Tennessee was one of the first states to approve a hemp program in May 2014, shortly after the U.S. Congress passed the Agricultural Act of 2014 (the 2014 Farm Bill).
Since then, Tennessee’s hemp program has become one of the leading in the country, with nearly 2,000 licensed hemp growers cultivating in 93 of the state’s 95 counties as of March 2021, according to Kim Doddridge, the public information officer at the Tennessee Department of Agriculture (TDA).
So, what makes The Volunteer State appealing to hemp farmers?
From its natural resources to its laws, the state provides hemp farmers opportunities for success, says Denise Woods, the state’s hemp program coordinator.
Kelley Mathis Hess, executive director and lobbyist for the Tennessee Growers Coalition, agrees with Woods and believes the state is one of the best regulatory environments for hemp in the country.
“The department of agriculture has done a great job of regulating but not putting up a lot of barriers for people to participate, and not just [for] farmers, but the entire industry,” Hess says.
After the 2014 Farm Bill passed, the state took the necessary steps to ensure that using cannabidiol [CBD] was legal for consumers. And in 2019, the state was the first to outright legalize smokable hemp by putting a statute in place that allows any person who is 21 or older to consume it.
Aside from the state’s laws and regulations, Woods says: “I think one of Tennessee’s biggest advantages is its soil and climate. And the amount of hemp that our farmers have produced in the last several years is a testament to that.”
A Tennessee Department of Agriculture inspector at work in the field.
Photo courtesy Tennessee Department of Agriculture
Just last year, the state licensed 15,722 acres for hemp cultivation, according to Woods (although farmers only wound up growing around 4,836 acres of hemp). Based on 2020 data compiled by Hemp Grower, Tennessee had the 8th highest number of acres licensed for hemp out of all 50 states.
“The weather is mild, and the soil is diverse,” Woods says. “Farmers can go from the Delta land in the west, to Middle Tennessee, to mountain areas in the east. Wherever it is, the soil is good to grow hemp, and the climate is conducive to growing a good product.”
Although the mild climate is an ideal growing condition for hemp, Tennessee farmers face one challenge: the humidity. But Woods says farmers have identified this issue and made accommodations for the way they store and hang hemp.
“There were fungal diseases found in the field due to humidity and mold issues due to improper storage,” Woods says. “These issues are not exclusive to Tennessee. Farmers have since realized that good air flow is essential for hemp to maintain its integrity. Unlike tobacco, hemp must be spaced apart to allow for good air flow, and many times, fans are used.”
Due to the state’s diversity in climate and resources, there is no particular region where hemp grows best, Woods says.
“If you define ‘best’ as a place where a certain seed grows best—maybe a seed that likes cooler temperatures and a lighter spring—then you’ll see that in East Tennessee,” she says. “But if you define ‘best’ as a variety that grows best in hot temperatures with different soil, then you’ll see that in West Tennessee.”
Helping Growers Settle Into a New Industry
Whether a farmer is experienced, generational or brand new, Woods says the state aims to provide the necessary resources to help all growers succeed.
For example, Tennessee has continued to operate under the 2014 Farm Bill despite the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) taking effect Dec. 20, 2018, and the U.S. Department of Agriculture (USDA) issuing its final rule on hemp this January. Instead of switching to operating under the new regulations, the TDA thought it would best benefit growers to remain under the pilot program for now. (States have until Jan. 1, 2022, to switch from their pilot programs to operating under the USDA’s final rule on hemp.)
The state submitted a hemp plan last year, and the USDA approved it in July 2020; however, state authorities changed their minds and decided to move forward operating under the 2014 Farm Bill instead. The state is planning to re-submit a plan to the USDA by summer, Woods says.
“Continuing under the pilot program gave our growers another year of knowing what to expect, to develop their programs, to ensure they can find and develop genetics that would test under the legal 0.3% THC [tetrahydrocannabinol] limit and more,” Woods says. “Our program changes every year too, so it just gave another year of minimal change to growers, so they could get on their feet and not have to scramble to comply.”
Denise Woods of the Tennessee Department of Agriculture oversees the state’s hemp program.
courtesy Tennessee Department of Agriculture
Woods says the TDA has made changes to the state’s hemp program over the years to better serve growers and to comply with the changing federal and state laws, rules and regulations.
“Hemp is a new industry that is impacted by many different stakeholders,” Woods says. “As the hemp industry evolves, so follows the program.”
