hemp Archives - Green Market Report

Adam JacksonAugust 15, 2022
CVSciences.png?fit=1200%2C624&ssl=1

4min81

CV Sciences, Inc. (OTCQB: CVSI) sales fell in the quarter as demand for hemp-derived products continues to fade. The hemp operator announced its financial results for the quarter ending June 30, 2022.

CV Sciences delivered approximately $4.1 million in total revenue during the period, a loss of 19% versus the same period last year —  missing the Yahoo Finance Average analyst estimate for revenues of $4.88 million.

The company said that the decline is primarily due to lower sales in the retail channel. The total number of units sold during the second quarter also decreased 5% compared to the same time last year. Other reasons for the decline included higher discounts for new product placements and changes in our sales mix to lower priced products.

CV Sciences also reported a second-quarter net loss of $2.7 million versus a $3 million loss sequentially; and a net loss of $3.5 million in the same period last year. The earnings were for a loss of two cents per share, versus a loss of three cents per share in the previous quarter.

“Second quarter results met our expectations and we are encouraged by improvements in the retail channel and very positive consumer response to several new product launches,” said CEO Joseph Dowling.

CV Sciences posted a gross margin of 30.7% for the second quarter versus 44.7% for the second quarter last year.

The operating loss fell to $2.3 million in the second quarter of 2022 versus an operating loss of $3.5 million in the second quarter of last year — mostly due to reductions in its selling, general and administrative expenses. The company posted an adjusted EBITDA loss of $1.8 million versus an adjusted EBITDA loss of $2.4 million in the second quarter last year. Last quarter’s figure was $2.5 million.

The company said it had a total cash balance of $1.1 million at quarter end, versus $1.4 million at year-end.

Despite the revenue loss, CV Sciences reiterated its position as a top-selling hemp extract brand in the natural product retail sales channel, according to SPINS scan data.

The company said it will continue to evaluate strategic review of its business, “including consideration of inbound and outbound merger, sale, acquisition or other options for the Company as a whole or for any business segments.”

“Our new OTC products, along with our Reserve Collection and Wellness Line of products are evidence of our strong pipeline, and demonstrate our ability to develop innovative products that address the need states of our consumers,” Dowling said. “Our flagship PlusCBD brand continues to gain market share in the natural product channel, and, with our portfolio of high-quality, proven products, and favorable regulatory momentum, we believe the Company is positioned for future growth.”


Adam JacksonAugust 1, 2022
hemp.jpg?fit=960%2C638&ssl=1

9min130

Lawmakers in Washington D.C. heard testimonies from a slate of hemp advocates and stakeholders in the industry looking to provide input on the commercial production and processing of the crop.

The hearing, titled, “An Examination of the USDA Hemp Production Program” was held last Thursday by the Subcommittee on Biotechnology, Horticulture, and Research (Committee on Agriculture).

In her opening statement, Chair Stacey Plaskett (D-USVI) said that while markets for hemp products such as fiber, grain and flower are developing, “they are still volatile and uncertain.”

“To support farmers and producers in the ongoing development of this emerging sector, it’s crucial that USDA continue to work to support and expand hemp production and the hemp industry,” she said, adding “As we look towards the next Farm Bill, we can continue to address ongoing issues and provide our farmers, producers, processors and agricultural researchers with the resources they need.”

USDA, FDA Absent

Members of the committee including Jim Baird (R-IN) as well as Rep. Glenn Thompson (R-PA) noted the absence of U.S. Department of Agriculture (USDA) and Food and Drug Administration (FDA) representatives at the hearing, considering the central role the agencies play in hemp regulation.

Kate Greenberg, Commissioner Colorado Department of Agriculture (CDA) said in her remarks that the 2018 Farm Bill burdens hemp producers with high sampling and testing fees, required background checks, and FSA acreage reporting, “which is duplicative in nature because it is already reported to the USDA through state reporting.”

“Hemp has the potential to create new economic opportunities for farmers who are dealing with a changing climate and increasingly arid land,” she said. “Our young farmers and ranchers are constantly seeking new ways to support their bottom line and the environment at the same time. The hemp industry has the potential to advance CDA’s priorities if we listen to our producers and implement sensible regulations.”

Ryan Quarles, Kentucky Department of Agriculture Commissioner (KDA) said that acreage for the crop has fallen since the 2020 growing season because supply has outpaced demand. He also added that the Drug Enforcement Administration (DEA) should not have to play a role in testing and that the THC limit for hemp plants should sit at one percent instead of the current 0.3%.

Marijuana Moment previously reported that House Appropriations Committee leaders released spending legislation asking the USDA to create further guidance on hemp. The legislation also recommended that the USDA coordinate with the DEA and figure out how to manage concerns about enforcement actions for hemp that exceeds the 0.3% THC limit.

At the same time, “it would be appropriate for the new one percent limit to include not only Delta-9 THC, but every other THC isomer which could have an intoxicating effect on consumers,” Quarles said, such as synthetically created Delta-8, Delta-10, Delta-7, HHC, and others.

