical in these initial legal growing years.

What do you have to lose? Great insurance salespeople never lose sight of what their customers have to lose—a house, a car, their life. Much in the same vein, hemp insurance salespeople should keep these numbers handy: According to the hemp advocacy group Vote Hemp, American farmers were licensed to grow 9,770 acres of hemp in 2016; 25,713 acres in 2017; 78,176 acres in 2018; and 511,442 so far in 2019. For hemp businesses, that’s a lot to lose.

Paul Barbagallo is a Boston-based writer and a former senior editor for Bloomberg News and beat reporter for Bloomberg BNA.

Today, a multitude of Cannabis seed companies are producing more seeds than ever, and now that laws are changing, more and more cannabis crops are being grown outdoors from seed.

Broadacre (farms that produce crops on a large scale) cannabidiol (CBD) producers are leading the return to growing crops from seed. Auto-flowering tetrahydrocannabinol (THC) and CBD varieties are gaining popularity, especially in regions exceeding 40° latitude north or south, where summer days are too long to induce flowering in most cultivars.

But the growing of seed crops can cause problems. Put simply, the airborne pollen from seed crops poses a serious threat to the much more lucrative business of growing seedless drug cannabis flowers.

Biology Meets Agronomics

Most plants produce flowers bearing both male and female sexual organs, and the majority of these are pollinated by various animals ranging from insects to bats. In natural settings, Cannabis plants present an exception to the norm, with millions of pollen grains borne on male plants that release their genetic potential into the breezes. Those pollen grains that complete their reproductive journey land on the receptive ovule-containing flowers borne on female plants and fertilize them, the seeds maturing a few weeks later. Individual male plants die within a few weeks, leaving the remaining pollinated female plants to mature their precious seeds (the next generation) without competition for water, nutrients and sunlight.

In another exception to the norm, separation of the sexes is the key to horticultural cannabis flower production. Both THC and CBD drug cannabis crops are grown without seeds. The sinsemilla (seedless) method is commonly used to enhance the production of secondary metabolite target compounds such as THC, CBD and aromatic terpenes. When seedless Cannabis is grown for drug production, any seeds are undesirable and drastically lower the value of the dried flowers. Early sinsemilla growers realized that they could simply remove all male plants so no seeds formed, and their precious females would develop much larger and more potent flowers. Female plants with desirable traits were vegetatively reproduced to multiply the clones in common production today, and there are no longer troublesome male plants in most modern drug crops.

We believe seeds producing all-female crops will be widely used for broadacre THC and CBD production in the near future. Why grow any males when you can grow only females, and why keep mothers and make cuttings when you can more easily, efficiently and cheaply sow seeds that are essentially a female cutting in seed form?

This sounds like a perfect scenario. What could possibly go wrong?

Enter Traditional Industrial Hemp

In Europe and North America, hemp fiber crops have traditionally been harvested upon reaching technical maturity when the male plants begin to shed pollen. In eastern Asia, hemp fiber crops destined for fine textile production are harvested before they flower, and therefore no pollen or seed is produced. No flowers, no pollen and no problems. The timing of a fiber crop harvest—either before or after it releases pollen—determines whether it poses a threat to neighboring sinsemilla cannabis growers. Depending on cropping techniques, fiber hemp production can be compatible anywhere. The real issue is not about hemp fiber production but seedless drug cultivation. However, the situation differs with hemp seed crops.

Hemp seed crops are grown specifically for seeds sold primarily to the food and body-care industries. Hemp seed and seed oil are more in demand than at any other time in recent history, and the profitable growing of hemp seed is increasing at suitable temperate latitudes worldwide. Based on their common environmental needs, seedless drug cannabis thrives in the same agricultural niches as hemp seed crops, and this can lead to competition between these agronomically incompatible crops.

Long-distance Cannabis pollen transport is well-documented. A single male Cannabis plant can produce millions of pollen grains that are easily carried on the wind. Each summer, allergenic pollen traps installed along the Mediterranean coast of southern Spain collect Cannabis pollen that drifts across 100 miles of open sea from hashish fields in the Rif Mountains of Morocco.

