Guide to CBD attended the North Carolina Cooperative Extension’s Industrial Hemp Production Workshop on February 28, 2019, at the Chatham County Agriculture & Conference Center in Pittsboro, NC. What we learned there about the present and future of industrial hemp in North Carolina was a fascinating look at an emerging industry. “NC Hemp Farmers Wanted” was the overall message of the evening.
As a stronghold for tobacco and cotton for centuries, North Carolina’s farmers have been searching for alternative crops in recent decades, as cotton production moves overseas and tobacco use has plummeted. While soybeans and corn remain strong, and North Carolina’s peanuts and sweet potatoes are a mainstay, many agricultural experts have been hoping that industrial hemp in North Carolina will provide a lifeline to struggling family farmers.
It was in that interest that the NC Cooperative Extension organized the Industrial Hemp Production Workshop for farmers and agricultural investors in the region. The workshop was no Silicon Valley hype event or utopian TED Talk. No snake oil was sold to farmers. The presenters, from the NC Industrial Hemp Association, the NC Department of Agriculture & Consumer Services, and NC State University, gave straightforward, sometimes dry, but absolutely essential information on everything we know about growing industrial hemp in North Carolina.
Renewed Frontier: Growing Hemp in NC
Farmers grew hemp in North Carolina from the Colonial era right up until the 1940s, when WWII created an unprecedented need for hemp fibers for textiles, rope, and other war needs. But the Controlled Substances Act of 1970 put a complete halt to legitimate hemp cultivation in the US by making cannabis a Schedule 1 drug – and industrial hemp with it. Growing hemp in NC, like everywhere else in the nation, became strictly illegal.
The 2014 Farm Bill, however, opened up some much-needed leeway, allowing states to set up industrial hemp cultivation in a tightly regulated research capacity, led by state agriculture departments and research institutions. In 2016, North Carolina approved an Industrial Hemp Pilot Program, which would allow a select few farmers with NC hemp permits to begin planting industrial hemp under the oversight of the NC Industrial Hemp Commission, the NC Department of Agriculture & Consumer Products, NC State University, and NC A&T University.
NC State University launched extensive research in 2017, the first year cultivation was legalized. As researchers Keith Edmisten, Angela Post, Leonora Stefanile, and Lindsey Thiessen explained to the workshop, the first year was anything but smooth. Seeds and clones could only come from states where hemp had been legalized already, like Colorado, and had to go through a slow and complex vetting process. It entailed moving a controlled substance across state lines, after all. Delays in the legislature kept the research farm from being able to obtain clones until late in the season, so many plants ended up root-bound and non-viable.
Plus, no one really had any idea how to grow industrial hemp in North Carolina. After all, no one has done it on a commercial level for generations. Consultants from Colorado and Massachusetts, brought in by the NC Industrial Hemp Commission and the Department of Agriculture, were of little help; operations in those states are largely concentrated on greenhouse and growhouse production of marijuana, not field cultivation of industrial hemp, and their advice had precious little applicability.
Edmisten wryly noted in his presentation that, though boosters claimed that hemp is a crop that practically grows itself, with very little effort from the farmer, “Hemp does have pests. Hemp does need water. Hemp does need fertilizer.” In other words, hemp is a plant, subject to all of the dangers of any plant – not a miracle crop.
As researchers from NC State explained, all of NCSU’s research in the first year was centered on fiber and seed cultivation, because that’s what researchers thought would be the dominant crop – CBD wasn’t even on their radar. It quickly became apparent, though, that the market was gravitating toward CBD cultivation, which made it necessary for researchers to revise their plans for the second year.
To put it very simply, then, growing hemp in NC was a centuries-long tradition, broken up by around 60 years of prohibition – just enough time to wipe out all living memory of how to do it. Now that the 2018 Farm Bill has made industrial hemp officially legal at the federal level, farmers are starting from scratch, and the biggest market for hemp – CBD – has exactly one growing season of experience to draw on.
Meanwhile, industrial hemp farmers in NC have to work past a long-standing stigma against cannabis sativa. In his presentation, Blake Butler, director of the NC Industrial Hemp Association, told an amusing story of a rogue sheriff – “Every good hemp story begins with a rogue sheriff” – who was regularly ripping CBD products off the shelf of a health food store. When Butler called him to provide some much-needed education, the sheriff let him know in no uncertain terms that he knew what that seven-fingered leaf meant, and there was no place for marijuana in his county.
All in all, the first two years have been an educational experience – for farmers, for researchers, and especially for law enforcement, who have had to learn to check permits and verify with NC Ag before busting anyone growing hemp in NC. Butler himself has led many workshops to help NC law enforcement officials to understand the difference between industrial hemp and marijuana, even if they are identical in appearance. For NC farmers, though, there’s a big difference – and a big opportunity.
Getting Down to Numbers: The Reality of Growing Industrial Hemp in North Carolina
The most eye-opening part of the workshop is realizing the scope of growing hemp: the complicated maze of regulations farmer have to navigate; the constant negotiations with the land, sun, and rain; and the sheer, plain unknown of growing hemp in North Carolina.
