The Hazards of Hemp in 2020
If history is prologue than the 2019 hemp harvest has much to say about the future of hemp in the United States. Let's take Oregon for example. Oregon went from 11,000 acres of hemp planted in 2018 to more than 60,000 acres in 2019. Jackson County was the largest producer of any county in the state at 8,500 acres. That kind of growth is not sustainable and as a consequence, many farmers saw their prospects in the market come crashing down with at least four suicides, acres of hemp wiped out by mold, and other catastrophes. Thus, turning “fields of dreams” into waking nightmares.
Hemp farmers have faced many challenges this past year. The simple act of inadequately planning for their harvest resulted in many farmers leaving acres and acres of abandoned and rotting hemp behind. This is a stark testament to the growers who went bust. Others saw old barns converted into makeshift drying sheds for their crops go up in flames.
Other problems encountered by hemp farmers this past season included labor shortages and lack of supplies, drying facilities, and processing facilities. One grower, who had harvested 8 acres and had been drying it in makeshift drying sheds, lost 80% to mold after it rained because the grower hadn’t use dehumidifiers to control the moisture.
I estimate that more than 50% of the hemp growers will likely call it quits by the end of this season. Those individuals who had no business farming experience, let alone experience farming hemp, thought they could do it better and have failed. Rest assured, the market will settle down, stabilized, and mature as more specialized equipment for harvesting and processing hemp is developed and as more large scale processing facilities are brought online. Once this takes place, individuals will be able to convert hemp into valuable extracts.
Despite the challenges faced by growers in 2019, many managed to make profits this season as more experienced hemp farmers realized the steps they needed to take to scale up and prepare to face a new challenge in 2020, one that may prove even more demanding. This past October, the United States Department of Agriculture proposed new rules which would make it even more difficult for hemp farmers to grow existing strains. Proposed regulations will require using a different testing method than had been used by most hemp farmers. This new testing method will effectively redefine industrial hemp in practice.
The 2018 Farm Bill defined industrial hemp as the plant cannabis sativa L. having less than 0.3% Delta-9 THC. By excluding THCA (THC acid), farmers were able to more easily to stay within the 0.3% THC limit. Currently, the 0.3% THC level is determined by taking samples from an entire plant within 30-45 days of harvest and having them tested by licensed cannabis testing laboratories. The proposed new rules would require testing buds on top of the plants close to harvest time, and the tests would have to be conducted at a DEA-approved laboratory. These changes will make it more difficult and expensive for farmers to comply with the regulations, making them more likely to face fines and see their entire crops destroyed for exceeding the 0.3% THC limit.
Many growers thought they could scale up their production without fully considering the hard costs of preparing a field, harvesting it, and processing it into an extract. Instead of calculating $8,000 to $20,000 an acre to prepare a field, many growers thought they could do it for less than $5,000 an acre. And then there’s another $15,000 to $25,000 per acre to harvest and process the plants into an extract.
Despite the challenges faced by farmers this year and the fact that more than 50% who grew this year may not grow again next year, it is likely that a new crop of farmers, motivated by the clarity of new rules and regulations, will enter the market next year. Next year, 2020, may be a transformative year for the US industrial hemp industry. With the final adoption of proposed USDA regulations coming just in time for the spring 2020 planting, we are bound to see another wave of hopeful hemp farmers, perhaps sobered by the lessons learned in 2019, but likely no less discouraged. With more harvesting, processing, and extraction capacity coming to the market in 2020 we will likely see fewer bottlenecks at harvest time and more opportunities for retailers and brands to enter the CBD market at a lower risk. 2020 may just be another banner year for USA hemp!