As the new editor of Hemp Grower, I want to introduce myself and share some information about my background and where the publication is heading.
I have been a journalist and editor for 20 years, during which I spent time covering Congress and federal agencies in Washington, D.C. More importantly, I come from a family that ran a small business. I was raised in and worked for the family auto parts business, which my father and mother built from nothing. I was there for every challenge, struggle and triumph. I have seen up close how difficult it can be to run a business, and that helps drive my desire to see you succeed.
As Hemp Grower starts publishing monthly (instead of bimonthly) in January 2021, it is more important than ever that the magazine provides you with the best insights and strategic guidance possible to ensure you and your business are successful. To this end, please contact me at firstname.lastname@example.org to let me know what issues matter the most to you, such as the challenges you face, topics you’d like to learn more about, and any feedback on our coverage.
Before we head into the new year, however, we wanted to close out this year strongly; this issue contains more than 70 tips on topics ranging from cultivation and raising capital to greenhouse maintenance and more. It also includes stories that I believe will inspire you and help grow your business.
I have seen up close how difficult it can be to run a business, and that helps drive my desire to see you succeed.
The cover story chronicles the journey of Charlotte’s Web as it grew from a small startup to the leading cannabidiol (CBD) producer in the nation, sharing its lessons learned and how it is navigating both regulatory uncertainty and the economic fallout from the pandemic.
The story of Charlotte’s Web illustrates how we can all learn from both adversity and triumph.
I look forward to being a part of your journey as Hemp Grower helps you navigate such challenges and opportunities so you can find success in the new year and beyond.
The industry’s understanding of best practices for hemp biomass storage is an ongoing learning process in these early years of licensed cultivation in the U.S., and much of what growers are falling back on comes from earlier generations’ grasp of the fundamentals or the Canadian industry. The Alberta Ministry of Agriculture and Forestry, for example, published an in-depth set of best management practices on hemp storage in late 2015, and it remains a helpful framework for how the industry approaches this matter.
And to a point, the state-legal cannabis industry (which many call the marijuana industry) in the U.S. has provided education on how to store this plant safely, as well.
Billy Chavis know this. He spent nearly 10 years in the legal cannabis space before joining Paragon Processing as lead engineer and partner. Earlier this year, the company secured a 250,000-square-foot former Columbia Records warehouse in Colorado City, Colo. (near Pueblo), and built it out with 170,000 square feet dedicated to climate-controlled storage space. The Paragon team asserts that this facility is the largest hemp processing facility in the country.
“Knowing that the [cannabis] market was heavily shifting and the price per pound of marijuana was decreasing, hemp seemed like a great opportunity,” he says of his career change. “So then I applied my skills to build larger-scale extraction equipment specifically designed for hemp. I’ve been doing that for around three to four years, and it’s led me into the position that we’re in with this company.”
And while Paragon will be storing its own hemp biomass for its processing ends, the company also accepts outside farmers’ crops for testing and storage as well. With clients’ precious product in mind, the Paragon team has developed a rigorous model for hemp biomass storage that can be used as a guide, no matter the size of your business, for examples of best practices.
Storage is key, Chavis says, because the newly legal hemp industry in the U.S. is engendering a great deal of excitement and, inevitably, overproduction. There’s a glut of raw material on the market. Prices are falling. Farmers need to know how to store their harvested and dried crops properly and line up buyers in need of biomass.
“Seventy percent of the biomass being grown this year so far does not have a predetermined buyer,” he says. When Hemp Grower spoke with Chavis in mid-October, he referenced a cold-warm spell that was moving through southern Colorado—a problem for hemp growers who still had plants in the ground.
This is an important starting point: Before hemp biomass is brought into a climate-controlled space for storage, growers must ensure that the crop is coming out of a suitable outdoor environment. Humidity levels vary by season and by geographic region. Southern Colorado, for example, clocks a dryer climate, generally, than much of Oregon. Each of those states has licensed more than 50,000 acres of industrial hemp, making Colorado and Oregon prime examples of what thriving hemp markets may look like for the foreseeable future in the U.S.
But that climatic difference is a big one. Oregon sees higher humidity and rainfall throughout the year compared to Colorado. In certain parts of the state, Oregon’s humidity levels hover closer to the 60% to 80% range with almost daily rainfall. That’s a significant obstacle for many Oregon farmers—one that those in Colorado and other states may not need to focus on nearly as much.