The state also tries to ensure that anyone who works with growers has the resources and knowledge needed to communicate with them effectively, Woods says.
“Tennessee realizes that hemp intersects with many different departments and programs, and hemp is not only new to the department of agriculture, but to everyone,” Woods says.
The state conducts regular training with the Tennessee Department of Revenue and sends nearly 20 TDA plant inspectors out into the field every day.
“Tennessee has many indoor growing operations, which necessitates the inspectors being in the field year-round,” Woods says. “… By being a helpful presence, the Tennessee Department of Ag has developed an energetic working relationship with the growers.”
Additionally, several state universities, such as the University of Tennessee Institute of Agriculture (UTIA), Tennessee State University (TSU), and Middle Tennessee State University (MTSU), participate in hemp research and conduct variety trials, Woods says.
“We do all of this just so when our farmers talk to us, we can respect and appreciate everybody’s needs and expertise,” she says.
“I see a lot of brand-new farmers breaking into the industry, which is so exciting,” Woods adds. “And I think that plays into the energy Tennessee has.”
Woods says the state has created an opportunity for many to join the hemp program by keeping requirements minimal and fees reasonable.
“The opportunity to grow hemp brought both novice and experience to the agricultural table,” Woods says. “It was a level playing field since there were no ‘experienced Tennessee hemp farmers.’ Hemp brought together a diverse community that needed each other. Learning, succeeding and failing, working hard, sharing info, dreaming and hoping all created energy. This new crop, with its new vocabulary, new ideas, new uses, and new possibilities, added to the energy.”
The state has made additional efforts to bolster hemp, Woods says, including increasing human resources, adding a business development consultant, partnering with The Hemp Alliance of Tennessee and adding hemp to a list of TDA-promoted crops. These are “all proof of Tennessee’s hospitality and commitment to contributions to making Tennessee a national leader in the industry,” she adds.
In turn, Tennessee hemp farmers have become true entrepreneurs and created a market where one didn’t previously exist, Woods says.
As the industry continues to progress and grow, Woods is excited about what the state’s hemp industry may look like in the coming years.
“However we define the future, however our growers define the future, or wherever the industry or our vision leads us, will be the future of hemp in Tennessee,” Woods says.
Andriana Ruscitto is assistant editor for Hemp Grower, Cannabis Business Times and Cannabis Dispensary.
How BrightMa Farms is Striving to Create Opportunities in Hemp
Features - Cover Story
Named after founder Harold Singletary’s great-great-grandmother, who was enslaved, BrightMa Farms strives to fulfill hemp’s potential to benefit farmers of color and society as a whole.
Left to right: BrightMa Farms' Sherman Evans, director of sales and marketing; Dwayne Green, member manager; Brandon Hudson, director of cultivation; Jean-Marc Villain, chief operating officer; and Harold Singletary, founder and CEO
While stationed at the Schofield Barracks U.S. Army base in Hawaii in the early 1990s, Harold Singletary received a call from his mother, Anna Delores Singletary. She told him that an author, Edward Ball, had uncovered information about the Singletarys’ ancestors.
Ball, a descendant of slaveholders, wrote about the history he unearthed. His story included the lives of the Singletarys’ forebearers, who were slaves to the Ball family.
“My mom called me and said, ‘Wow, all of this history is coming out,’” Harold Singletary says, adding that it can be difficult for many African Americans to trace their family histories.
Singletary’s family members, including his late grandmother, Katie Roper, spoke with the author in the ’90s, sharing oral history and information from documents such as labor contracts, as cited in Ball’s book, “Slaves in the Family.” When Katie Roper was about 10, her grandmother and namesake, Katie Heyward, reenacted for her granddaughter how she ran into a river to escape a beating while she was enslaved.
“She ducked in the water, and swam,” Roper told Ball. “I got excited, and started crying. And I screamed murder! I said, ‘Oh Lord, the ’gators going to eat her!’”
Heyward, also known as “Bright Ma” for reasons that have been lost to history, was forced to work in the field, likely growing rice, on the Balls’ Comingtee Plantation in Berkeley County, S.C. When she was freed in 1865, she settled on a 10-acre plot of land in Cordesville, S.C.
Today, Harold Singletary runs his hemp business—BrightMa Farms—on that land in Cordesville. It’s where ancestors between him and Bright Ma in the family lineage grew food for sustenance and near where they fished commercially. It’s near where his grandmother became fearful of water after Bright Ma jumped in the river.