Consumer products should require a separate legal standard focusing on quantities, he added, not percent concentration by weight.

“Embracing a “total THC” standard instead of a “Delta-9 THC only” standard will establish a threshold which better reflects the material’s true intoxicating potential,” he said. “Congress should consider adopting a separate definition for consumer-ready hemp products. The current law’s definition is focused on the chemical compounds within the hemp plant at the time of its harvest in the field or greenhouse; it is not a useful yardstick for measuring the intoxicating potential of consumer products that are intended for human consumption such as gummies, liquids, vapes, or “smokeables.”

Eric Wang, CEO of Ecofibre who testified on behalf of the U.S. Hemp Roundtable, agreed with the sentiment.

“Bad actors are selling products without appropriate safeguards and misleading consumers with false label claims,” he said. “Further, some struggling farmers and businesses have pivoted to market intoxicating products such as Delta-8 THC, prompting FDA and CDC warnings that they pose significant consumer health and safety risks, particularly for minors.”

CBD Rules

In Wang’s testimony, he expressed that “a clear regulatory pathway for CBD would not only relieve the economic pressure that is leading to this product shift, but would also help ensure products do not contain intoxicating hemp ingredients.”

Industry interests reflect a range of national and regional groups with varied priorities, many times depending on the products they produce and whether the hemp is used for its fiber, grain, or flower.

The Congressional Research Service (CRS) said in a March report that some shared priorities call for relaxing USDA’s regulatory standards, “which are perceived by the hemp industry and some state regulators to be overly restrictive and impractical,” as well as removing the role of the DEA in hemp regulation.

The report also recommended that Congress address industry concerns about the lack of FDA regulations for hemp-derived CBD products in the food supply chain, which it said could become a public safety threat.

“An open question is whether changes to FDA laws and regulations are within the farm bill’s jurisdiction,” the report said.

In a May hearing, FDA Commissioner Robert Califf lamented agency action on CBD and expressed his interest in developing a regulatory path despite the FDA’s limited authorities under current law.

“I don’t think the current authorities we have on the food side or the drug side necessarily give us what we need to have to get the right pathways forward,” Califf told lawmakers. “We’re going to have to come up with something new. I’m very committed to doing that.”

Marcus Grignon, a tribal spokesman and executive director of Hempstead Project Heart, also made recommendations to the panel such as separating the definition and regulation of industrial hemp from cannabinoid or floral hemp, which he says are “easily differentiated with a visual inspection,” and removing the testing and background requirements for hemp grain and fiber producers.

Hemp operations need to be able to interact with banks and insurance companies more freely, he said, as it is difficult to source a bank that will take business accounts connected to hemp production and processing. The sobering lull of federal legalization has deflated industry optimism of companies engaging with banks and credit card companies soon.

He added that the USDA should issue stamps of approval for hemp being shipped between the various jurisdictions in the United States to help mitigate issues related to interstate commerce.

“While these suggestions do not cover all the needed changes, these top three will enhance the American hemp industry, ease burdensome regulations for farmers and create more demand for hemp-made materials,” he said.


Adam JacksonJuly 29, 2022
lab2-2-scaled.jpg?fit=960%2C641&ssl=1

7min151

A team of Missouri researchers have figured out a way to distinguish Delta-8 from Delta-9 using common drug testing methods.

The new discovery comes as testing companies have faced challenges isolating the semi-legal Delta-8 from its chemical cousin Delta-9 – the primary psychoactive ingredient in cannabis – in both presumptive and definitive urine drug tests. The findings were presented by its author Dr. Uttam Garg of Children’s Mercy, Kansas City and researchers at the Missouri-Kansas City School of Medicine during the 2022 AACC Annual Scientific Meeting & Clinical Lab Expo in Chicago this past weekend.

“With our methods, we can detect both Delta-8 and Delta-9 isomers and distinguish Delta-9 from Delta-8,” said the paper’s author, Dr. Uttam Garg of Children’s Mercy, Kansas City. “If someone is using Delta-8-THC, the immunoassay we are using and likely other immunoassays which are out on the market will detect it. Once an immunoassay positive sample has been identified, then you need a chromatographic method to separate Delta-8 and Delta-9 because they are very similar structurally. That’s what we did in our lab—we used immunoassay for initial screening and GC-MS to separate and distinguish the two compounds.”

Gas chromatography-mass spectrometry (GC-MS) is an instrumental technique typically used for fast molecular analysis in forensics, environmental monitoring, drug testing of athletes and other applications.

Delta-8 gained more popularity in the U.S. over the past few years after the 2018 federal Farm Bill made it legal to grow hemp. The Farm Bill specifically defined THC as Delta-9, which left Delta-8 out, sparking a grey market of Delta-8 products. Hemp contains large amounts of cannabidiol (CBD), and CBD can be chemically converted into Delta-8, Quest Diagnostics Medical Science (NYSE: DGX) Liaison Jack Kain said in a company blog post last year, “and in recent years, it has grown in production and selling as medicinal or recreational cannabis products.”