“That puts them into a position where they could [inadvertently] ruin their entire crop very quickly,” Chavis says. “So, even if they’re able to … get their crop down and dry it, storing it in a high-humidity environment will cause degradation of the plant material and essentially cause major losses, somewhere in the neighborhood of 20% to 100% loss.”
Paragon Processing works with farmers from those varying climates, and Chavis says his team focuses on that moisture content in each super sack (flexible fabric bags that can hold hundreds of pounds) of hemp that crosses his facility’s property line.
Before actually storing any hemp, Chavis advises farmers to quarantine each batch of biomass product and test random samples—just to be clear about what’s coming into the controlled storage space. He recommends three separate samples from each bag to ensure well-rounded data points. This 24- to 48-hour process may play out in quarantined trailers, somewhere away from the storage facility. In following this lead, growers avoid the possibility of contaminating hemp already being stored inside.
Farmers should know precisely what is going into any storage space. Beyond just the actual mass of the dried hemp product, it behooves them to test each batch and to prevent any microbials (mold spores), heavy metals or pesticides from ever entering the climate-controlled space. Whether growers are storing other businesses’ hemp biomass or only storing their own products, this is an important defense measure and an added layer of data to maintain a rigorous paper trail for federal or state compliance or to defend against potential litigation. Paragon also conducts random testing each month for longer-term storage needs.
Important Storage Variables
Once inside the storage facility, Chavis says that proper storage revolves around a few important variables. Chief among these climate considerations is a constant 10% moisture content for long-term storage. (Getting the humidity down a bit lower is even better.) If you’re storing your hemp for future cannabinoid extraction, starting off with a drier biomass product is going to help maintain the integrity of those chemical compounds; extraction of biomass with higher moisture content ends up costing up to 20% of the plant material’s cannabinoid content, Chavis says.
“Being able to dry [the hemp biomass] in a climate-controlled, low-humidity storage environment at the right percentages of moisture gives [growers] the longevity of being able to make the right decision for their company instead of having to rush into a decision that’s forced by a timeline,” Chavis says.
When it comes to temperature, growers encounter a classic Goldilocks scenario.
“Anything too hot is going to start to degrade your product,” Chavis says. “Anything too cold is going to put you in a position where the moisture content is going to start to have an effect of sweating when it turns out. Ideally, we keep our temperatures between 68 and 78 degrees Fahrenheit, which allows for perfect climate-controlled storage on top of that [10%] humidity level we’re trying to achieve.”
Because Chavis has spent much of his career in the legal cannabis space, he is well aware of the fundamental lesson in dried cannabis storage: The prevention of mold is of the utmost importance. Disregarding the nuances of climate controls or allowing products with varying moisture content to sit alongside one another in your facility will undoubtedly create conditions for mold growth and uncontrollable proliferation. This is a recipe for disaster, and it’s averted with ease by applying these tenets of storage to your facility—or by ensuring that your contracted storage supplier or processor is doing the same.
“If you don’t have an ideal storage environment, you can promote the growth of mold,” Chavis says. “And one little mold spore in a room can contaminate an entire storage or curing room—as you would call it on the cannabis side. If you were to do that, you could ruin hundreds of thousands, (if not) millions of dollars’ worth of product. Those lessons that you learn are very expensive, because they’re happening firsthand. So, one of the major, most important things that I learned was not to bring mold into a facility that can promote mold growth, to prevent mold at all costs and how to treat mold if there is an issue.”
And while Paragon’s 170,000 square feet of storage space is on the higher end of the spectrum in the legal U.S. hemp industry, Chavis says that scale isn’t a significant factor here. On one hand, larger facilities will simply provide more tasks—more data and product to monitor. But the fundamentals remain the same.
Over time, of course, cannabinoid content degrades naturally. Those cultivating and processing hemp for cannabidiol (CBD) can take pains to mitigate that degradation by monitoring climate controls. But, in an industry that relies almost entirely on cannabinoid content, this is an important statistic to track for all cultivators; any product that clocks a tetrahydrocannabinol (THC) reading above 0.3% should not be stored on-site, as it is already in violation of federal law. Chavis says one of Paragon’s first clients ran into this problem, and the team had to turn the product away.
