Santa Fe Farms recently acquired Colorado-based High Grade Hemp Seed in an effort to shore up its genetics and build out a portfolio that includes consistent seed production for its network of growers in the American Southwest and elsewhere. It’s a move toward the company’s plans to develop an ecosystem, a vertical operation that operates holistically in the quickly expanding international hemp scene.
Santa Fe Farms works in the cannabinoid and fiber segments of the business, and good seed is the gateway to its broader goals of high-quality, paradigm-shifting end products for a new marketplace.
“There are multiple benefits in becoming part of the Santa Fe Farms ecosystem,” Bodhi Urban, founder of High Grade Hemp Seed, said in a public statement. “High Grade has had a goal of expanding into the industrial hemp space. It feeds nicely into the Santa Fe Farms ecosystem that has ties to industrial research, as well as the ongoing pursuit of genetics for CBD as an ingredient. Aside from the economic and growth benefits for both companies, we are all committed to powering a global supply chain for a better, healthier and more sustainable world.”
We spoke with Santa Fe Farms CEO Steven Gluckstern to learn more about the acquisition and to get a sense of how the company sees the industry developing in this year and in future years.
Eric Sandy: Can you set the stage for what Santa Fe Farms was looking for in an acquisition like this?
Steven Gluckstern: Santa Fe Farms is committed to playing in the entire hemp ecosystem. That's all the way from genetics to growing to processing to investigating new forms of products. Our thesis was that if you didn't play in the entire system in a brand new industry like this, then you wouldn't necessarily know where in the long run the best margins are going to be for you to make the most impact. When we started out two and a half years ago, we were committed to building a comprehensive company. That's very important. We spent the last two and a half years focusing on different areas at different times. One of the things that is obvious, and it should be to anybody in this business, is that what you grow makes a difference.
We spent a considerable amount of time looking. We purchased seed from lots of people. We grew seed on our demonstration farms. We began to understand the various opportunities out there, and then concluded that we needed to take a position in a well-known ultra-high-quality firm. We looked around and were lucky enough to find High Grade Hemp Seed. So, it all starts with genetics.
By the way, I think everybody knows that there's not one “genetics,” and that depending on what latitude you grow at you may or may not need different kinds of seed with different kinds of characteristics—growth patterns.
ES: Could you elaborate a bit on that point about the regional characteristics that make this such a great fit for your farmers?
SG: One of the things is the way in which High Grade went about producing its own seed and identifying its own strains with production partners in various regions around the U.S., it had a portfolio of different kinds of seeds. Some have to be resistant, some need more water, some need less water, some need more sun, some need less sun. What we found in their portfolio was this range of different kinds of seeds.
It's still early days, obviously, for all of us, especially on the industrial side. One of the important things is that High Grade, like most seed producers in the U.S. focus initially on phyto-rich cannabinoids. Everybody really started out focusing on the cannabinoids, and that was the first push, but now obviously industrial is really important.
We also, I should mention, have operations in central America. We have a very important partnership with one of the most significant high-profile companies in Costa Rica, where we're working to develop strains that will also ideal for the tropics, because those will be different. What's interesting about the tropics is that you can grow year-round, which obviously we can't do in North America. I think everybody knows that the farther south you go, the more likely that plant is to express THC. Obviously in the hemp business that’s a negative, not a positive.
ES: What sort of problems does this genetic consistency solve for famers?
SG: Each microclimate poses different problems. In New Mexico, generally, we have to deal with the fact that water is critical here. It's not abundant as it is in some other localities. For us, finding seeds that can operate in a lesser water environment will be important. Also, our topsoil isn't the best in the world here in New Mexico. Anybody who's in the seed business wants to figure out how their seed in any given strain will work in any given sort of ecology.
For a farmer, what they want is consistency. They want to know what seed do I have? What are the standard operating procedures? How do I grow the seeds, in the case of cannabinoids, to make it produce the highest amount of CBD with the lowest amount of THC with the highest amount of biomass per plant with the fewest amount of seeds? Consistency is what you look for in any farming practice, right?
We don't like doing monoculture, but the idea is for farmers to know what you're going to get when you plant it if you plant in the same way, every time. Here in New Mexico, for instance, we have hail early in the season. So, that determines when you plant. You have to understand the depth. When I started out sort of on the farming side, it was a process of buying your seeds and realizing what you were buying exactly. They didn't necessarily tell you what the standard operating procedures were—how deep should you plant this? Should you plant starts? Or should you plant seed? Should you plant mechanically? What kind of irrigation? As our industry matures, we'll get smarter about doing that. And obviously the consistency of seed will help the consistency of farming output.
ES: You’ve mentioned the CBD-rich varieties that have been all over the market, and how there’s a rising interest in industrial varieties. Does agricultural practice itself change when you're working with those different types of seed—meaning, as you get more involved in industrial, do you need to rewrite the script on planting this crop?
SG: I have to preface this and say I'm not a farmer myself, but I'm learning it. But, certainly, just in the simplest way, think of the density of seeds. When people plant cannabinoid-rich seed, you're looking at planting between 2,000 and 5,000 seeds per acre, depending on who you talk to. When you’re doing industrial seed, you're talking about a vastly higher density of plants. You don't care about flower, right? If you're planting for fiber and hurd, flower is what you don’t want. If you're planting for CBD-rich flower, you don't want fiber and hurd; what you want is resin-rich flower. So, there's no question that the practices are different.
By the way, the harvesting is wildly different. How do you get it out of the ground? What do you do with it? How do you process it after you pick it? You can't build an industrial practice in hemp with hand-shucked flower. It doesn't make sense. You’re never going to be able to get the scale.
ES: With High Grade in the fold now, as the 2021 season gets under way, what are some of the big things that you're hoping to achieve with Santa Fe Farms this year?
SG: What we're doing is trying to find a way to, I would say, industrialize the business. And I don't mean that just in terms of fiber and hurd, but even in the cannabinoid space—to find a way to make this a real industry that can supply on a consistent basis high-quality product to the manufacturers who are going to use it in their products or on a standalone basis.
We are extremely focused on the issues of sustainability and carbon sequestration. The hemp plant is a unique plant. If we can begin to develop the standards on how much carbon is sequestered when you grow it appropriately and then use it appropriately, that is another revenue source for farmers. Basically, you'll be able to add additional revenues with respect to the carbon offset that’s produced in hemp farming. I happen to personally believe that's going to maybe be the most significant part of our industry in the next 10 or 20 years.
ES: For all the obvious reasons, it’s a very exciting idea—just in the conceptual sense of what that means and how to convey it to other businesses and also the consumers who are still somewhere in the early stages of that demand curve. There’s much more to come, for sure.
SG: I don't know how old you are, but I'm almost 70. I think the generation of the 30- and 40-year-olds has woken up in a way that we never did in my generation—to say that if we don't make protection of the planet, if not the No. 1 issue that transcends every other issue, at least among the top three, then businesses need to begin to address what they do. Either you're part of the problem or you're part of the solution. And I think one of the very unique things about hemp is that, when we think about bio-sequestration, which without a doubt is a requirement in solving the climate crisis, there's just no doubt about it. Hemp and the hemp industry, if it thinks about itself in the right way, we can be a leader in the bio-sequestration effort, which I believe is critical for my grandchildren to live in a planet where they can breathe the air and drink the water.