Delta-8 is known for giving consumers a milder high than regular pot, but because Delta-8 products are unregulated, researchers have found that many contain toxic manufacturing by-products that make it more dangerous than Delta-9-THC.

“In light of this, testing for Delta-8 is needed to discourage people from taking these contaminated products as a way to circumvent drug tests,” the release said. “Testing is also needed to monitor the spread of Delta-8 and to inform public health efforts to craft better regulations for it.”

Hemp Market

The market seems to be cratering for Delta-8.

Hemp Benchmarks said rates are beginning to slide, with Delta-8 prices falling each month for the past year — down 6% since May to an average tag of $542 a kilogram in June. This represents a 55% drop since the same time last year. Reported deals ranged from $370 to $725 per kilogram, according to the latest benchmark.

Delta-8 THC is illegal in 14 states. Oregon this month banned the sale of synthetic cannabinoids at general retailers – the first state to do so.

Regulators at the Oregon Liquor and Cannabis Commission (OLCC) said that any store without a special license cannot sell Delta-8 products on the open market effective July 1 over concerns about the chemicals used to make artificially derived cannabinoids.

“The supply of CBD was outstripping the demand for CBD,” Steven Crowley, the OLCC’s hemp and processing compliance specialist told the Oregonian. “And so, the people who had CBD on hand were looking for other ways that they could market it. People started working on different products that they could convert the CBD into. This is where you get the Delta-8 THC products.”

CBN – a hemp-derived cannabinoid – will have a one-year “grace period” before it is banned as well, the newspaper reported. The new rules will allow the sale of artificial cannabinoids only in OLC- licensed adult-use cannabis shops and after those products have undergone testing and approval from the FDA. Those who violate the law face fines up to $10,000.

In Colorado, Governor Jared Polis signed into law a measure that authorizes the state to ban the production of “intoxicating tetrahydrocannabinol isomers that originate from industrial hemp or may be synthetically derived.” The measure also establishes a 20-member task force to study those intoxicating hemp products – such as Delta-8 THC and other THC isomers manufactured from hemp-derived CBD – in order to make legislative and regulatory recommendations by early next year.


Adam JacksonJuly 26, 2022
Texas.jpg?fit=960%2C640&ssl=1

9min210

Texas Agriculture Commissioner Sid Miller is calling for an expansion of the state’s current cannabis laws as a license shakedown scandal swirls within his orbit.

Last week, Miller posted an editorial on the Texas Department of Agriculture website calling for a loosening of the state’s cannabis laws. Texas has only legalized medical marijuana for a very restrictive list of conditions, but the state is also a big proponent of industrial hemp.

While Miller is calling for “expanded access to the compassionate use of cannabis products in Texas,” a political consultant and former top aide for Miller, Todd Smith, is fighting accusations – among many others – that he profited off a hemp licensing scheme.

Hemp Scandal

Smith was first arrested by state authorities in May 2021, on charges of third-degree felony theft, alleging that he leveraged his relationship with Miller and the Texas Department of Agriculture (TDA) to solicit money and campaign contributions for licenses as the state was figuring out how to regulate hemp cultivation.

In a 9-page affidavit, investigators detailed how Smith used a middle man to recruit prospective clients willing to dole out thousands of dollars in exchange for a “guarantee” that they would be first in line for the state-issued licenses.

The first known instance according to the document occurred at a social event on Aug. 18, 2019, shortly after Texas Gov. Greg Abbot signed into law House Bill 1325, which legalized hemp production.

Smith’s associate, a Texas man named Keenan Williams, approached Andre Vinson – who was operating in the CBD industry before finding interest in hemp amid state implementation – and told him that he was working directly with senior leadership at the TDA, adding that there would only be 15 exclusive state hemp licenses issued in the entire state. The going rate for just one license according to Williams at the time? $150,000.

However, there is no such cap on hemp production licenses in Texas. Each license costs $100.

“What Will Be The Cost Of A License?” on Page 5 of TDA’s Hemp FAQ Guide.

The criminal warrant chronicles at least six detailed accounts of cash handoffs and quid pro quos for exclusive access into Texas’ nascent hemp market. In another instance, Smith gave one prospect-turned-whistleblower a $25,000 invoice to conduct a survey “to help obtain and solidify the Republican votes on hemp issues.”

“Todd Smith created by words and his conduct, a false impression of fact that affected the judgment of others in the transactions to obtain a hemp license and/or conduct a survey that was never attempted by Todd Smith,” the affidavit said.

Miller Denials

Green Market Report previously reported that this apparently isn’t Smith’s first rodeo when it comes to influence peddling. In 2018, the Austin American-Statesman reported that Smith promised a San Antonio businessperson an appointment with the Department of Agriculture in exchange for a $29,000 loan. Miller and Smith’s relationship has been mutually beneficial. In 2016, Miller gave Smith’s wife a newly created assistant commissioner position, one of the highest-paying roles in the department.