Day-to-day monitoring is critical. His team is on the lookout continuously for drips in the ceiling or water lines. Any sign of standing water is an immediate red flag. Humidity levels are checked and double-checked throughout the day.
“These are valuable products that they’re sending over, especially in the neighborhood of the hundreds of thousands of pounds that each farmer is going to be bringing over here,” Chavis says. “So, to them, this is worth a lot of money. They want to know that it’s secure.”
Eric Sandy is digital editor of Hemp Grower and sister magazines Cannabis Business Times and Cannabis Dispensary.`
Throughout early American history, hemp fiber was woven into everyday life. It was used in clothes, paper, sails, canvases and numerous other everyday items. The Founding Fathers even grew hemp for its fiber.
While the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) rekindled hemp production, hemp fiber has yet to make a comeback in the U.S. In fact, it’s the last aspect of the grain-cannabinoid-fiber trio of the U.S. hemp industry to develop, trumped by the promise of profit by its cannabidiol (CBD)-rich cousin.
Entrance into today’s U.S. hemp fiber industry is riddled with barriers, especially now that cannabinoid production dominates the current hemp infrastructure and discourse. Stigma still exists surrounding cannabis despite hemp’s legalization. CBD has dictated much of the conversation surrounding hemp production regulations, making procedures like fiber processing facility inspections a lengthy headache.
But mostly, problems in fiber stem from an underdeveloped and disjointed supply chain. Those in the industry describe it as a chicken-and-egg scenario: Farmers don’t grow it because they can’t find processors to buy it, and few processors have emerged because most can’t find the supply they need from farmers.
Despite the numerous challenges involved with breaking into the industry, hemp fiber is beginning to gain traction in the U.S. Around the country, pockets of farmers and processors willing to take risks are beginning to make connections, slowly piecing together the supply chain puzzle that has been dismantled in the U.S. since hemp’s prohibition.
“Hemp fiber is a no-brainer,” says Gary Sikes, a hemp farmer based in Polkton, N.C. “We just have to learn how to use it again.”
I. The Farmer
A Growing Interest
Though CBD will still account for a majority of hemp production in 2020, according to market analytics firm Hemp Benchmarks, interest is beginning to pivot toward fiber, especially as CBD prices continue plummeting. From experimental plots for reuse on the farm to hundreds of acres to be baled and sold, a larger number of farmers are turning their focus to fiber.
“We have heard from several agriculture departments that they’re seeing an increased amount of interest from people growing for fiber. ... [And] it seems fairly certain there’s going to be a pretty significant reduction in the amount of acreage licensed for hemp growing in general,” says Adam Koh, editorial director for Hemp Benchmarks. “With total acreage going down and fiber production going up, you’ll see fiber make up a larger proportion of acreage in 2020.” In North Carolina, for example, 446 of 1,483 hemp growers for 2020 are licensed for fiber, representing 30% of hemp grown in the state, according to state officials.
Hemp grown and harvested specifically for its stalk is, by nature, a dual crop. “Fiber” typically refers to the bast of the stalk, a fibrous bark that wraps around the core like a ribbon, while the hurd inside is a soft woody material. The fiber can be used for markets such as textiles and paper, and the hurd has numerous applications in animal bedding, building materials and more.
Many farmers focusing on hemp stalk production this year are doing so in tandem with other parts of the crop, whether through multicropping or experimenting with several different varieties, to reduce their risk in an underdeveloped market. (Even using the entire hemp plant—its cannabinoids, grain, bast and hurd—could be an eventual possibility for farmers. See the sidebar for more.)
In Kentucky, for example, out of 960 growers who are licensed for hemp production, all but 15 of the 159 farmers who indicated they will be growing hemp for fiber this year will be growing for flower as well, according to the Kentucky Department of Agriculture. Montana reports that about 85% of its 11,000 acres of hemp has been licensed for fiber and grain production, according to state officials.
Grain and fiber go hand-in-hand as the industrial sides of hemp, as both can be derived from similar varieties. Gary Rooth Jr., an organic hemp farmer in Bay City, Texas, is using his first year of hemp production to plant a hefty 500 acres of grain varieties. While Rooth Jr. is focused on grain production, he has a buyer interested in his stalk as well.