“It’s been in my family for many, many years,” Singletary, BrightMa Farms’ founder and CEO, says of the land he inherited from Roper. “I’m just happy—it meant a lot to my grandmother. She would take her little bit of change and pay the property taxes. And I never wanted to lose it once she left it to me.”
With hemp, Singletary, an accountant and entrepreneur in the financial sector, is growing a plant that he says helps both people and the earth heal—and which can allow Black farmers and other farmers of color to create generational wealth and thrive.
BrightMa Farms runs a 3,000-square-foot headhouse and 7,200-square-foot greenhouse on the land in Cordesville and has offices in Charleston, S.C. The licensed nursery propagates a variety of hemp cultivars used for cannabinoid, grain and fiber production, and then sells the rooted clones to growers for them to mature and sell on a large scale. BrightMa also advises those growers through harvest. In addition to its cloning operations, BrightMa also breeds hemp, conducts research and development, and grows boutique smokable flower.
One of Singletary’s overarching goals is creating a global circular economy focused on reducing waste by incorporating hemp as a sustainable alternative for other materials, such as tree-sourced paper and synthetic plastics, and then either processing it at BrightMa Farms or selling it to another processor.
“My [customer] farmers and minority farmers will always have a value proposition within my circular economy,” Singletary says. “I will provide them genetics, I will provide them the understanding of how to grow, and we will process and then everyone will win. But there need to be more opportunities where we can be positioned to have not just a farm but processing capabilities and other components within the supply chains to be successful.”
To that end, Singletary says BrightMa Farms aims to buy product back from the growers it works with and process it for a variety of end uses, such as textiles, “advanced material composites” for the automotive sector, and plant-based foods.
Other opportunities include biofuels, batteries and aeronautical composites, Singletary says, commenting that President Joe Biden’s administration has ordered a review of multiple industrial supply chains to decrease U.S. reliance on China and other foreign countries. “The verticals are unlimited,” Singletary says of hemp. “We like to say it’s a plant of unlimited opportunities.”
“We like to say it’s a plant of unlimited opportunities.” – Harold Singletary, founder and CEO, BrightMa Farms
Hemp plants growing at BrightMa Farms.BrightMa Farms has developed six smokable cultivars with grain and fiber cultivars added this year.
Courtesy of BrightMa Farms
The Business's Early Days
Singletary, who is from Charleston, grew up working on a farm owned by his grandparents, Katie and Ned Roper, on James Island, S.C.
“It’s a hard life,” he says. “To do large-scale farming—I never wanted to do that at all. I’m an accountant by trade. I wanted to understand business and finance. That allowed me to structure, raise capital, use a network and also create a different solution to farm, which was indoor farming.”
A desire to help create opportunities for African American farmers, plus a few other experiences, inspired Singletary to enter the hemp marketplace.
Brandon Hudson, BrightMa Farms’ director of cultivation
Courtesy of BrightMa Farms
For one, his mother, Anna Delores, suffered from bone cancer. She received two bone marrow transplants but ultimately lost her battle with the disease in 2016. When she was still alive, Singletary provided her with cannabidiol (CBD) and tetrahydrocannabinol (THC), which he says allowed her to retain a better quality of life than prescription opioids did.
Hemp and cannabis also helped Singletary deal with anxiety and post-traumatic stress disorder (PTSD) from his U.S. Army infantry enlistment. He was deployed to Haiti for six months in 1995 as part of Operation Uphold Democracy, for which he received an Armed Forces Expeditionary Medal. He entered conflict zones and other dangerous situations where he fired weapons and witnessed casualties. “Even any soldier being put into any warfare or heavy, stressful situations—you will acquire anxiety or PTSD,” he says. “Then, trying to come back out of those types of situations ... into a normal society—and adapt to what may not be intense anymore—how do you navigate that?”
Another impetus behind the business was a collection of positive family experiences. Singletary’s wife, Shanequa Renee Singletary, is a certified herbalist. She owns a company called Four Room Herbals, referencing the body’s four “rooms” of mental, physical, emotional and spiritual wellness, and works with herbs such as elderberry, aloe and lavender. Harold Singletary says he and his family use herbal products and find that they provide them with health benefits. “We come from people that treated themselves holistically with natural herbs,” he says, zeroing in on hemp: “This plant is a natural, God-given miracle plant.”