Miller denied knowing anything about the allegations against Smith and Williams – even suggesting that the accusations were political fodder amid an upcoming election season – though the pending criminal case called into question by political opponents the commissioner’s own proximity to the scheme.

“That was Todd, between him and his clients,” Miller told the Texas Tribune.

Texas criminal defense attorneys Sam Bassett and Perry Minton – whom Smith hired following his arrest – said in a statement that he was “paid and performed these very duties for a number of clients interested in obtaining hemp licenses” and that Smith “never guaranteed anyone a particular outcome of any kind.”

“Todd never violated any laws and did not steal anything from anyone,” the lawyers said at the time, adding that their client “looks forward to continuing his cooperation with law enforcement and the district attorney to clear his name.”

Grand Jury Indictment

At the same time, Williams continued to cooperate with authorities following his arrest. By January 2022, a grand jury indicted Smith on felony theft charges – along with Williams – as well as commercial bribery. Miller officially cut ties with Smith the next day.

“Todd Smith and I have mutually agreed to terminate his association with my campaign effective immediately,” Miller told the Texas Tribune. “My campaign and the (TDA) will cooperate fully with any agency involved in this matter so it can be resolved openly, fairly, and judiciously.”

In the end, the scheme earned $55,000 for Smith. Williams collected $77,500.

Market Size

In 2021, Texas has issued 760 hemp licenses and permitted 3,405 outdoor acres and 10,871,664 greenhouse square feet. Texas is third in the nation for the amount of greenhouse hemp grown. According to Texas A&M Today, industrial hemp is the target for a plan from Texas A&M University researchers to 3D print new buildings using hempcrete. The project will be funded by a $3.74 million grant from the U.S. Department of Energy Advanced Research Projects Agency-Energy (ARPA-E) Harnessing Emissions into Structures Taking Inputs from the Atmosphere (HESTIA) program.

While some in Texas are working towards increasing legal hemp and medical marijuana, the conservative state also has those fighting against it. The Jurist wrote in June that the Texas Supreme Court decided to uphold a ban on the production and processing of smokable hemp, saying that it was constitutional under state law.


Julie AitchesonApril 7, 2022
hempcrete.jpg?fit=960%2C639&ssl=1

5min102

According to the U.S. Census Bureau, the rate of new housing starts in the U.S. hit 1.769 million in February of 2022, the highest since June 2006 despite material shortages, supply chain issues, and cost-of-living spikes. The US hemp building industry is riding this wave by moving forward in its efforts to certify hemp and lime (often referred to as “hempcrete”) insulation in U.S. building codes. On January 10, the U.S. Hemp Building Foundation submitted an appendix in the International Residential Codes to familiarize the U.S. permitting departments with hempcrete. During the final week of March, the International Code Council approved Proposal_RB316-22 for the International Residential Code, which is the ICC’s first step toward adopting hempcrete as an officially recognized building material.

Hempcrete is non-structural insulation commonly made of hemp hurd (the woody inner parts of the hemp stalk) and lime binder. An efficient insulator when installed up to one foot thick in wall assemblies, hempcrete has an impressive list of attributes. It is vapor-permeable, thermally regulating, fire-resistant and repels mold and pests. Because hemp plants sequester large amounts of carbon while growing, hempcrete is also carbon negative. Once incorporated into the construction, hempcrete can increase carbon negativity by absorbing carbon dioxide exhaled by building inhabitants.

U.S. construction industry professionals such as builders and architects could previously use hempcrete, but they often needed an alternative material variance and an engineer’s stamp on hempcrete house plans to do so. This requires them to go through a separate approval process for each project. Certification and the existence of a national code would eliminate this necessity. Though hempcrete has already been in popular use in Europe for over thirty years and, more recently, in Canada, it is still not widely understood as a material in the United States.  Building professionals have been tasked with providing research and other supporting documentation to building permitting authorities in order to demonstrate hempcrete’s capacity and limitations.

Beyond a standardized code to facilitate its use, there have been additional barriers to hempcrete’s integration into the U.S. construction industry. Many building professionals wrongly believe that hempcrete contains psychoactive components. Concerns that the process for making hempcrete is slow and labor-intensive, as well as hard to fully automate and standardize are warranted, however, and will need to be addressed before hempcrete can gain broader acceptance in the U.S. 

Fortunately, innovative companies like the UK’s IsoHemp and Canada’s Just BioFiber are forging the way with mass-produced and standardized hemp and hemp/proprietary material blocks, so hempcrete’s day in the U.S. may be dawning sooner than critics think. ICC’s approval of the hempcrete proposal initiates a public review process that will continue until June 20, 2022, with a final determination to be made at the Public Comment Hearing in Louisville, Kentucky, between September 14-21, 2022.