“You pretty much have to pull the stalk out of the field regardless, or burn it … so if we’re getting it out of the field anyway, we’re going to try to bale it and send it off to get decorticated if it’s feasible,” Rooth Jr. says.
Some farmers are dedicating a majority of their hemp production to fiber, whether because of a passion for its numerous purported environmental benefits or because of their confidence in its longevity. “I firmly believe that fiber is the long-term play in hemp,” says Marty Mahan, president of the Indiana Farmers Union hemp chapter and a hemp fiber farmer based in Rush County, Ind.
That venture, however, is far riskier for farmers—even for those who have buyers in place.
Mahan grew about 10 acres of hemp for fiber in 2019 when he connected with Sunstrand, a hemp processor based in Louisville, Ky. He and many other fiber growers in the area, who he worked with as part of an informal research co-op, contracted with the company.
But by the time he’d baled the hemp, Mahan knew something was wrong. Sunstrand had become unresponsive. In January 2020, Mahan’s concerns were confirmed—the company had filed for Chapter 7 bankruptcy with debts exceeding $10 million, leaving at least dozens of farmers with no buyers for their fiber. (The owner of Sunstrand, William Riddle III, and his bankruptcy attorney, David Cantor, did not respond to Hemp Grower’s requests for comment.)
To this day, Mahan and many other farmers in the region who grew for Sunstrand still have most of their hemp fiber from 2019 baled and ready for sale.
The experience rattled Mahan, but it hasn’t shaken him out of the industry. He is growing a small amount of fibrous hemp only as a cover crop this year.
But he plans on holding onto the hemp he still has until 2021, when he is aiming to have his own farmer-owned non-profit cooperative up and running. His ultimate goal for the co-op is to build out a fiber processing facility to assure hemp fiber farmers have buyers for their crops.
“We’re still very optimistic,” Mahan says.
Trial and Error
Sikes, too, says he has been burned by Sunstrand.
He was an early adopter of fiber production on his poultry farm, Bountiful Harvest Farm. Sikes helped form a regenerative growing cooperative called Bio-Regen Co-op and began experimenting with CBD, grain and fiber production when North Carolina legalized hemp and began production in 2017. “We were thinking we had some processing and infrastructure set up for fiber,” Sikes says. “We did not.”
Sikes did discover processing infrastructure in Sunstrand in 2018, only to become another story of a broken contract. He says Sunstrand had plans to move processing equipment to North Carolina, but the funding for it fell through. On top of the “suffering” Sikes went through with Sunstrand, he says, two hurricanes hit the state that year.
But Sikes continued growing for fiber in 2019. “I did not get down on it,” Sikes says. “I know it has a tremendous potential.”
That year, Sikes met Taimour Azhar, the CEO of the startup fiber processing company The Hempville, who had been searching for farmers growing hemp for fiber. The two struck up a verbal agreement: Sikes would grow 37 acres of hemp for fiber with genetics from China, and he’d be paid as soon as he baled the hemp and took it to Azhar for processing.
Though leery from past experiences with processors, Sikes says he trusted Azhar. “After watching Sunstrand fold, I liked his plan for growing the business,” Sikes says.
While the hemp wound up testing hot (above the 0.3% THC limit), North Carolina allowed them to use it for fiber production, and Azhar honored his word.
For 2020, Sikes was brought on as a partner with The Hempville. He now manages The Hempville’s farming operations, overseeing nine other farmers in the Bio-Regen Co-op who are collectively growing about 125 acres of hemp for fiber for the company.
Like many other fiber farmers this year, the Bio-Regen Co-op is experimenting with genetics. After their seeds from China resulted in hot crops in 2018 and 2019, the farmers are now primarily testing out a Polish variety certified by the Association of Official Seed Certifying Agencies (AOSCA).
Meanwhile, Sikes has been conducting some experiments of his own. He’s growing about 20 acres of a grain variety as a proof of concept for The Hempville with the hopes of eventually pursuing multicropping for the plant’s bast, hurd and grain.
Sikes says farmers still have much to learn before growing hemp for fiber can be a profitable venture in the U.S. And if it’s not profitable for the farmer, Sikes says, the industry will never get off the ground.
He’s hoping to help establish best growing practices for fiber so The Hempville can scale up. Azhar says he eventually hopes to create a “sustainable local hemp supply chain in the U.S.” by working with other growing groups to set up processing facilities in different regions.
