These first few years in the legal hemp market have held a jumble of successes, surprises and learning curves. Two of the biggest obstacles that growers have faced are the financial challenges of building a business around a relatively new crop and the complexities of cultivating hemp.
Hemp Grower reached out to five hemp farmers with varied backgrounds, cultivation methods and goals to ask about their experiences during their first years growing hemp and what they’ve learned about both running hemp businesses and hemp production. Part I of this special two-part feature focuses on the top business lessons they’ve learned.
Tips from …
Pete Shafer, Co-Owner, Nanticoke Gardens/Nanticoke Hemp, Endicott, N.Y.
As co-owners of Nanticoke Gardens, Pete and Chip Shafer have cultivated a reputation for providing premium ornamental bedding plants. In 2017, the brothers expanded into hemp production as part of New York’s Industrial Hemp Agricultural Research Pilot Program, made possible by the Agricultural Act of 2014 (the 2014 Farm Bill).
The Shafers’ thriving bedding plant business shares the property with a 65,000-square-foot, state-of-the-art, gutter-connected greenhouse built from the ground up for hemp production. In 2020, the Shafers expanded their business to include processing, and Nanticoke Hemp was born, offering a variety of hemp-derived cannabidiol (CBD) products. Pete Shafer offers lessons from Nanticoke’s first four seasons of industrial hemp production:
1. Focus on your strengths.
On the business side of things, Pete and Chip concentrated on their expertise and refined their process for scaling industrial hemp propagation. In 2019 and 2020, Nanticoke produced more than 1 million hemp starter plants for farmers each year. “Focus on what you’re good at,” Shafer advises. “Then, dial in there.”
2. Have a post-harvest plan.
Shafer says many growers planted hemp without any post-harvest plan. Processing infrastructure and biomass buyers weren’t there yet, so oversupply and plummeting prices ensued.
“You really have to have a plan for what’s going to happen with the crop after harvest because it matters. That biomass degrades over time,” Shafer says. “You have to have a plan for processing, and then you have to have a plan for after processing.” That plan may include having a buyer in place.
Tips from …
Jim Rexroth, Partner, Rexroth Farms, Windsor, Pa.
From its beginnings as a vegetable farm, Rexroth Farms has evolved into a large-scale commercial farming operation. “In the early years, my father grew anything in our region that made sense,” says Jim Rexroth. “He did what had margin. He did whatever paid the bills and whatever bought more farms.” Current crops include corn, soybeans and wheat.
When the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) opened the door for U.S. hemp cultivation, Rexroth was willing to explore it. “We like to be on the cutting edge. We’re constantly looking for innovative new things with a little better return, and that led us to the hemp discussion,” he says.
As the state’s fourth-largest hemp producer in 2019, Rexroth grew 255 acres for a private investor who contracted with several farmers for a total of nearly 1,000 acres of high-fiber hemp for seed production. But not an acre of Rexroth-controlled land grew hemp in 2020 because of the mayhem he saw in the unprepared industry players in his area. Rexroth offers a lesson from this experience:
3. Exercise caution.
Rexroth was paid for his 2019 hemp contracts, but many farmers he knows were not. In the end, Rexroth says his contractor suffered devastating losses during the year as seed prices in his area of Pennsylvania fell to the same price per pound as baled hemp.
He says county extension agents and farmers were as ready as possible, but processors and the market as a whole were not: Even high-CBD hemp got bulldozed into windrows in Rexroth’s area, and high-fiber hemp rotted on the local processing facility’s loading docks.
“It was just a lesson in caution,” Rexroth says. “How far in front of something do you want to be before it’s the bleeding edge?” While he doesn’t rule out growing hemp again, he says that won’t happen until the market stabilizes in his area—and the margins exceed other crops.
Tips from …
Colin Clark, Owner, Never Winter Botanicals, Fort Collins, Colo.
Colin Clark brought nearly two decades of hydroponic greenhouse experience to the hemp industry. In the past, he gained attention in controlled-environment agriculture circles for hydroponic hops and his Colorado State University (CSU) research. When CSU began researching hemp, Clark “never looked back.”
Now in his third season of hemp cultivation, Clark operates a 5,000-square-foot hydroponic greenhouse focused on craft cultivation of smokable hemp flower. He offers the business lessons he’s learned cultivating hydro hemp:
4. Find your silver lining.
Clark says kilograms of CBD isolate sold for $7,000 when he started growing hemp. “Now they’re around $1,000,” he adds. Thousands of acres were rushed into production and created staggering biomass excess, and the outdoor and CBD isolate markets crashed.
Despite a few states moving to ban smokable hemp, Clark sees a bright future in the steadily growing smokable craft hemp market, which he’s watched accelerate over the last six months. The growing market gives small farmers, who spend time and labor creating the highest-quality craft hemp, an opportunity, says Clark.
5. Combine the best of big ag and cannabis.
Clark notes that boutique hemp growers invest labor and attention to detail equal to what high-THC cannabis growers provide. But, at press time, hemp flower was selling for about $300 to $500 per pound compared to $2,000 per pound for cannabis flower in his market, he says. Given tight profit margins, efficiencies are key to success.