In 2017, Singletary and his team put together a vision board for their company, which they originally called Lowcountry Hemp Extracts, and intended to focus solely on cannabinoid production. They started growing in 2018 under South Carolina’s industrial hemp pilot program, which the state had launched the previous year.
The company made some alterations as the team expanded its vision to include the fiber and grain side of the hemp industry in addition to on the cannabinoid front. Reassessing the company name, Singletary looked to the land he had inherited from generations of farmers. “My ancestors were with me,” he says, “and ‘BrightMa’ just felt great because her hands were first in the soil.”
Members of the BrightMa Farms cultivation support team Dan Latimer and Christy Perez
Courtesy of BrightMa Farms
As for that vision board of which Singletary speaks, his associate Sherman Evans says the founder maintains a physical board. “He’s got it all up there,” Evans says.
Evans, a serial entrepreneur, previously owned and operated retail businesses, serving as marketing director at NuSouth Apparel and marketing and sales director for Vertical Records before joining BrightMa Farms as director of sales and marketing.
Both Evans and Singletary see opportunities for replacing toxic materials with hemp-based inputs. Singletary says hemp fiber cultivars can be used to create cellulose- and lignin-based batteries and plastics.
In these early days of the newly reestablished legal hemp industry, much of the market has been heavily focused on CBD, Evans points out. “That has been the buzzword, and that has been ... where even a lot of our farmers got sucked into this gold rush,” he says. “We really took a deeper dive, and … we were fortunate in a lot of ways. We got exposed [to] and got the opportunity to start working in the fiber space.”
Growing for Good
On the cultivation front, BrightMa Farms works with larger-scale Black hemp farmers to hold onto family properties that extend back generations, despite farming’s inherent risks, says BrightMa Farms’ director of cultivation, Brandon Hudson.
Crops can fail from extreme weather, such as torrential rains and hurricanes that batter the coast, Hudson says, adding that has been the case with crops that are harvested for their fruit, as well as cannabinoid hemp. The financial consequences can be severe.
“Then you’ve lost your family’s property; you’ve lost property that your family died on ...,” Hudson says, but touching on the financial promise of the hemp industry, he adds: “Hemp gives us some opportunities to hold onto this property, hold onto it as a single unit, hold onto it for generational wealth and productivity.”
Between all the farms BrightMa sells clones to and those it consults with and visits, the company has access to more than 5,000 acres of farmland. It is expanding its network in part because of connections Singletary has made as treasurer of the U.S. Hemp Growers Association—a position he started this year after joining the group’s board of directors in 2020.
Hudson says he prefers outdoor growing for fiber and grain production in South Carolina rather than growing hemp for cannabinoids outdoors because of the unstable climate.
Harold Singletary (right) during a field consult with Doug Fields.
Courtesy of BrightMa Farms
However, with the Propel Center's consortium of Historically Black Colleges and Universities [HBCUs] and BrightMa's strategic partners Puregene AG (a Switzerland-based research and breeding company) and US Nursery (hemp clone and seed provider), Singletary says, "We look to dial in on data-driven variety and cannabinoid development that will not make this a concern for future farmers," says Singletary.
Good genetics can mitigate negative situations for farmers in the field. BrightMa Farms has its own breeding programs and has developed six smokable cultivars, Singletary says, with grain and fiber cultivars added this year. It’s now conducting an industrial hemp trial with South Carolina State University and partnering with Puregene AG.
It's important to pay attention to quality genetics, Hudson says; however, they can still be hard to come by, given the setbacks caused by more than 80 years of cannabis prohibition in the U.S.
Hudson says BrightMa Farms uses a “controlled pollen exchange” to breed for specific cannabinoid and terpene attributes, as well as resistance against pests and diseases and severe weather conditions.
“We run all of our cultivars in the field as well as indoors,” Hudson says. “Our personal flower is produced in our greenhouses so that we can produce the best quality ... hemp that we can. With that said, it is crucial in serving client farms and strategic partners that we can set them up for success, so we do the outdoor runs to be sure the cultivar can handle coastal conditions.”
Looking back, Hudson says he remembers thinking, Where am I supposed to get these invisible, mysterious genetics?
“Luckily, with some of the contacts in the hemp world, I’ve been able to get some really interesting stuff,” Singletary says.
Even within a specific type of genetics, Hudson compares the lifecycle and the needs of plants to those of humans. For example, preteens, middle-aged adults and elderly people will all need to eat differently, engage in different activities and sleep for different lengths of time.