But for Sikes and many other aspiring fiber farmers, advancing the industry is not only about profit, but also about realizing its potential in a more sustainable world.
“We have a very strong interest in building a sustainable industry that will begin with regenerative practices on the farm,” Sikes says.
II. The Processors
As farmers’ interest in the fiber industry has grown, so too has interest from processors across the U.S.
Some companies are looking to make big investments up front and with hopes of jump-starting the industry. Panda Biotech, a Dallas-based hemp fiber and cellulose processing company, for example, is donating more than 60 tons of approved hemp fiber seed to Texas growers this upcoming season. The company will use the 2020 growing season to collect data in time for it to begin processing in 2021.
And Collective Growth Corp., a special purpose acquisition company (SPAC) that is also based in Texas, is investing millions over the next year into bringing specialized harvesting equipment and decortication and processing facilities from more advanced hemp markets overseas to the U.S. for whole-plant processing.
But other processors are using lessons they’ve learned from now-folded processing companies to start small and slow. “We’ve seen a massive amount of people trying to get involved in the hemp industry,” says Scott Pearce, president and COO of Hemp Biocorp, a new hemp processing startup company in Illinois. “Numerous startups that didn’t have the pipeline or the infrastructure set up faltered, so we don’t want to make those mistakes.”
The first step for many has been connecting with farmers interested in growing industrial varieties. Because proximity is such a significant consideration in the hemp fiber supply chain, many processing companies are building their facilities near concentrated groups of farmers to keep transportation costs to a minimum.
Prairie PROducers, for example, is setting up shop in Olivia, Minn., near where the owners have located farmers who grew hemp in previous years but still have biomass in storage.
“Part of the thought process for us is that we’ve had farmers that are sitting on fiber bales that they want to get rid of,” says Tim Seehusen, COO and co-founder (along with his brother, Paul) of Prairie PROducers. “There are people who want processed fiber but don’t want what the farmer has, so they’re looking for people like us, and farmers are looking for people like us, so we’re going to jump in and hopefully make that connection from the farmer to the next user.”
Other processors, like The Hempville, have been drawn to growing co-ops to get the supply they need.
After The Hempville’s Azhar connected with Sikes in 2019, he began working with the farmers to improve their fiber farming skills and learn which varieties performed well. Azhar also spent the year engineering a hemp decortication system.
But in addressing those issues, a new chicken-and-egg situation arose: this time, between the processor and the end users of the processed hemp.
“During that whole time, what we have learned is how to grow, how to process, and we have distributor targets across the U.S.,” Azhar says. “Then, the problem kind of shifted from the farmers to the processors. It became, ‘OK, the farmers know how to grow it, but where is the outlet for all of the hurd and fiber?’”
The Hempville is now focusing its efforts on researching and developing end markets by collaborating with private organizations and various universities, including North Carolina State University, Azhar says.
Finding a Market
Industry participants Hemp Grower spoke with don’t question whether the demand for hemp is available. Major companies looking for more sustainable alternatives have already begun adding hemp into their products, including BMW, Patagonia and Levi’s. And some industry producers are confident those companies are just the beginning.
“We know there’s a market there—it is limitless—but the critical next step is identifying and doing the market development for what those markets are in the U.S.,” says Jay Olson, chief technology officer of Hemp Biocorp.
Some processors have chosen to identify their target end markets before completing construction of their facilities, as each end market requires different equipment and sometimes even different facilities for further processing.
Barbara Filippone, founder of hemp fiber manufacturer and importer EnviroTextiles LLC, for example, says her company’s production of hemp fiber textiles requires the involvement of five different factories overseas. Meanwhile, processing hurd for products like hempcrete and particleboard simply requires a run through a hammer mill or horizontal chipper to be sized down into particles specific to the application of use, Filippone says.
“What we’re looking to do is process it, [and] then as soon as we can get someone saying, ‘This is what we want,’ we’ll develop the equipment to [do] what they’re looking for,” says Seehusen of Prairie PROducers.