Debra BorchardtFebruary 25, 2022
hemp-2.jpg?fit=960%2C640&ssl=1

8min60
This week New York Governor Kathy Hochul signed S8084A into law. The law is meant to speed up the rate of cultivation, processing, and distribution of cannabis in New York. This new law will allow hemp farmers and processors in the state to become licensed to grow and manufacture cannabis in time for the 2022 growing season.

“I am proud to sign this bill, which positions New York’s farmers to be the first to grow cannabis and jumpstart the safe, equitable and inclusive new industry we are building,” Governor Hochul said. “New York State will continue to lead the way in delivering on our commitment to bring economic opportunity and growth to every New Yorker in every corner of our great state.”

Eligible applicants must possess a valid industrial hemp grower authorization from the Department of Agriculture and Markets as of December 31, 2021, be in good standing, and have grown and harvested hemp for at least two of the last four years. The law also requires that both cultivator and processor licensees participate in a social equity mentorship program as well as an environmental sustainability program. The licenses expire on June 30, 2024.

Assembly Majority Leader Crystal Peoples-Stokes said, “Last year, after many years of fighting, we finally enacted the Marijuana Regulation and Taxation Act, and are beginning to undo the devastating impacts over ninety years of unequal enforcement of marijuana prohibition had on too many lives and communities. MRTA ensures that the legal adult-use market will be centered on equity and economic justice for communities of color and individuals that have been harmed most by the War on Drugs in the State of New York. With the passage of this bill, we have the opportunity to create a responsible start to the adult-use cannabis industry by authorizing temporary conditional cultivator and processor licenses to current New York hemp farmers. This authority will help secure enough safe, regulated, and environmentally conscious cannabis products to meet the demand of the adult-use cannabis market when retail dispensaries open. Importantly, this legislation calls for a Social Equity Mentorship Program, which will create a viable and inclusive path for social and economic equity partners interested in cannabis cultivation and processing to gain invaluable knowledge and experience in this emerging industry. The temporary conditional licenses authorized by this bill will ultimately help realize the vision and goals of the MRTA.”

License Types

Hemp farmers and licensed hemp processors have the opportunity to apply for and obtain the following license types:
  • Conditional Adult-use Cannabis Cultivator License
  • Conditional Adult-use Cannabis Processor License
According to a statement from the Governor’s office, “With a conditional adult-use cannabis cultivation license, farmers can grow outdoors or in a greenhouse for up to two years from the issuance of the license. It also allows them to manufacture and distribute cannabis flower products without holding an adult-use processor or distributor license, until June 1, 2023. Cultivators are limited to one acre (43,560 square feet) of flowering canopy outdoors or 25,000 square feet in a greenhouse and can use up to 20 artificial lights. They can also split between outdoor and greenhouse grows with a maximum total canopy of 30,000 square feet as long as greenhouse flowering canopy remains under 20,000 square feet.

Application Process TimingThe OCM will be developing a license application process and opening the program as soon as possible. To qualify for an Adult-use CannabisConditional Cultivator License an applicant must have been an authorized industrial hemp research partner for the Department of Agriculture and Markets, cultivating hemp for its non-intoxicating cannabinoid content for at least two of the past four years and in good standing as of December 31, 2021, when the research program ended.

Holders of the license must also participate in a social equity mentorship program where they provide training in cannabis cultivation and processing for social and economic equity partners, preparing them for potential roles in the industry. Growers will also have to meet sustainability requirements to ensure the cannabis is grown in an environmentally conscientious way.

Joe Caltabiano  CEO of Choice Consolidation Corp and co-founder of Cresco Labs said, “The New York State Senate has made clear its strong desire to ensure that affordable cannabis is available to its constituents. These legislators recognize that the product must be fairly priced in order for the legal market to flourish. This is a bold move by one of the most important markets in the US to snuff out the illicit market and proves the state does not want to end up as another California.”


Debra BorchardtJanuary 3, 2022
Seed.jpg?fit=960%2C407&ssl=1

10min60

Hemp prices remain depressed causing hemp farmers to decide against planting crops for 2022. Hemp Benchmarks reported that December pricing for hemp crops remained in the doldrums as past overproduction led to too much supply and not enough buyers. Despite some promising end markets, the demand just isn’t enough for the farmers to take the chance. In addition to the low prices and oversupply, the hemp market is also facing supply chain issues like increased trucking costs. Plus, other crops like corn and soybeans have experienced price increases prompting some farmers to abandon hemp.

There are big hopes for industrial hemp fiber, but that market is also hobbled by a lack of processing facilities and a lack of industry standards. There are no government guidelines for hemp fibers like there are for say cotton, which has had standards defined since 1918. 

Price Declines

Delta-8 cannabis had been seen as the saving grace for hemp farmers when CBD product demand wasn’t able to keep up with the supply. However, several states began banning Delta-8 as the product faced little regulation. Hemp Benchmarks wrote, “The observed price for Delta-8 THC Distillate declined for the sixth consecutive month, slipping 4% from November to average $839 per kilogram in December. The low end of the reported price range fell to $450 per kilogram, down from $650 per kilogram in November. The high end of the observed price range declined as well, from $1,200 per kilogram in November to $1,100 per kilogram this month.”