It’s also imperative that growers keep a healthy mother stock, Hudson says. “You’ve got to keep that clean and healthy because it drives everything else that we do, whether it’s providing cuttings for other farmers as a nursery, whether that is producing our own flower to sell or to do extraction with and make other products,” he says. “It all starts with the moms.”
To establish a clean growing environment, even before COVID-19, Hudson required team members to wear scrubs, wash their hands with alcohol and wear bleach-dipped rubber slides. They also need to follow internally established standard operating procedures (SOPs). “We have strict SOPs for all aspects of our cultivation, whether that is IPM [integrated pest management], fertigation, harvest, cure, or propagation,” Hudson says.
The BrightMa Farms team with Dr. Louis Whitesides (fourth from left), VP and executive director of S.C. State University's 1890 Land Grant Program, and other 1890 Extension team members.
Courtesy of BrightMa Farms
Connections are also essential to the farm’s success. Hudson says he has numerous connections in the cannabis industry and is an organic gardener outside of BrightMa Farms. At the same time, he points to connections Singletary has with South Carolina State University and other HBCUs and land-grant universities, as well as organizations like the nonprofit Lowcountry Local First. Hudson says the circular economy will grow as BrightMa Farms provides “information, education [and] advocation” to more farmers of color.
“I’m very excited to keep moving forward with our team and trying to make inroads in the business world with this and be successful, but also really try to navigate all the social equity and sustainability and environmental impacts that we could have with this,” Hudson says.
But there are challenges associated with expanding a U.S.-based business into a global hemp circular economy. For example, there’s a lack of robust processing infrastructure in the U.S. There’s also the requirement that all hemp—not just that grown for cannabinoids or smokable flower—must be tested to ensure its THC content doesn’t exceed the 0.3% legal limit.
“Imagine, now, if I’m out here and I’m running 200 acres, and they decide to randomly come out and pick from a particular spot in my farm and it pops hot, I have to destroy my entire 200 acres,” Evans says. “That is catastrophic.”
It’s one of the reasons BrightMa Farms plans to work with partners like the Propel Center, a newly established educational hub, on projects such as determining which genetics work for which environments. “I think with any emerging space, you have to have the institution of higher learning partnerships for success,” Evans says.
Forging Connections
The Propel Center, founded by Ed Farm, the educational nonprofit behind the center’s concept and design—along with $25 million investments from Apple and Southern Company, a leading energy company serving people in three states—will service more than 100 HBCUs and provide students with in-person education at its Atlanta University Center Consortium as well as virtual learning.
Together with Ed Farm, as part of the Propel Center’s AgriTech program, BrightMa Farms will teach Black farmers about hemp production and research, says Singletary, who attended HBCU Livingstone College in Salisbury, N.C. “Hemp could be the igniter to change the narrative for Black farmers,” he says.
In part through using resources from and working with the team at BrightMa Farms, the Propel Center will work to bring equitable opportunities for Black students and professionals to participate in the hemp supply chain, says Inga Willis, director of strategic partnerships at Ed Farm.
Of Apple and Southern Company’s involvement, she says, “It was just a perfect fit because we wanted to bring education technology to this sphere of agriculture and really inspire students who come from a legacy of agriculture, but honestly, go away to get educated and don’t return to their homes because they don’t necessarily want to be farmers. I believe that hemp is changing that desire.”
Willis, a graduate of Howard University (an HBCU in Washington, D.C.) who sits on the board of the U.S. Hemp Growers Association with Singletary, says she predicts the hemp market will continue to provide many new opportunities within the farming sphere, noting that “those opportunities have to be met with training and students becoming equipped to become the workforce of the future.”
With the numerous HBCUs participating in the Propel Center’s programming, Willis says students can find various opportunities there, including mentorships, internships, jobs and accelerators.
Innovating Disruption
Eager to disrupt global supply chains via hemp production, Singletary says establishing and expanding various partnerships in the circular economy can reverse the stigma that surrounds the plant.
“We need to have more synergy in our approach to changing that narrative,” he says. “I’m excited that BrightMa Farms has been at the front of it as a stakeholder by opening doors to ignite imaginations. Our goal is to have a global footprint. BrightMa Farms will eventually be back in Africa.”