Field-grown hemp seed crops are agronomically and economically incompatible with drug cannabis crops, and growing them within the range of pollen travel will likely result in conflicts. Even Cannabis plants grown in greenhouses and grow rooms can become fertilized by pollen that enters through the ventilation system. It is of note that during the early days of industrial hemp cultivation in the Netherlands several indoor and glasshouse sinsemilla growers reported finding seeds in their normally seedless crops. (Tip: High-efficiency particulate air (HEPA) filters effectively remove pollen from air intakes in sealed grow rooms.)

In the sinsemilla setting of zero tolerance for seeds, long-range pollen drift, especially outdoors, sounds frightening. Reactionary voices within the cannabis community have raised the alarm, but is there a real threat? How are the cropping strategies of growing seeded hemp cultivars for their CBD content versus growing seedless drug varieties for THC and/or CBD content playing out across North America and worldwide?

International Precedents and Lessons

In response to increased market demand for both hemp seeds and CBD, traditional hemp cultivars’ flowers are now commonly grown to produce both CBD and seed. Hemp stalks are harvested for their economically valuable fiber from both the male and female plants, while female flowers produce economically valuable compounds such as CBD, THC and aromatic terpenes as well as seed. Broken flowers remain after threshing hemp seeds. Until recently, this CBD-rich waste was burned in the fields. Now, CBD is extracted from the flower biomass. Several hemp cultivars contain sufficient amounts of CBD to make extraction profitable.

We perceive the most lucrative agronomic model to be triple cropping an existing approved (low-THC) industrial hemp cultivar for fiber, seed and CBD. HempFlax BV, a hemp cultivation and processing company with cultivation sites in the Netherlands, Germany and Romania, harvests all three products from the same standing crop. This lucrative cropping strategy allows a farmer to make agronomic decisions based on three commodity markets— fiber, food and drug—and we predict will prevail in the near future among progressive farmers worldwide.

China and Romania are traditional hemp farming regions without commercial seedless drug cannabis production. Manitoba farmers have dominated North American hemp grain seed production for 20 years and have established Manitoba as a hemp seed producing region. Few outdoor sinsemilla growers would attempt to establish production there. Rather, drug cannabis is more often grown indoors in urban areas, and in glasshouses and outdoors in regions without hemp seed crops. To that end, conflicts are rare but could still arise.

In most drug cannabis producing regions (e.g., Colombia and Mexico, as well as the Caribbean, Africa and Southeast Asia), crops are grown seedless to increase the flowers’ potency. It would be unwise to attempt growing seeded crops in these regions. In all these examples, a pairing of local traditions with economic factors determines whether Cannabis crops are grown with or without seeds.

Several of the aforementioned agricultural business models could prove economically viable in any given region, but many are not mutually compatible. The agricultural differences among broadacre, greenhouse and indoor production create an economically segregated terrain where few conflicts have yet to arise. However, conflicts will undoubtedly arise unless specific cannabis growing regions become set aside for female-only growing of seedless drug crops.

North American Constraints

In the face of steadily expanding seedless drug crop acreage bolstered by supportive legislation across America, will there remain anywhere for hemp grain seed crops to make their long-awaited comeback? Will the U.S. always rely on Canada and China for healthy hemp seed products?

The expanding range of Farm Bill hemp (high-CBD seedless flower) production in 2018 reached 23 states. Colorado and Montana, leaders in U.S. hemp production, each grew more than 20,000 acres; followed by Kentucky and Oregon with around 7,000 acres each; and Tennessee, North Carolina, North Dakota, New York, Nevada, Wisconsin and Vermont had 1,000 to more than 3,000 acres under licensed cultivation. More than 78,000 acres of Farm Bill hemp were grown in 2018, nearly tripling the less than 26,000 acres grown in 2017.

Now, private citizens as well as agricultural entities across North America are increasingly allowed to grow both industrial hemp (including hemp grain seed crops) as well as seedless drug cannabis for medical and adult use. In some areas, this situation sets the stage for potential conflicts until industry self-regulation and enlightened agricultural policies take effect. In the meantime, most regions appear to offer opportunities for everyone.

However, the situation is becoming increasingly convoluted. The U.S. landscape is a complex puzzle of differing jurisdictions, each with its own evolving cannabis scenarios and range of regulatory solutions. Until the advent of the CBD industry, industrial hemp cultivation held little attraction in most regions of the U.S., and largely due to prohibition, most seedless drug cannabis was grown either in remote rural or insular urban settings isolated from any hemp pollen. Many newly cannabis-tolerant jurisdictions may allow Cannabis plants to be grown for whatever end use someone might choose—be it fiber, seed and/or drug.