The Benchmarks also posted the following prices for CBD:

Greenhouse-Grown CBD Flower (Bulk) 

  • Average $384 per pound (down 2% from November) 
  • Low – High: $80 – $700 per pound 
  • The average price is 44% higher than the overall 

CBD Flower spot price. Outdoor-Grown CBD Flower (Bulk) 

  • Average: $156 per pound (up 2% from November) 
  • Low – High: $50 – $400 per pound 
  • The average price is 41% lower than the overall CBD Flower spot price

Reduced Acres

Colorado was once one of the biggest states for hemp production is a prime example of the reduction of hemp acres being planted. The 2022 Colorado Business Outlook published in December even addressed the hemp market in its report. It wrote, “Hemp, which experienced a huge boom when first legalized as a commercial crop, has dropped from 2,000 registered Colorado growers in 2019 to about 500 in 2021, and from 87,000 acres to 21,000. Growers cite the lack of a market and processing facilities for hemp fiber and competition from other states legalizing industrial hemp, creating an abundant supply on the market. State government support for hemp remains strong, and there are still many ardent supporters of the crop. The Department of Agriculture continues to work on development projects for hemp flour, fiber, and other uses.” 

Farmers also faced extreme weather conditions. The west has experienced massive wild fires in Calirfornia and Oregon. Louisiana and Vermont both drowned in excessive rain, while Texas started the year with a catastrophic cold snap. Hemp Benchmarks also wrote that one veteran hemp cultivator in New York, Allan Gendlemen, told WSHU Radio that he lost one of his six acres to rain in 2021.“This whole thing got completely flooded and the plants literally just died,” he said. “And so now, this is empty field.”

Expensive Travel

If all that bad news wasn’t enough to scare away most hemp farmers, just getting the product to a processing facility also costs more. Hemp Benchmarks said in its December report that hemp logistics company Fide Freight provided data on rates to ship bulk hemp products by truck that showed significant increases in average shipping prices compared to last year. The report said, “As of this month, average rates to move bulk hemp products in a “dry van” from Denver, Colorado to various selected locations increased anywhere from 22% to 94% year-on-year, with the route from Denver to Los Angeles, California seeing the largest jump.”

Regulations Are A Mess

The lack of guidance from the FDA has certainly not helped CBD producers and hemp farmers. Last month New York Representative Kathleen Rice,  Morgan Griffith (VA-09), Angie Craig (MN-02), and Dan Crenshaw (TX-02) introduced a bipartisan bill that would establish federal standards for CBD food and beverage products to protect consumers and provide marketplace stability for farmers, producers, and retailers. CBD companies have faced penalties regarding product labeling and website claims, yet get no direction from the government hampering their ability to promote and sell their products. 

“CBD products are exploding in popularity, but the lack of federal regulation surrounding them has put consumers at risk and left businesses looking for clarity,” said Representative Rice. “The bipartisan CBD Product Safety and Standardization Act will establish the clear regulatory framework needed to provide stability for business and ensure unsafe products stay off the shelves.” The bipartisan CBD Product Safety and Standardization Act would allow FDA to regulate CBD as it would any other food ingredient and subject these products to enforceable safeguards to ensure accountability. It also charges the agency with establishing CBD content limits and packaging and labeling requirements and determining in which categories of food CBD is appropriate for use. 

“We strongly support requiring the FDA to regulate hemp extracts like CBD as food and beverage ingredients,” said Jonathan Miller, General Counsel, U.S. Hemp Roundtable, the hemp industry’s national advocacy organization.  

States have also complicated the regulatory landscape with whipsaw decisions around Delta-8. Texas for example tried define Delta-8 as a schedule 1 substance causing retailers to fight back winning a lawsuit that temporarily lifted the ban. However, an appeal was filed causing the ban to go back into enforcement. The fate of Delta-8 in Texas is now mired in the courts. 

Promising Markets

Hemp farmers remain optimistic even in the face of so many obstacles. Even as CBD demand flattened, the projected market for hemp fiber and grain is $32 billion by 2030. Hemp Benchmarks wrote that Melissa Nelson-Baldwin is co-owner of South Bend Industrial Hemp in Kansas and that the company has been growing hemp grain and fiber since 2019 and opened its processing facility this past June. “NelsonBaldwin told Hemp Benchmarks that their decortication facility, believed to be the first of its kind in the Midwest, has been busy ever since it was first switched on. Business for hemp fiber, she said, has ‘grown exponentially. There was none three years ago, and now I need three shifts at my facility.’” 

Many believe that industrial hemp will be a bigger market than the diet supplement market. The National Hemp Association wrote in its Economic Impact report, “The average hemp fiber & grain processing facility employs 117 people, with an annual payroll of $6.1 million. The total economic output attributed to a single processing facility is estimated at more than $30 million.” It went on to say, “By 2030 industrial hemp can account for over $9 billion of economic output in rural areas.” 