However, hurdles remain. For example, BrightMa Farms produces boutique smokable flower, but it needs to either send the flower to a processor or to ecommerce customers out of state, as South Carolina has banned smokable hemp. In 2020, Singletary says the business produced 1,000 pounds of smokable flower.
As it deals with challenges on various fronts, the business will continue to honor Singletary’s family history. “We actually have a strain in our house called Anna D,” Singletary says, explaining that it’s named after his mother. “It’s a CBG [cannabigerol] strain, and we’re excited about that; it’s something that Brandon came up with in the lab.”
Singletary shares that his experience has felt “surreal, being able to try to create this generational wealth opportunity with land that wasn’t bequeathed so positively.” He’s glad to now support growers of color so they can provide for their own family and heirs. “My blueprint will be replicated,” he says. “Like minds do powerful things.”
PATRICK WILLIAMS is the managing editor for Hemp Grower magazine.
5 Tips for Managing Pests on Outdoor Hemp
Departments - Smart Start: Quick Tips
Learn proper identification, scouting methods and other techniques to prevent insect and mite pest damage.
Weeds can serve as alternate hosts for insects such as aphids, which can migrate to hemp and cause damage.
Hemp crops grown outdoors are susceptible to a wide range of insect and mite pests. These pests can have either chewing mouthparts, in the case of caterpillars and beetles, or piercing-sucking mouthparts, in the case of aphids, spider mites and plant bugs. If not managed early in the growing season, insect and mite pests can cause substantial damage to hemp crops. Below are five tips that will help you to manage these pests effectively and prevent damage to your crops.
1. Properly identify the pest.
The first item that requires your attention is correctly identifying the insect or mite pest that is feeding on your hemp crop so you can implement the appropriate plant protection strategies. Resources such as books, fact sheets and online sources will help you correctly identify the insect or mite pest. In addition, you can contact a state extension entomologist for identification assistance.
2. Know what plant parts insect and mite pests feed on.
Insect and mite pests will feed on different parts of the plant during the growing season. Below are plant parts with examples of insect and mite pests that feed on them.
Stem: Eurasian hemp borer (Grapholita delineana), European corn borer (Ostrinia nubilalis), aphids and grasshoppers
Buds/seeds: corn earworm (Helicoverpa zea), Eurasian hemp borer, stink bugs and lygus bug/tarnished plant bug (Lygus hesperus)
3. Scout regularly during the growing season.
Scout your hemp crop at least once a week during the growing season using one or a combination of the following methods:
Randomly select plants and check leaf undersides, which is where aphids and spider mites are typically located. You can use a 10- to 16-power hand lens to look for the twospotted spider mite (Tetranychus urticae) and hemp russet mite (Aculops cannabicola), which are commonly found on hemp.
You can use the beat method, which involves placing a white piece of paper attached to a clipboard under branches or leaves, and then shaking the plant. Any insects or mites you dislodge from the branches or leaves can be seen crawling on the white paper.
You can randomly place yellow sticky cards or pheromone traps among the crop. The yellow sticky cards will capture adult moths and beetles, as well as certain insects in their adult stages, including thrips, leafhoppers and stink bugs. Pheromone traps attract male moths, which are then captured in the sticky substance in the trap.
All these scouting methods will detect insect and mite pests early, which will avoid having to deal with insect or mite pest outbreaks.
The beat method helps detect insect and mite infestations early.
4. Know when insect and mite pests are a problem.
Insect and mite pests will appear during certain times of the growing season. However, not all of them will be present simultaneously. It is important to know when insect and mite pests are active during the growing season so you can determine the most appropriate scouting method. For example, corn earworm larvae (caterpillars) will be present later in the growing season because they feed on the buds. Be sure to keep detailed records on the month that pests are present during the growing season, along with the crop growth stage—whether vegetative or reproductive—so you can know what to expect.
5. Remove weeds from the growing area.
Weeds can serve as reservoirs or alternate hosts for many insect pests, including aphids, leafhoppers, leaf miners and thrips. The presence of weeds in the growing area can lead to increases in insect pest populations that can migrate onto the hemp crop and cause plant damage. Therefore, removing weeds from the growing area eliminates alternate hosts for insect pests. Strategies that can be implemented to minimize problems with weeds include installing geotextile or fabric barriers, hand removal, mowing or weed eating, and applying herbicides.
Raymond A. Cloyd, Ph.D., is a professor and extension specialist in horticultural entomology/plant protection at Kansas State University. Reach him at rcloyd@ksu.edu.
