Sunday, May 26, 2024

Root Bioscience puts hopes in hemp basket

In Garrett Perdue’s estimation, a lot of Tar Heel agriculture’s future is in a little bottle that could contain old-fashioned eardrops, except for its $99.99 price. It’s hemp oil. “Cannabis,” he says, “contains over 120 cannabinoids that are useful in health and wellness products” to treat pain, anxiety and inflammation. At less than two years of age, his Root Bioscience Inc. processes the chemical compounds for retail, wholesale and bulk customers nationwide at its headquarters in Morrisville near Raleigh-Durham International Airport. Those unfamiliar with Perdue’s terminology would recognize the five-leaf plant depicted on Root’s bottles as marijuana.

Federal law changes in 2014 and 2018 have opened the floodgates for industrial hemp, a new industry in North Carolina potentially worth billions of dollars a year. Valuable in drugs, cosmetics, nutritional supplements, fiber and other purposes, the nationwide market is projected at more than $22 billion annually by 2022. North Carolina has the fifth-largest acreage in the nation, says Perdue, 44, who is the son of former Gov. Beverly Perdue.

Root Bioscience and Hobgood-based Criticality LLC are among the hemp industry’s early leaders. Criticality has converted a former tobacco warehouse in Wilson, the state’s one-time tobacco-market capital, to process industrial hemp.

[media-credit name=”Business North Carolina” align=”alignleft” width=”250″][/media-credit]

The cannabis rush is fraught with possibilities but also economic uncertainty. “We’ve seen explosive interest,” says N.C. Department of Agriculture and Consumer Services spokeswoman Andrea Ashby. Licensed growers more than doubled in the last year to about 700, adds Phil Wilson, director of the department’s plant industry division. Acreage also doubled to about 8,600 and the rush has fostered a fivefold jump in greenhouse and other inside production to more than 3.2 million square feet.

The ag department has a full-time employee devoted to processing license applications, and the Asheville-based N.C. Industrial Hemp Association, whose members include most growers and processors, is swamped with inquiries. “We’re getting 50 to 75 calls a day,” says Blake Butler, executive director. “There’s tremendous interest in the farming community if North Carolina can apply some of the same principles and techniques we used to become great in tobacco to industrial hemp.”

After federal law cleared production, state legislators in 2015 established an Industrial Hemp Commission to regulate and license growers and processors like Criticality and Root. Since then, more than 400 processors have registered, from Lux Botanics LLC in Swannanoa and Sugarleaf Labs LLC in Conover — its offerings include extracts for humans and pet products — to Abaca Labs Inc. in Wilmington. Smaller concerns such as coffee shops and breweries also have signed on.

Criticality recently opened the 55,000-square-foot Wilson plant with 18 employees and expects to grow to nearly 90 workers in five years, says CEO Brian Moyer. When news of its partnership with Morrisville-based tobacco wholesaler Pyxus International Inc. was disclosed last September, Pyxus shares soared 37% in one day because of investor fervor for cannabis opportunities.

Root, which has about a half-dozen workers, has forged an alliance with Greenfield Agronomics, a hemp-farmers co-op, and established a 65,000-square-foot center in Windsor, says Perdue, who is a graduate of the UNC School of Law. His goal: become one of the Southeast’s largest industrial hemp processors.

[media-credit id=12 align=”alignright” width=”500″][/media-credit]

The ag department’s pilot program is designed to weed out weekend tinkerers and back-porch experimenters. “It’s geared primarily to the farming industry,” Wilson says, open solely to those who can show a history of agricultural income. Such licenses also give legitimate growers legal cover — industrial hemp is indistinguishable from regular marijuana — by allowing law officers to check GPS coordinates to see if a grower is licensed.

The rules could also protect would-be hemp farmers and processors from themselves. “We’re only two years into the program, and we’ve found the money you spend you’re not guaranteed to get back,” Wilson says. “To be honest, the markets are not yet real clear, and a lot of people are gambling.”

Root Bioscience’s Perdue is more blunt. “People are going to get hurt,” he says. “We’ve gone from zero to more than 400 processors in less than 24 months, so yeah, there’re an extreme number of entrants, and their sophistication covers a pretty wide range.”

Industrial hemp is a potential replacement or supplement for tobacco, the state’s flagging traditional cash crop, but little research yet documents a definitive picture. Tobacco returns $3,500 or more per acre, while hemp’s potential is unclear. “The jury’s still out on that,” Butler says. The hemp commission cautions would-be growers that seed is expensive and temperamental, cultivation is exacting and harvesting is difficult. “It’s all over the board,” Wilson says. “One grower recently told me his $10,000 investment grossed $50,000 last year, but that’s just one guy.”

Tar Heel industrial hemp so far goes mainly into oil and extracts such as those processed by Root and Criticality, but Blake says at least three textile companies are exploring using hemp fiber in fabrics. That could fuel new demand. Meanwhile, 10 states now allow all recreational and medical uses of marijuana, and N.C. lawmakers are considering a bill to allow more uses of marijuana for medical purposes. It’s now limited to children with epilepsy.

Some fear the growing rush could produce an oversupply that would send prices plummeting. “We’re telling people to have a realistic plan in place, then maybe scale up eventually,” Butler says. “This is a specialized market. There’s no blueprint. We’re writing the book as we go along.”


Top hemp-producing state
in 2018, with 22,000 acres planted

12 times
Increase of licensed hemp growers in Tennessee in the last year

Don’t touch this
The FDA views cannabidiol in food and dietary supplements as unlawful. Walgreens and other chains still sell the products.

$58 million
Money raised in April by Los Angeles-based Vertical Cos., which has hemp and cannabis interests

U.S. Agriculture Secretary Sonny Perdue warns too much production may sink hemp prices.

source: Hemp Industry Daily

Related Articles