Where are Hemp Businesses Finding Success?

August 03, 2022

It is no secret that the U.S. hemp market has been in a tough spot in recent years as businesses have been grappling with oversupply, falling prices, the coronavirus pandemic, and, now, a tough macroeconomic outlook. However, some business owners and operators have been able to carve out niches – in both the industrial and cannabinoid hemp sectors – where they are finding some success as the industry works to gain steady footing and rebound in the coming years.

State Rules Benefit Those Able to Weather the Storm

Several states – including Massachusetts – have put regulations in place allowing registered hemp businesses to sell certain products into their legal marijuana markets. “We have a dispensary market that is very welcoming of hemp, and there are only 31 growers in the state of Massachusetts this year,” said Linda Noel, owner of Terrapin Farm, a small, family-owned fruit and organic hemp operation in southeastern Massachusetts. “Everybody left the business,” she told Hemp Benchmarks. “The [state] rules got so stupid, there was no place you could sell it and the price of biomass got down to $10 a pound, or less.” In comparison, Noel said, the local price of biomass last fall was $40 a pound.

That being said, Noel expects hemp prices to rise in Massachusetts, and she will have more information following the harvest of her operation’s first crop in August. “Most of us that are growing [in Massachusetts] are growing with the idea we’re going to harvest a dual crop, part biomass, part smokeable flower,” she said. “I have heard prices on the smokable flower market between $1,000 and $1,200 a pound. I don’t know if that will hold until harvest, but that’s what they were paying last month.” 

Noel added, “Now they can only sell smokable flower that is grown in the state of Massachusetts, so that’s artificially driving the price up. I don’t know how long that will last, because that violates interstate commerce. I’m sure that’s going to get overturned, but we’re hoping we get at least a year or two with that law.”

A positive factor affecting her state’s hemp industry, Noel said, is that after years of governmental disconnect, the state’s Cannabis Control Commission and the Massachusetts Department of Agricultural Resources “are finally talking to each other,” and are coordinating their regulations regarding hemp and hemp-derived products in the state.

“So there will be a demand [for hemp],” she noted, “and right now I think [local hemp cultivators] are all optimistic, because [there are] so few of us. I was expecting more growers to jump back into the market, but I think that since so many got burned so badly, I don’t think they were willing to risk the money again.”

Choosing Cannabinoids over Industrial Hemp

In Colorado, Ryan Loflin, owner of Rocky Mountain Hemp, is taking a different approach this season. Since its start in 2013, the company, with its 900 acre farm, has been concentrating on developing seed varieties for grain and fiber production. However, his operation is not growing hemp fiber in 2022. “This year we’re doing a substantial CBG grow for a company in Utah,” Loflin told Hemp Benchmarks. 

The 300 acre contract, he added, paid well and also fills in the current financial gaps created by the lack of hemp fiber contracts. “Mainly because there’s not a lot of processing out there, that’s the bottleneck of the industry,” he said. “Each state has to have regional processing. I don’t mean one for every state. We need at least three in Colorado for decortication, and those facilities need to put out contracts like the sunflower industry and other commodities. Farmers are not going to grow [hemp] to just grow it anymore.”

Loflin also noted that the continuing rise of corn and other mainstream grain prices is steering growers away from hemp. “Nobody is going to gamble with that,” he said. “That’s guaranteed money, so it’s not even an option for hemp and the industry. We really got to get the processing in … . We’ve got to focus on regional processing for all levels, not just the decortication.”

Laying the Groundwork for an Expanded Fiber Hemp Industry

David Camby is a partner at BioPhil Natural Fibers, a Pennsylvania-based company that produces bast fiber, hemp hurd, and hemp powder. He noted that, despite rising production costs for fuel, fertilizers, and other agricultural essentials, the demand for hemp hurd and fiber remains strong. 

“I get calls everyday looking for bales of hemp,” he said. “I got 4,000 bales of hemp in surplus, not to mention what I’ve got coming off the field this year. People we’re dealing with, they’re wanting 100,000 pounds of fiber a month. For the past three years, your car manufacturers, your textiles, your composites, they’re wanting to know how consistent, how much of a supply you have. For the past couple of years I’ve been overgrowing, just to store these bales.” He is also collaborating with hemp fiber companies in Texas and Minnesota on hemp fiber-related equipment designed by BioPhil.

In Colorado, Ryan Loflin expects hemp fiber to find its place as a mainstream commodity in the near future, once certain obstacles are overcome. “I believe as a producer that other farmers would be more willing to grow hemp fiber cultivars for several reasons – mainly it’s just simpler,” he said. “The harvesting is … a challenge right now. The equipment’s not exactly dialed in; it’s a really hard crop to harvest, as far as the fiber.”

Loflin does not expect the U.S. hemp fiber market to really take off until production prices – as well as mainstream crop prices – come down to earth. “Right now, nobody wants to pay, either,” he noted. “The people that want fiber crops produced, well they literally have a hard time paying $600 to $700 dollars an acre, which is the bottom of the barrel for a farmer. Right now [mainstream] commodities are making more than that, so it doesn’t pencil out.”

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Hemp Industries Association Midwest Hemp Council National Hemp Association