4 Tips on Raising Capital for Your Hemp Business
Columns - Guest Column
Being prepared, patient and pliable to industry changes are key.
One of the most difficult things to do in any industry is raise capital. This can be said even for companies that have industry-disrupting products. It’s never easy. The white knight swooping in and closing an entire round of financing happens very rarely, and fundraising can end up being a multi-month or even multi-year endeavor. It often results in an extreme time drag on you and your employees’ daily activities, especially those at the management level, as investors always want to deal directly with the principals of the business, which usually takes place over multiple meetings.
Raising capital is difficult in general, but raising capital in a newly formed industry with fragmented laws and regulations—and minimal clarity from federal regulators—proves to be a special kind of difficult. But, as with most things in life, with great challenge comes great opportunity.
We’ve witnessed a few cycles play out for hemp investing. The passage of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) re-opened the U.S. hemp market and removed hemp and its derivatives, including cannabidiol (CBD), from the Controlled Substances Act (CSA). In 2019, entrepreneurs and investors flocked to the industry. Poseidon Asset Management saw many pitch decks a week, mostly for hemp-based CBD products, but also for cultivation and processing facilities. This climate set up a boom-or-bust year for many: The boom of hemp biomass for more than $4 per percentage of CBD content per pound in Colorado, Kentucky and Oregon, according to U.S. hemp benchmark price provider PanXchange, followed by the bust of an oversupply and lack of buyers for many.
A common concern among investors is losing money because of regulatory changes. The lessons learned in the past and some recent clarity in the U.S. Department of Agriculture’s (USDA's) final rule are giving operators more focus and providing investors peace of mind, presenting new opportunities to get your business funded. Having spent the past two and a half years raising capital for cannabis and hemp companies, I’ve observed that interest in hemp from investors in the first two months of 2021 is as strong as it’s ever been. Here are four tips to help give your company the best chance for success when raising capital.
1. Educate potential investors.
Education is by far the most important thing to take into account when speaking to a prospective investor. Go into meetings assuming the investor knows very little to nothing about the hemp industry, and give them the opportunity to prove you wrong. Sometimes a first meeting can be nothing but education, but it’s gaining that level of knowledge that turns a prospective investor into a partner. I’ve heard from both high-net-worth individuals and multi-billion-dollar fund managers that they don’t have the bandwidth and/or resources to do the proper diligence on the industry. Assume that the people you’re pitching will only invest in things they truly understand.
When we live and breathe our industry every single day of the week, it is easy to forget that the vast majority of Americans know very little about the plant and everything happening on a regulatory basis. The 2018 Farm Bill made hemp and CBD legal—what else is there to know?
Many individuals and investment offices have flocked to the cannabis and hemp industries expecting growth due to lack of institutional capital because of the restrictive federal banking landscape. However, they are not always familiar with the products themselves. For example, I recently told a prospective investor I take hemp-based CBD daily in the morning, which has greatly improved my overall well-being. The look of horror on this person’s face made me realize they had no idea what hemp-based CBD is, and our conversation had to shift immediately. I made an assumption and it almost ended the conversation simply due to lack of knowledge.
Start from the beginning and be as transparent as possible. Think about the questions you would have about an agricultural industry you knew nothing about and explain the answers—what hemp is, what it’s used for, its benefits, its history in the U.S., the 2018 Farm Bill, the current laws and regulations, how you measure quality, what the Biden administration may do, the import-export market and more.
2. Make flexibility a selling point.
I’ll break this into two parts—the flexibility needed for the ever-changing regulations on a state and federal level, and the flexibility needed for cultivating hemp varieties that are in line with customers’ ever-changing needs.
An investor needs to know that regulatory changes aren’t going to have a materially negative effect on your business—on the contrary, they’re likely to have a net positive effect on business, as they will provide the stability and guidance needed to grow the industry. The industry is awaiting certain regulatory guidance, and proving to an investor that the possible outcomes will not negatively affect your business is important. It is also important to prove the same about growers’ customers’ businesses.
For instance, if you’re growing a high-CBD strain for customers infusing food and beverages, how will the pending U.S. Food and Drug Administration (FDA) guidance affect their business? These are the types of questions it’s great to address head-on. Other recent developments that would be helpful to address with investors are the introduction of H.B. 8179 to Congress, which would legalize CBD in dietary supplements, as well as different facets of the USDA’s final rule on hemp that would impact your business. No matter what your opinion is on these developments, these will all excite investors because they are now seeing more regulatory guidance and industry stability.