The different end markets also determine the quality and variety of hemp fiber needed. Nonwoven textiles, for example, can be made out of shorter fibers than woven textiles can, Filippone says. It’s the reason some processors, such as Prairie PROducers, are working this year to establish grading systems for the different types of hemp they’ll be purchasing. This will help the processors not only determine which grades they need and guide farmers in which varieties to grow, Seehusen says, but also begin to establish standard pricing throughout the industry.
Even with end markets identified, processors continue to face other challenges tied to stigma around hemp.
“Education is the No. 1 challenge—educating societies and industries about the added benefits of hemp as a sustainable industrial manufacturing material and its contribution in a circular economy,” Azhar says. “This is a big challenge for us, and we’re developing a team and consulting program to coach and consult with sustainability-driven companies.”
While hemp producers down the supply chain face numerous obstacles—not the least of which includes delayed timelines brought on by the COVID-19 pandemic—2020 is poised to be a big year for advancements in the U.S. hemp fiber industry. As farmers learn more about ideal fiber-producing varieties and how best to grow them, and processors pursue market development, the two are beginning to make connections needed to advance the industry.
Many industry participants are estimating the hemp fiber industry will see a boom in growth within the next three to five years.
“What I had projected over 10 years will probably happen within five, and I really see us making a big jump in the next two years,” says Prairie PROducers’ Paul Seehusen. “We believe we all have to work together to make it work.”
Because woven textiles require intensive mechanical processing and are difficult to produce on a large scale—especially because only about 15% of the hemp stalk consists of bast fiber while the rest is hurd—Filippone estimates apparel-grade fiber will be the last viable hemp fiber market to hit the U.S.
Markets like hempcrete and animal bedding have already begun to take shape, mostly because of their simplicity to create and widespread application potential.
Meanwhile, nonwovens and bioplastics may come into the mainstream next as R&D advances in those areas.
Filippone estimates hemp seed food production will take off before those markets do.
Still, while the hemp fiber market’s ultimate rollout may take years, some industry participants assert it represents the long game in hemp. And little by little, they are working to restore hemp fiber to the prevalence it had in the U.S. centuries ago.
“If you ask me a five-year projection, I’m very optimistic about the potential that hemp [fiber] has to offer,” Azhar says. “There have been failures in the hemp industry, typical with any new and emerging market, but we will be learning a lot this year and in years to come.”
“The biggest disruption opportunity related to cannabis plants at large is to use the whole plant and hemp for what it can do. And there’s over 200 categories of things that you can disrupt.”
Bruce Linton, former CEO of Canopy Growth Corp. and CEO of Collective Growth Corp.—a special purpose acquisition company that went public on the Nasdaq exchange in May and aims to build out the hemp supply chain in the U.S.—commented in a Forbes.com article, “Bruce Linton On His $150M Venture: ‘Hemp’s Disruptive Potential Is Higher Than CBD.’”
“Please, have the courage to get these people home.”
Tom Jubin, a lawyer for mother-and-son hemp farmers Debra Palm-Egle and Joshua Egle, pleaded with a Laramie County, Wyo., judge in his closing comments during the preliminary hearing where prosecutors sought to charge the farmers with drug trafficking. The charges were pressed after the Wyoming Division of Criminal Investigation raided the Egles’ farm in November 2019 and seized more than 700 pounds of hemp that tested above 0.3% THC, with the highest testing at 0.6%. The judge dismissed all charges in August.
“… we knew that the 0.3% THC was an outdated and artificially low definition for hemp, but it was the best we could achieve in the 2014 and 2018 Farm Bills. … We really felt it was important to begin working to get that changed. So, we started out with a petition. We figured that’s a great place to start to demonstrate that there is strong support for this.”
Vote Hemp President Eric Steenstra commented in an interview on HempGrower.com about the organization’s efforts to increase the hemp THC threshold to 1%, including a petition the organization plans to submit to Congress. Read the full interview at bit.ly/VoteHempPetition.
Source: Hemp Grower
“We’ll be able to recover most of our acres. The hard thing is some farmers’ fields are completely lost—zero. They’ve been eaten down to the nub. What should look like a green stand looks like a wheat stubble field.”
Benjamin Brimlow, an agronomist with hemp oilseed and fiber company IND HEMP, describes the grasshopper infestation destroying some farmers’ hemp fields throughout Montana. To read about the infestation and lessons the growers will take into next year, read bit.ly/HGGrasshoppers.
Source: Hemp Grower