Researchers from NC State laid out the logistics of growing hemp in NC in great detail, and the data might be a bit intimidating for new hemp farmers. An outline of the budget for planting an acre of hemp – clones, fertilizer, and every other non-labor cost – runs around $14,500 per acre. According to NCSU’s research, 1550 plants per acre are optimal for growing hemp in NC; that spacing seems to provide the best balance between plants being too close together, and maximizing how many plants can be grown at a time.
Clone plants alone are, on average, $6.00 each. Angela Post jokingly apologized to any of the suppliers at the workshop who might be charging more, but she seriously warned prospective farmers not to be taken in by seductively low prices. When it comes to hemp clones, she explained, you get what you pay for. She also recommended getting clones from a local supplier, with more assurance that they will be suitable for the NC climate.
It’s when we start to consider return on investment that things really start to look up. According to Post’s research, most CBD companies in 2018 were paying $3.50 per percent of CBD per pound of bud or flower. Since most companies want plants with 10% CBD, that comes to $35 per pound. Ideally, farmers will be able to get 1 lbs. of bud per plant. If a farmer has managed to bring each plant through the season, that means 1550 lbs. of flower, which comes to $54,000 per acre. Since you put $14,500 into planting, your profit is a cool $39,500 per acre.
However, that’s a best-case scenario, and real life doesn’t do best-case scenarios. First of all, no farm is going to see 1550 plants make it through the entire season. 2018 was a particularly wet year, and farmers saw large losses to fungus, bacteria, and pests. Aside from direct attacks, every NCSU researcher iterated and reiterated the same mantra: “Hemp doesn’t like wet feet.” Considering rainfall in central NC has been steadily rising every year for the past decade, that’s a little worrisome.
The second challenge is the fact that industrial hemp farming in America is at a stage where there is essentially no mechanization. Because hemp farming was illegal at the federal level until just last year, production in the US has been extremely small; there has never been a financial incentive for equipment manufacturers to design and produce specialized equipment for large-scale hemp cultivation. Keith Edmisten’s slideshow included a photo of a machine with the decal “Hemp One.” He took that picture, Edmisten explained, at a trade show. “That looks like a tobacco transplanter,” he said to the salesman. “It is,” the salesman replied; “I just wrote ‘Hemp’ on it.”
That, of course, means that every aspect of growing hemp in NC must be done by hand. Plants must be set out by hand. Beds have to be weeded by hand. Plants are harvested by hand. Edmisten included photos of a fully-grown hemp plant – over six feet tall, with a woody stalk as much as 3 or 4 inches thick, that must be cut by hand. NC State researchers hacked them down with machetes. Then, each bud must be picked off by hand.
Without machines to plant and harvest, industrial hemp cultivation is extremely labor-intensive, an expense many farmers failed to account for. Early reports from states like Colorado and Massachusetts, claiming that hemp basically grows itself, prove more than a little exaggerated. Growing hemp in NC is no easier than growing tobacco, corn, or soybeans, and has challenges all its own.
Thirdly, there are marketplace limitations. CBD companies prefer plants with 10% CBD, but out of the dozen or so varieties NCSU researchers planted, they were only able to produce buds with 7-9% at best. Some were as low as 2.5%. That’s a big difference from 10%. CBD companies will still buy the flowers at a lower rate, but in general, anything under 7% is going to waste. In fact, Phil Wilson, head of the Department of Agriculture’s Plant Industry Division, explicitly mentioned that there are thousands of pounds of hemp from last year still in storage, unsold.
Plus, NC State’s research farms found it very difficult to get 1 lb of bud or flower per plant; their estimates were closer to ¾ of a pound for each of their plants. Post cautioned that those numbers were not set in stone, however; they had just finished processing their harvest from September of 2018. That harvest, for what it’s worth, was also a little premature, as researchers had to rush to save their results from Hurricane Florence.
Navigating the Weird Legal Labyrinth of Industrial Hemp Regulation
Even after farmers growing hemp in NC make it through the gauntlet of Mother Nature, they still have to pass the hurdles of regulation. The federal government is very specific in the 2018 Farm Bill: only industrial hemp with less than 0.3% THC content is legal. But it’s the states that are left to actually regulate their industry as they see fit. While states may be able to set even tighter standards (a state could decide, for instance, that only 0.1% THC is allowable), they must adhere to the 0.3% limit.
That’s where the NC Industrial Hemp Commission and the Department of Agriculture come in. The NC Industrial Hemp Commission sets rules for NC hemp farmers to keep within federal law, and the Department of Agriculture tests all hemp farms. It’s their job to destroy any plants that come back too high in THC.
By Wilson’s estimation, around 10% of industrial hemp in North Carolina had to be destroyed in 2018 because of a THC count over the limit. That doesn’t mean that 10% of each farmer’s crop had to be destroyed, obviously; it means that if a field tests high, that field is destroyed. Wilson’s slideshow included an ominous photo of an enormous bonfire – an entire field ripped up, heaped into a pile, and burned by NC Ag officials.