Another selling point is around your flexibility to adapt to changes in the market. As more end uses become viable at scale, there will be high demand for different hemp varieties needed from different industries. Talking to investors about what data is driving your crop selection and your ability to adapt or diversify is important. It also educates the investor on how many end uses exist for hemp and how we’ve just scratched the surface of most in terms of industry disruptors.
3. Have a strong revenue strategy in place.
The 2019 cultivation boom and associated price compression made investors wary of farms without known buyers. Investors want to know if you have buyers or letters of intent in place. Who are the buyers, and what are the terms of the contract? (It is helpful to have an experienced agriculture attorney draw up and review the contract, assuring it has mutually beneficial length, price and futures pricing.) Also, how are you sourcing prospective buyers, and what gives you a competitive advantage over others? How are you sourcing genetics, what cultivars are you using, and what end uses are you focusing on? Showing a consistent revenue stream, or the ability to achieve that revenue stream, is critical.
4. Create an organized data room.
Access to your company’s information and full transparency are going to be your most powerful tools to attract investors. When I ask a company if they have a data room and they say, “Yes,” or “We’re working on it,” I get an immediate sense of organization and professionalism. Investors see it as a great start.
An online data room allows documents used for due diligence to be securely stored and distributed. They are not complex, though they can take some time to build. They are invaluable to an organization raising capital and, once built, can be easily updated and used for years to come. Always assume it’s never the last round of capital.
Here are some data room items to consider having in an organized manner:
Marketing deck and bios
Financials and projections
Business formation documents, licenses and insurance
Customer contracts and/or letters of intent
Customer pipeline
Photos and videos of the farm
Crop information and lab results
Intellectual property
Land use history
Summary of regulations on a federal, state and municipal level
With an investment push toward Environmental, Social, and Corporate Governance (ESG) investing, investors are taking note of hemp. I’m seeing more pitch decks from early-stage R&D companies focused on diversifying the end uses of hemp, some of which already have partnerships with major corporations. Hemp's potential for technological breakthroughs across a number of industries is promising. With that disruption will come the need for more hemp acreage, which will be fueled by a new crop of investors seeking a true American growth story.
Michael Boniello is a managing director at Poseidon Asset Management, which has been investing solely into the cannabis and hemp industries since 2014.
The Latest in CBD: Quotes from Around the Industry
"By including multiple companies and announcing all settlements at once, the CBDeceit announcement was coordinated to send an authoritative message to the CBD industry, broadly that the law requires companies to have robust evidence known as ‘competent and reliable scientific evidence’ to support their health claims, a standard that applies to health claims for all consumer products.”
Kristi Wolff, partner at Kelley Drye & Warren and chair of the firm’s cannabis law practice group, wrote on HempGrower.com about the Federal Trade Commission’s (FTC’s) “Operation CBDeceit,” an enforcement effort that she called the most “significant and coordinated FTC enforcement in the CBD space” to date. In December 2020, the FTC announced proposed settlements with six CBD companies that made unsubstantiated health claims, and those settlements became final in early March 2021.
“What we observed to date is no clinical evidence of liver disease in any participants. We observed slight, clinically insignificant elevations of liver function tests in less than 10 percent of consumers irrespective of age, product composition and form, and the amount consumed.”
Jeff Lombardo, PharmD., a board-certified oncology pharmacist, said in a statement about preliminary findings from a seven-month study of CBD’s effects on the liver, facilitated by Validcare, a company that conducts patient-centric clinical trials for the supplement industry. The study included 839 participants and is a response to the U.S. Food and Drug Administration’s (FDA’s) call for science-based data on the cannabinoid.
“There’s not going to be a hemp industry in Massachusetts if this isn’t implemented in a timely fashion. We’re in a legal [cannabis] state that’s about to drop the ball on hemp—the most benign form of the cannabis plant.”
John Nathan, president of Bay State Hemp Company, a licensed hemp extractor and processor in Massachusetts, told Hemp Grower about the state’s slow rollout of a new law that would allow licensed hemp growers and processors to sell their products to cannabis dispensaries.
2020 Hemp Cultivation Map
Hemp Grower's interactive cultivation data map provides a state-by-state breakdown of acres grown, licenses issued and more for the 2020 growing season. View More