What Happened, and Where Do We Go From Here?
Where do I start? Many questions may come to mind for a lot of you disgruntled hemp or cannabis farmers reading this, but I intend to lay out my perspective on what jostled the market a while ago. For those of you reading this and not wanting to accept the truth, I am writing this to digest and forewarn those in or about to enter the hemp industry. The takeaway? It’s risky, and you should have a solid plan and know the facts before you enter in the market. What I’m writing will dispel any myths you may hear or not hear in our business, and no, the numbers I am presenting are not fictitious, they are coming from a wholesale perspective as I am putting the story through my own sunglasses here in Kentucky. Not Oregon, Washington State, Michigan, or Texas. Take everything I say with a grain of salt, I think we have seen the worst that has come.
It comes as no surprise that 2020 and 2021 were filled with adjustments for many within the cannabis and hemp industries. For a lot of us, the signs started to show at the end of 2019 that our great industry we helped cultivate from the ground up back in 2014 was becoming a little too big for our own boots. The golden years of our promising industry in 2016, 2017, and 2018 showed great growth and commitment on the end of our small business backbone that started this great industry.
2019 came, and corporate greed and governance took over our industry and small family farms. Many small companies that were poised to make it, felt that the only way to compete is to overspend their means of production and resources. Overfilling contracts that could not be kept, and empty commitments based on broken promises to family farmers and greenhouses. Many overzealous businessmen that put projections over realistic growth, many of which did not have any hands-on experience in commercial farming or the hemp industry. When the bubble popped, experienced farmers and business owners saw a little of it coming, but even couldn’t fathom $15/lb. pricing (on a low-end projection, I heard some gullible farmers actually think they were going to get $50/lb. on a high end) going to less than $2/lb. for their crop. That was obviously sped up to that price point (going from $10, $8, $6) when Covid-19 peaked its’ ugly head around the corner in March of 2020.
When the pandemic happened, a lot of us in the industry that had been established didn’t have any good answers to struggling farmers and business owners. Add in the fact that retail stores were closed (or modified service) until June, it was a really dark time for all of us. For other people in other industries complaining on how tough it was for them, that was such an overstatement compared to those that were in the shoes of a hemp farmer or processor during this time. Investors were pulling out their money from a lot of small processors that had contracts and commitments for farmers under contract from 2019, it was such a mess. Luckily, the bond and kinship from all this that transpired made connections happen between farmers and out-of-state buyers that were at least offering split agreements or sales from the fallout to get something out of their crop.
There were many, how you say, opportunists that also entered the market when this happened, and some did get taken advantage of. It should go without saying that anything that sounds too good to be true in business, 99% of the time, is. The same can be said for those promising $15/lb. returns on their crop, that was never realistic when Isolate Kilos were going below $1,000/kg wholesale. Any references that these buyers COULDN’T give were also not merited because of the desperation at play. A lot of them were sorted out by the end of 2020. A lot of that biomass did find a home by that time, but the prices were still not near to cover the cost of growing the crop.
There is a lot to talk about for regulations that are pending or will pass, but a lot of what we went by, and still go by today, is based off the 2018 US Hemp Farm Bill passed by our own Senator Mitch McConnell. We have been constantly advocating with his office, as well as Rand Paul’s office, and congressmen Andy Barr and Tom Massie’s offices to relay our advocacy to what needs to happen federally for this crop to fully develop and succeed. There have been claims that smokeable or consumable floral material is grey area along with Delta-8 THC or Delta-10 THC. According to the law at hand, federally both are legal, and we intend to promote that as the Kentucky Hemp Association. We intend to protect ALL businesses in and out of the state of Kentucky by any means possible. Small business owners should not be punished for the current legalities based on existing laws. In our state, what has been an effective means to being profitable in the hemp industry has been to sell into the floral material markets by way of greenhouse or indoor flower cultivation. Our state, currently, does not recognize this as legal to do in our own state, but explicitly says we can sell into other states pending it passing for THC requirements (isn’t that a funny take on legality?). So, farmers have figured out how to do so and remain profitable by legally doing this in other states.
That is one example of our ingenuity in Kentucky, but I think the motto of the industry now is to produce quality over quantity to really make it and be sustainable. Gone are the days of 150-acre hemp grows, I see it really mirroring the tobacco model of growth in the southeast to keep this industry going and making way for a small farmer to still make it in the industry. For those of you not aware of this, tobacco companies set a quota to fill by allotments in the southeast. There is a cap on how much you can grow, and if you overproduce there is a great chance that the excess crop will not be bought. That is the way it must go for this to remain successful, and eliminate the corporate farming, and major greed, from the industry. The carved-out niche of greenhouse or indoor-grown flower is also going to be apparent as we go forward. That is a great way for a small family to net $200-500/lb. for wholesale material in the future, possibly more if we can recognize that smokeable hemp should be recognized across 50 states and out of the country.
As we near the end of 2021 and approach harvest, I know that many lessons have been learned by those that were in the hemp industry, and still are. Maybe a lot of people still waiting in the wings for their turn to give it a try. I have nothing but the utmost respect for those still in the game and trying to still blaze the trail to pioneer this industry. For those that may be waiting in the wings, good luck competing with those who have lived the ups and downs in the industry, together. The fiber industry is a great example of this, and its’ development will probably surpass any outdoor field cultivation for future grows. The row crop model is still alive and well for growing fiber and grain from hemp, but still very much under development. Once infrastructure and buying demands are figured out in the coming 2-3 years, we will be a leader in the world for this niche of hemp growth, especially as we continually adopt sustainable building and clothing materials from God’s Country.
The ones still hempin’ have a motto:”hempin’ ain’t easy.” I foresee good days ahead this fall and into 2022. Hopefully, hemp’s cousin, will see it’s way into legal farms in our state and across the southeast soon. When that happens, watch out. Our farmers will grow the best in the country, and I can’t wait to boast about their future successes. Join our cause at KYHA. We are working with the MJBA and other associations across the country and the world to figure this thing out. I’m optimistic as ever, and so should the grower or business leader reading this. Be the one to help change this industry for the better, and help us out in any way you can.
Mitchell ‘Tate’ Hall is the former President of the Kentucky Hemp Association, KYHA (formerly Kentucky Hemp Industries Association, KYHIA).