By Dan Barkin
In spring 2017, North Carolina licensed its first 23 hemp farmers. Cultivation of the newly legal crop was underway; seed was in the ground. Tom Melton, chairman of the N.C. Industrial Hemp Commission, expressed hope this marked the beginning of a success story.
Two years in, it is too early to say whether hemp will be a success. But it is a phenomenon.
In just the first half of this year, the number of hemp farmers has more than doubled to nearly 1,200. So has acreage (now more than 14,000), greenhouse space (5.4 million square feet) and leaf processors (nearly 700).
“It’s fun to watch, and it’s also a little frustrating and unnerving at times, “ says Melton, who just retired as deputy director of N.C. State Extension. “Because nobody really knows what they’re doing. It’s really growing faster than knowledge.”
We are in the early stages of hemp fever because the plant is in hot demand as raw material for CBD products. CBD — cannabidiol — is a compound some think can be good for arthritis pain, insomnia, high cholesterol, anxiety or you name it.
But the science is unsettled, and skittish regulators are trying to come up with CBD rules. Law enforcement is also nervous. Hemp is marijuana’s non-stoner twin and sheriffs want test kits.
The excitement is about money, potentially billions. In 2014, Congress let states set up pilot programs to grow hemp, something that had long been illegal because of its ridiculous association with marijuana. The federal 2018 Farm Bill further loosened restrictions.
Thousands of farmers have jumped in from coast to coast, as have CBD processors ranging from mom and pop operations to large factories such as one in Wilson owned by Criticality LLC. It will employ more than 80 in a renovated tobacco warehouse.
The Brightfield Group research firm predicts the market for hemp-derived products could be $22 billion by 2022. Farmers are interested in taking their cut; hemp can in some cases net $10,000 per acre. “You’re looking at $300 to $400 for corn, $500 to $600 for beans. … Tobacco, a thousand would be the top,” Melton says. “So you’re looking at 10 times what tobacco would provide you there.”
But profits are in proportion to risks. If a crop tests higher than 0.3% for THC — the ingredient that creates marijuana’s psychological effect — it has to be destroyed. That happens 10% of the time, according to Phil Wilson, director of the N.C. Department of Agriculture and Consumer Services’ plant industry division.
Melton gets calls from farmers in financial distress wanting to know how to get into hemp. “My advice to them is, ‘Don’t do it.’” A lot of factors can make a crop test higher than 0.3%, and if you can’t afford to plow it up, you shouldn’t plant it.
The CBD-hemp phenomenon is really two stories.
The CBD story is in cities and suburbs where new stores are popping up such as Your CBD Store in the Triangle. The business is co-owned by Michael Huneycutt, who suffered from back pain that was so intense he couldn’t stand up until he used CBD. A believer, he looked into franchises and now has shops in Clayton and Apex.
The hemp story is unfolding in North Carolina’s struggling countryside, where textile and furniture plant shutdowns have taken out hundreds of jobs at a time for decades. The withering of the tobacco industry was quieter but also profound.
In the late 1970s, nearly 40,000 N.C. farmers grew tobacco on more than 420,000 acres. Today, there are about 1,300 farmers growing on about 170,000 acres, the result of anti-smoking campaigns, quota buyouts and foreign competition.
The demise of textiles, furniture and tobacco has hollowed out rural counties, and it hasn’t hit bottom. In the next decade, forecasts project North Carolina’s population will grow by a million, mostly in and around Charlotte, Greensboro and Raleigh-Durham, and in retirement destinations on the coast and in the mountains. A third of the state’s 100 counties will most likely continue losing population or see no growth.
That is why so much hope is bound up in the new crop.
Whether hemp can be a game changer depends on people like Miguel Martin, CEO of CBD manufacturer Reliva LLC, based in Natick, Mass., whose products are in 5,000 convenience stores in 28 states. Martin decides where to buy his company’s raw material. Today, most of it comes from Oregon and Kentucky, but he describes North Carolina as up-and-coming.
“Most of the farmers that we come in contact with, particularly in the Southeast, are third- and fourth-generation tobacco farmers,” Martin says. “They think this is going to save them.”
Meanwhile, Wilson, at the ag department, has been shuffling around his folks in order to deal with the relentless surge in license applications and requests for inspections. Farmers literally email pictures to the department to let it know their plants are flowering and to request an inspector to show up for a checkup. Wilson says the new state budget adds four more inspectors.
North Carolina, which spent more than $400 million in economic development tax incentives last year, can certainly afford a few more bucks for hemp.
You can each Dan at firstname.lastname@example.org