So, the potential promise of hemp keeps many in the industry focused even as the current environment remains difficult. It looks as if only the strong will survive and growing hemp is definitely becoming a labor of love.


Debra BorchardtSeptember 9, 2021
StarDog_Octubre-207_600x.jpg?fit=600%2C900&ssl=1

4min20

Flora Growth Corp. (NASDAQ: FLGC) has entered into a commercial agreement with American e-commerce company Zulily to launch a sales and marketing campaign across the US for its Stardog Loungewear product line. The Flora brand and product launch through Zulily will initially feature Stardog’s best-selling product, hemp shoes, and is expected to kick off within the next month.

Zulily is a huge online retailer with annual sales of more than $1.5 billion and 5 million active customers. Zulily launches thousands of products each day, curating personalized shopping experiences. Zulily’s app uses compelling video and imagery to bring more than 15,000 big name brands and boutique finds to life on mobile, including brands such as Callaway, Cuisinart, Disney, Hanes, New Balance, SOREL, UGG, and Under Armour.

“In speaking with the category management team from Zulily, it was clear that they were looking to onboard special products with compelling values at attractive price points, differentiated by stories that inspire and excite consumers – this aptly describes Stardog and how we’ve executed mindfully building and scaling the brand, ” said Nicolás Vásquez, General Manager of Stardog Loungewear. “At Stardog, we are reframing our connection with nature by working with materials that can easily go back to where they came from. Growing the finest quality organic hemp fibers allows us to equip our tailors with the very best materials to design and handcraft our loungewear for consumers. Stardog is a shining example of the slow fashion movement that considers all aspects of the supply chain, aiming to respect people, the environment, and animals.”

Flora is a cannabis company that leverages natural, cost-effective cultivation practices to supply cannabis derivatives to its diverse business divisions of cosmetics, hemp textiles, and food and beverage. As the operator of one of the largest outdoor cultivation facilities, Flora strives to market a higher-quality premium product at below-market prices.

“Conversations around corporate social responsibility and having a transparent supply chain are more prevalent today than ever before as consumers carefully consider how to spend their hard-earned dollars. When reviewing potential distribution partners to launch this campaign, it was evident to us that Zulily was able to effectively take consumers on a digital discovery journey that could accurately capture the story we’re trying to tell, make a personal connection, and provide us with the opportunity to expand this campaign into a larger initiative across our entire brand and product portfolio,” said Jason Warnock, Chief Revenue Officer of Flora Growth. “Stardog has an extremely passionate and engaged community in Colombia and we’re looking forward to working with the team at Zulily to help create the same demand and engagement we see at home. By taking a customer-centric approach and implementing a comprehensive marketing strategy coordinated across the entire customer journey, we believe that we’re effectively positioning Stardog to be as leading global hemp textile brand and look forward to announcing further distribution deals.”


Debra BorchardtAugust 30, 2021
hemp-2.jpg?fit=960%2C640&ssl=1

6min90

As hemp prices continue to fall, farmers are leaving. When the Farm Bill of 2018 passed, farmers rejoiced at the ability to legally grow hemp. Visions of massive demand for CBD products caused farmers to plant thousands of acres. Indeed, it seemed a sure-fire thing. Seemingly overnight numerous products on retailers’ shelves had some version with CBD included. Body products, foods, and supplements all touted the benefits of having CBD added. Then it all fell apart as several problems combined to crash the market.

The problems ranged from a lack of guidance from the FDA, falling prices, less demand for CBD than expected, weather-related issues, and a pandemic. The crops planted in 2019  led to a glut of biomass that persists today. Farmers that were unable to make any money have left the business leaving only the truly committed. 

Price Crash

The glut of biomass caused the prices to slide as the market worked its way through the supply. Hemp Benchmarks’ latest August report wrote, “CBG Biomass and extracted CBG products also saw their observed wholesale prices continue to slide this month. In regard to Crude CBD Oil, Hemp Benchmarks observed USDA Certified Organic and THC Free product that helped to buttress the category’s spot price somewhat, but this month’s assessed price for Crude saw an overall decline on an increase in the frequency of reported deals settling under $100 per kilogram.” Indoor-grown CBD flower is down 3% from July, greenhouse-grown CBD flower has dropped 5% from July and only outdoor grown CBD flower saw its price rise by 7% from July according to the Benchmarks data.

One example of the drastic fall in prices comes from North Dakota, where Veronica Michael told the Hemp Benchmark, “When we first started extraction [in the spring of 2019], crude had been around $1,400 [per kilogram],” she remembered. “I got a call from two buyers in the last two weeks. One was in Colorado and one was in Washington. Both were offering from about $80 to $120 [per kilogram] for crude. That’s ridiculously low. When you look at distillates and isolates, the numbers aren’t good either. People want to buy distillates and isolates for less than we can make them for unless you’re a really big producer. It makes me nervous and scared for the future.”