In many regions across North America, sinsemilla growers arrived decades earlier than the recently arrived hemp growers. North American sinsemilla growers pioneered drug cannabis cultivation and established their turfs long ago, largely in agriculturally marginal rural areas not well suited to broadacre hemp fiber and seed production. California presents several cases in point.

Sparsely populated rural regions of Northern California have been the primary producers of sinsemilla since the 1960s, and since the 1980s indoor, artificial-light growing has become increasingly popular in more urban regions with access to the electrical grid. The established agricultural precedent in both scenarios is drug cannabis production. So far, industrial hemp and hemp seed crops have had little, if any, effect. It is really up to the growers of seedless high-THC and high-CBD drug crops to defend their turf (especially outdoor cultivation, which is common in California and expanding elsewhere) from the potential pollen threat of seeded crops.

On the West Coast, state cannabis grower associations are striving to establish sinsemilla production regions based on climate and terroir similar to the appellation system used in wine branding. These groups have grown organically from illicit rural grower communities and provide good examples of self-regulation of our industry from within by a group of peers. Appellation membership will likely require qualified farmers to grow only female plants from cuttings, and the sowing of seeds (a possible source of male plants and contaminating pollen) will be strictly controlled.

Both industrial and medical hemp crops are most profitably produced under broadacre agriculture, while sinsemilla flower crops are most profitably produced under glass. California’s Sacramento, San Joaquin, Imperial and Salinas valleys present examples of regions where potentially conflicting business models may clash. Many growers in these traditionally broadacre farm and orchard regions have switched to glasshouse production of vegetables, bedding, house plants and cut flowers. Sinsemilla flower growers will move into regions where glasshouses are readily available, and local regulations usually stipulate that existing glasshouse infrastructure must be utilized. This places seedless growers near neighboring broadacre farms where it is also economically feasible to grow fiber and seed hemp.

These scenarios exemplify the need for agricultural authorities to take responsibility for local regulation of their cannabis industries before conflicts between growers arise. There are few established historical and agricultural precedents for either sinsemilla or hemp growing in prime agricultural regions. These areas produce many crops profitably and, as with other crops, are where the future of commercial cannabis production for many different products will be focused.

Solutions

How will various jurisdictions with differing constituencies and priorities create equitable policies for the control of stray Cannabis pollen in sinsemilla-only areas?

Local, state and federal agriculture organizations should control cannabis licensing and permitting, first in local jurisdictions and eventually nationwide. Agricultural officials must take stock of regional conditions and become sensitive to the unfolding cannabis industry and determine the traditional basis for cannabis economics in their region. If sinsemilla growers have contributed to the economic viability of their local economy, albeit illegally, then they should be invited to have a strong voice in determining future cannabis policies and regulations.

This article was reprinted with permission from Cannabis Business Times’ September 2019 issue.

Mojave Richmond is the developer of many award-winning varieties such as S.A.G.E., which served as a springboard for creating many notable cultivars. Richmond is a founding member of the international consulting company BioAgronomics Group. info@bioagronomics.com

Robert C. Clarke is a freelance writer, photographer, ethnobotanist, plant breeder, textile collector and co-founder of BioAgronomics Group Consultants, specializing in smoothing the transition to a wholly legal and normalized cannabis market. info@bioagronomics.com

Since the passing of the Farm Bill (formally called the Agriculture Improvement Act of 2018), much of the world has focused on opportunities created for hemp-derived cannabidiol (CBD). Some traditional hemp farmers have expressed concerns over CBD’s inclusion in the same category as hemp; they feel it could jeopardize hemp’s newly legal status and that CBD should be regulated as a drug. Aside from that, the Farm Bill has significant ramifications far beyond CBD for a crop that has been federally illegal to cultivate (aside from several recent research and pilot programs) for 82 years—a crop that many believe can change, and heal, the world.