“We take concepts of efficiency and large-scale production in hydroponics and irrigation … and all those things that we can take from the large-scale growers to help us save money,” he says.
Tips from …
Ben and Jane Lanza, Owners, Family Tree LLC, Sheldon, Vt.
Connections to Vermont’s artisanal traditions run deep at Family Tree. Ben and Jane Lanza grow craft hemp on the farm where Ben grew up. In addition to an outdoor grow started in 2019, they also grow indoors in a 450-square-foot, all-LED growing environment launched in 2020.
A “family of scientists and farmers,” the Lanzas have backgrounds in mechanical engineering, medicine and medicinal cannabis cultivation. Hand-crafted products include full-spectrum organic CBD oil from their outdoor crop and premium flower from the indoor grow. The Lanzas share the following lessons they’ve learned:
6. Know what value you bring the industry.
As experienced growers, the Lanzas felt ready for outdoor hemp when the 2018 Farm Bill opened up production. But their indoor cannabis knowledge didn’t translate seamlessly. “I think that any cannabis cultivator that has experienced indoor and also … outdoor [growing] would say that they can be two entirely different beasts,” Ben Lanza says.
The Lanzas approached their first outdoor grow with ambitious goals for wholesale volume. But in the process, they realized their value lies elsewhere.
“That’s not where we succeed as cultivators. Where we succeed is by making a smaller number of absolutely beautiful plants, humbly speaking,” Ben Lanza says. “… What I bring as far as process from my engineering and manufacturing background, that really carries over well to indoor cultivation.”
7. Expect positive market adjustments.
Ben Lanza doesn’t believe many people have seen true craft hemp yet. “The quality level of the indoor-grown flower is different [than hemp grown outdoors]; it is a different product,” he says.
As more states legalize adult-use cannabis, he believes market acceptance and permission for higher prices tied to higher quality will come for hemp. “The market will continue to show an increased acceptance for high value and higher price for indoor or greenhouse or very conscientiously crafted boutique flower,” he says.
Tips from …
Bill Corbin, Founder, Corbin Sciences, Springfield, Tenn.
A third-generation tobacco farmer, Bill Corbin grew his first hemp contract crop in 2015 under Tennessee’s Industrial Hemp Agricultural Pilot Program. Over the past six seasons, he’s watched the number of hemp farmers in the state grow to thousands.
In 2018, Corbin grew 45 outdoor acres of hemp and 3 acres in a greenhouse. The next year, he grew 42 acres of hemp and launched a pre-roll line, Billy Hemp Smokes. But market instability in 2020 drove Corbin’s production steadily lower. The final tally that year was 4 outdoor acres of hemp and 1 greenhouse acre.
Now weathering what he calls a “catastrophic market collapse,” Corbin is concentrating on smokable hemp. He feels it’s the most viable market left for non-industrial-scale farmers. “We are building out a true indoor grow right now to try to target that very, very high-end dispensary market,” he says. He offers these hard-earned lessons from the past six seasons:
8. Don’t burn your bridges.
Corbin grew his last tobacco crop in 2018. Looking back, he regrets both walking away from that part of his family heritage and losing the security that annual tobacco contracts could have provided during the hemp market’s growing pains.
Corbin says he’s still owed hundreds of thousands of dollars from hemp entities that failed to honor growing contracts. He urges new hemp growers to start small, keep another source of income, and research the hemp market and contractors thoroughly—and keep bridges intact.
9. Scale production to your labor force.
Corbin emphasizes that, like tobacco, hemp is a labor-intensive crop. “Anytime you’re going to do something that has so much manual labor involved, you need a solid labor force,” he says.
His regular tobacco crew, working through the Department of Labor’s H-2A Temporary Agricultural Workers visa program, made the transition to hemp along with him.
He repurposed existing tobacco equipment with some minor adjustments, but manual labor involved with the hemp crop is still intense. He advises farmers to secure a reliable workforce, then plan production accordingly.
10. Don’t lose faith in hemp.
For all the hard knocks Corbin experienced, he’s still enthusiastic about hemp and what smaller farmers can accomplish. Along with boutique flower, he’s excited about construction-grade hemp products, such as structural timbers, particleboard and hempcrete.
Corbin believes that industrial-scale farmers and machinery will soon dominate production for some hemp products, such as tincture-destined CBD. But he says the plant still offers hope for farms of all sizes. “The one thing about this plant is that from top bud to rootstock, there is value. There is something in that whole plant.”
Along with the above, all the growers interviewed for this piece shared this final lesson in some form:
Reach out to others.
Learning to ask for advice and guidance from others can be challenging for some new farmers. But these growers say the hemp community is always ready to help.
“One thing I’ve found is that anybody who’s already in this business isn’t afraid to help somebody else who’s interested in getting into it,” Pete Shafer says. “Don’t hesitate to pick up the phone and give somebody a call that was already in this space and ask their advice.”