“I hate having to do this,” Wilson said soberly. He noted that, while many critics imagined the Department of Agriculture running around the state like DEA agents seeking to bust industrial hemp farmers, “That was $50,000 worth of somebody’s livelihood.” The disappointment and regret in his voice was palpable.
In her comments, Post highlighted the arbitrariness – and ultimate absurdity – of the federal limit. “They only look at the first digit after the point,” she explained, “so 0.39% is fine, but 0.4% has to be destroyed.” In their variety testing, NCSU found many varieties running “hot” – with THC counts closely approaching that limit, but not quite going over – and several that would test high no matter what conditions they were grown in.
And conditions matter. As Edmisten noted, the main factor in raising the THC count appears to be stress on the plant. Hemp plants under stress produce THC. And what stresses hemp plants? Too little water. Too much water. Insects. Fungus. Bacteria. (Lindsey Thiessen’s presentation on diseases that afflict industrial hemp was eye-opening as to the many factors that can stress hemp in North Carolina.)
Wilson had clear and specific advice to farmers. The Department of Agriculture, he stressed, wants farmers growing hemp in NC to succeed, and there are still more NC hemp farmers wanted. After all, the state makes tax money off of hemp, and has invested many resources in getting a new, high-potential crop into the market – just not tax money. “Have you heard of an unfunded mandate?” he asked rhetorically. “That’s what they gave me.” Wilson’s office handles industrial hemp regulation without a line item in the state budget; the fees paid by farmers for licensing is the sole source of their funding, so encouraging hemp farming is in everyone’s best interest. Burning fields is not.
As soon as your plants start flowering, Wilson warned farmers, call us to do your testing. Hemp plants produce THC throughout the season as they develop, so the earlier farmers test, the less likely they are to get a high THC count. The Department of Agriculture sends out a representative as soon as possible (Wilson explained that there were around 9 field agents on the ground to cover the entire state), takes 3-4 samples per field, and sends them to an independent lab contracted by the state.
If the samples come back over 0.4% (an average of the 3-4 samples), agents come out a second time for a confirmation sample, which is processed at the Department of Agriculture’s lab. As Wilson explained, the NC Ag lab doesn’t have the capacity to process all of the samples, but they prefer to do their own confirmation testing. Unfortunately, if the first test comes back high, that’s not a good sign for the second – THC counts only increase as the season progresses.
“Test early,” Wilson said, several times. The Department of Agriculture is not in business to burn perfectly good tax revenue because of a fraction of a percent of THC, but that’s the law.
The Message: NC Hemp Farmers Wanted
“This is not cotton, corn, or soybeans,” Phil Wilson reminded the farmers and investors massed in the Chatham County Center. In other words, no one quite knows what they’re doing, not exactly, and it will take a few more years before farmers really have a handle on best practices – much less on the marketplace. NCSU’s research has set a baseline, but several more years of actual trial and error will be necessary before anyone can make reliable recommendations for varieties, fertilizers, growing conditions, and pest control. In fact, not a single pesticide has yet been officially approved for use on industrial hemp.
Naive farmers approach industrial hemp thinking they’re going to make a killing, Blake Butler explained, but instead of looking at hemp with dollar signs in their eyes, he encourages hemp farmers to think of themselves as heirloom tomato growers. Understand that you have a niche product, Butler reminded farmers; have a buyer lined up before you start tilling. Know what you’re planting and why.
Farmers should also do their research when looking for a processor. According to Phil Wilson, there are approximately as many NC hemp processors as there are hemp farmers; nearly 400 are listed by the NCDA&CS. However, Wilson warned farmers that just being registered among NC hemp processors is no guarantee to farmers: “You don’t know that they didn’t just covert their meth lab to a CBD lab.”
With the advances in the federal 2018 Farm Bill, there is new transparency and ease in hemp farming. NC hemp farmers wanted more opportunity, and with the new bill, they have it – industrial hemp has been legalized at the federal level. NC Ag is expecting a flood of new applicants, and the number of licensed hemp farmers is growing exponentially every year – just short of 150 in the first year of the pilot program, more than 300 the second year, and more than 600 for 2019. Handing out the hemp growing license, North Carolina’s state government is very much invested.
At this time, according to the Department of Agriculture, more than 7000 acres have been approved to cultivate. However, in 2018 only a little more than 200 acres were actually planted. There is enormous potential still to be realized, as all of the presenters noted, but they were also intent that farmers know the risk. Hemp in North Carolina is still in the trial phase, and as much as the NC Department of Agriculture, the NC Industrial Hemp Association, NC State University, and NC A&T would like to see industrial hemp take off in the state, there is still a lot of building to be done. When it comes to growing hemp in NC, everyone’s a pioneer.
To get a hemp growing license, North Carolina farmers must have a well-established history of farm income (a Schedule F tax return is a start). No one with a drug conviction can apply, nor can anyone with a felony in the last 10 years. Licensing costs are reasonable: $250 application fee for less than 50 acres, $500 for more than 50 acres, and an additional fee of $2 per acre or 1000 square feet of greenhouse. To apply for an industrial hemp growing license, North Carolina farmers should contact the Department of Agriculture & Consumer Services.