To gain insights into the Farm Bill’s full impact across all types of hemp farming and end uses, as well as into the contention between CBD and other hemp industries, Hemp Grower spoke with Joy Beckerman, principal of Hemp Ace International, which provides professional hemp consulting, legal support and expert services. Beckerman, whose hemp career spans more than a quarter century, is also the president of the Hemp Industries Association (HIA), executive vice president of the U.S. Hemp Roundtable (an advocacy organization for hemp CBD and hemp food companies), as well as the regulatory officer and industry liaison for global hemp CBD company Elixinol. She also is part owner of Colorado Hemp Works, a hemp grain processing facility, and is a member of Hemp Grower’s Editorial Advisory Board.

Noelle Skodzinski: The media has largely focused on the Farm Bill’s impact on hemp grown for CBD, and we’re seeing the boom in that market. I have heard from non-CBD hemp farmers who are not thrilled about CBD’s association with traditional hemp. Can you comment on that?

Joy Beckerman: The focus on CBD and the obsession with it can be frustrating to those of us who have either been in the movement for grain and fiber purposes or are engaged in the grain and fiber industries. There has been contention within the whole hemp community.

In 2014, we had already started to see the beginning of hemp CBD. It was often smuggled in from other countries, and it was starting to show up in the illicit market. And then the 2014 Farm Bill came along, and farmers started to grow for extract under these research and agricultural pilot programs. The HIA had to decide: Are we going to embrace the resin of the plant? Because we’re in a sticky situation here, no pun intended. Some thought we should not be in dietary CBD or the plant’s resins: It goes against the original mission statement.

We did decide to embrace it, and the HIA has adopted a policy for its members: If you’re making these products, you’re subject to federal and state safety and quality assurance laws and you damn well better be operating in compliance with those federal and state laws because your business is governed.

NS: Do you see CBD’s extreme popularity as a good or bad thing for hemp in general?

JB: I’m shouting from the rooftops about how we can heal the land and the world and make better products and better textiles on your skin and for your baby, and people can be—and are—moved by that. But, when they have a shoulder pain or anxiety or they can’t sleep at night, and they take hemp CBD and that shoulder pain is gone, and that sleep is healed, and that anxiety is relieved, that changes people. It solves an immediate need. And now people are really paying attention. They want to know more about this plant. So the awareness of CBD is wonderful for the grain—oil, seed—and fiber.

Investors then can take their money and move it over into creating the infrastructure for processing the most valuable biocellulose in the world (that’s the long, strong stalk that is hemp) and the most valuable superfood in the world, which is the seed and which has incredible industrial purposes as well.

NS: What has the Farm Bill’s impact been on other types of hemp products?

JB: The Farm Bill did not just open things up for CBD by making it clear that extractions of cannabinoids derived from hemp are removed from the Controlled Substances Act, it has opened the floodgates for the entire plant and all of its uses. We’re talking human and animal nutrition; human and animal body care; nutraceuticals and pharmaceuticals for humans and animals; paper; textiles; biocomposites; bioresin; building materials; industrial sealants and coatings; energy; fuel; nanotechnology; biomedical applications; and more. I just described every single thing that humanity and animals need to survive and thrive.

And I think it’s also important to note that the Farm Bill did not just amend the Controlled Substances Act; it also amended the Federal Crop Insurance Act to allow for hemp. It amended the Agricultural Marketing Act of 1946, which is where all legal agricultural commodities in the United States are defined.

Our definition of hemp now lives in Section 297A of the Agricultural Marketing Act as an agricultural commodity with corn, soybeans, apples and every other lawful crop. It has reclaimed its place in the broad light of day, among all other legal agricultural commodities in the United States of America. A farmer can’t obtain federal crop insurance unless the crop is defined in that act.

They amended several other acts as well—six in total—but around critical materials and supplemental crops and research.

NS: In light of that, do you think hemp now has the potential to disrupt other traditional mature markets and industries?

JB: Absolutely. Hemp is a massive disrupter if we choose to look at it that way. And I know that disruption can be a good thing, right? But we also like to think of it as the great synthesizer. We’re not looking for a mono-crop world. We’re looking to add hemp into existing rotations, which is much better for the soil and the pest cycle and integrated pest management. … So, in terms of the agricultural scheme, we’re saying not to disrupt but to add it into your rotation.

For the building materials and all these other areas of industry, we’re saying, start to add it into your formulation, whether for an industrial sealant or coating, building material or a road, concrete, or for paper. … Hemp is an amazing blender and synthesizer.

[Hemp Shield Company founder] David Seber is the first researcher in recent history who noticed when you put hemp seed oil in with volatile organic chemicals to make a wood sealer or a stain, it even makes the volatile organic chemicals work better together.

So, yes, it’s a disrupter, and it’s also going to synergize and make crops and industry better and put out superior products with the proper research and formulation. And much of it is already going on.

NS: What do you think the next five years will hold for CBD?

JB: The reality is that it’s a very long-term bureaucratic process within the [Food and Drug Administration]. They have said in congressional testimony that it’s going to take three to five years to come up with all this data and regulation, and it’s important to understand that the FDA is not exactly well staffed, and it takes resources, millions of dollars, to pay the staff and come up with a regulatory framework.

I would say that without legislation directing the FDA to follow an expedited time frame, the FDA could end up taking three to five years to figure it out.

NS: What are you most excited about as you’re looking at the future of hemp in North America and globally?

JB: I am excited about being a part of delivering on the full promise of the world’s most versatile, valuable crop. And that promise affects every single need that humanity and living beings have. It’s going to help the planet so much. Am I more excited about food than I am about hemp paper? I mean, I guess I am, but hemp is everything. Hemp lights up my life.

Editor’s note: This interview has been edited for length and clarity.

Noelle Skodzinski is editorial director of Hemp Grower, Cannabis Conference and sister magazines Cannabis Business Times and Cannabis Dispensary.

The U.S. hemp-derived cannabidiol (CBD) market is expected to reach $23.7 billion by 2023, up from the current value of $5 billion, according to CBD and cannabis research firm Brightfield Group. Thousands of farmers are ramping up production following passage of the 2018 Farm Bill, which legalized hemp at the federal level, as state industrial hemp programs expand.

The U.S., China and Canada lead global industrial hemp cultivation in 2019 in the number of acres planted, according to Brightfield Group’s recent “Hemp Cultivation Landscape” report. Farmers planted an estimated 288,000 acres of industrial hemp in the U.S. in 2019, up from 78,000 acres in 2018, according to the report.

In the U.S., the profit potential of CBD is driving the growth in hemp cultivation, with about 87% of the 288,000 acres expected to be used for CBD processing in 2019. On a per-acre level, hemp for CBD could potentially generate $45,203 in revenue, compared with $773 for corn.

• Difficulty obtaining certified feminized seeds and clones. Farmers looking for the highest revenue potential desire female hemp plants because CBD levels are highest in unpollinated female plants. Planting female clones ensures all female hemp plants, but the high cost and limited availability has restricted its use. With the shortage of certified feminized hemp seeds, farmers have purchased so-called feminized seeds without guarantees that they will be male-free or high in CBD.
• Labor-intensive growing. Hemp cultivation requires a lot of manual labor, especially during harvesting. Because the U.S. industrial hemp industry is new, options for hemp harvesting machinery are limited, so some farms are retrofitting their machinery to harvest hemp for floral material, where the CBD content is highest in the hemp plant.
• Required expertise. Growing hemp for CBD extraction is not a row crop like corn and soybeans. Cultivating hemp for CBD is similar to vegetables and requires more space between plants.
• Lack of traditional markets for selling hemp. The result is less price transparency and companies not honoring agreements to buy hemp from farmers.
• Risk of a “hot crop.” Industrial hemp crops can fail state agricultural department testing prior to harvest if test results show more than 0.3% tetrahydrocannabinol (THC) by dry weight. The farmer is then required to destroy the crop.
• Pollen drift issues and cross-pollination risks. CBD levels are highest in unpollinated female hemp flowers, while male hemp plants produce no flower. If male hemp plants, which are grown for fiber and grain, are planted too closely to female plants being grown for CBD, the male plant can pollinate the female plants and lead to lower CBD yields as the plant expends energy for seed production rather than floral production. Similarly, the presence of male hemp plants can reduce the THC content of the female cannabis plant if pollination occurs.

Despite the risks involved with the industry, more U.S. farmers are expected to invest in hemp cultivation. American farmers can capitalize on the rising demand for U.S.-grown hemp by marketing their CBD brands as “grown in the USA” or “locally sourced.”

A version of this story appeared in the September issue of Cannabis Business Times.

Virginia Lee is CBD research manager at Brightfield Group. She develops and executes syndicated and customized research covering the U.S. and international CBD markets.