Farmers Leaving

Hemp Benchmarks reported that it counted 10,881 hemp farming licenses issued nationwide for the 2021 season, down 45% from 19,799 hemp cultivation licenses documented in 2020. Brett Eaton, CEO and founder of Green Cherry Organics in Fort Collins, Colorado Told Hemp Benchmarks that “24 of the 28 hemp farmers he works with regularly are not planting hemp this year. Eaton’s company created the first USDA-certified organic hemp greenhouse in the United States. It also sells its CBD products and clones nationally, and works with hemp farmers in 11 different states.”

With no one to buy the hemp or prices so low that it doesn’t cover the expense of growing, many farmers returned to more traditional crops whose prices have soared. Corn and wheat crops affected by droughts have seen prices at three-month highs. The droughts in some areas contrast with overly heavy rains in other areas. The market has also seen a shift where hemp is being planted. Colorado hemp acres have fallen from 2020 to 2021, while Texas and Illinois have dramatically increased planting. Oregon, which has been a big state for hemp farmers, is seeing those acres face the criticism that the hemp plantings are masking actual illegal THC heavy cannabis farming. 

Outlook

For now, the outlook remains challenging. Many of the farmers cited in the August Hemp Benchmark report said that if the FDA would settle the issues around hemp regulations the market could recover. However, the FDA seems to be punting back to Congress and isn’t moving to take a stand. No one can do anything about the weather or pandemic forced quarantine issues. The industry could be helped by consolidation, but that doesn’t look to be happening. The THC side of the cannabis industry is awash in M&A deals, but the hemp side has just seen businesses close versus being acquired or merging. 

One thing that could help with the 2019 glut is that some of the remaining product is now turning brown and moldy. That suggests that at some point CBD brands will need to buy new CBD products and with fewer farmers planting less acreage, prices would surely rise. Still, the hemp farming industry is clearly becoming one for long-term players. It is not the quick turn on investment that the THC cannabis industry enjoys. 


Julie AitchesonAugust 3, 2021
hemp.jpg?fit=960%2C638&ssl=1

5min120

July 2021 saw record-setting temperatures in parts of the country, alarming spikes in Delta variant Covid infections, and large numbers of Americans returning to summer vacationing after having last summer’s dreams of ocean breezes and lakeshore barbecues dashed by the pandemic. It was also a notable, if not promising month for hemp. Hemp Benchmarks, a division of New Leaf Data Services and leading provider of financial, business, and industry data for the North American hemp markets, recently issued its report for July, which touches on some of the most high-profile talking points of the hemp market to date.

Wholesale cannabis prices have been experiencing a steady decline overall, with the exception of Crude CBD Oil and Broad Spectrum CBD Distillate. These products saw modest price rises in July but still fell short of the prices they topped out at a few months ago. There have been increases in transaction frequency and volume for CBD Biomass and extracted CBD products thanks to strong demand for delta-8 THC, which is synthesized from these products, but this has not been sufficient to move the needle on prices. Despite a steady demand, assessed prices for Delta-8 THC Distillate and Smokable CBD flower both dropped for the second month running, with indoor and greenhouse-grown products earning higher rates from buyers.

Delta-8 Demand

You might wonder why, with its steady-and-still-growing demand among consumers, Delta-8 THC has not been the rising tide that lifts all boats in terms of hemp sales. It may be due in part to state-by-state regulations and restrictions regarding its sale and use. As of July 1, The Connecticut Department of Consumer Protection established that businesses may no longer offer or sell products made using hemp or hemp-derived products with any concentration of THC, including deltas-7,8,9 and 10. A Senate bill signed into law on June 22, 2021 affirmed that products containing deltas-7,8,9 and 10 may only be sold by licensed cannabis retailers or medical marijuana dispensaries. New York has instituted similar restrictions. Delta-8 is also facing some opposition in states with legal cannabis markets as it is cheaper to manufacture than cannabis, is not taxed, and is cheaper to produce.

On the agricultural side, there has been an ongoing decline in the amount of acreage devoted to hemp production in 2021 due to farmers downsizing operations, fewer startups, and those who have cultivated in the past choosing not to grow this season. Meanwhile, existing hemp acreage endured threats posed by extreme weather conditions and the continued onslaught of Covid-19. 

In better news, fiber hemp is getting increased interest from farmers this year as a less volatile corner of the hemp market, being less prone to fluctuation due to changing regulations governing its use. Innovations in the industry abound as interest surges, such as the development of more precise and efficient processing equipment and proprietary technologies that meet the unique needs of customers. This is not to say that no hurdles exist, including developing cultivars that produce higher yields to make fiber hemp economically viable for farmers and the lure of growing other more financially rewarding row crops over hemp. And while there is less controversy around fiber hemp as opposed to hemp grown for CBD products, there is still a strong need for uniformity of regulation between states and better infrastructure in order for this market to flourish. 

The overall decline of the hemp market points to dramatic consolidation, a trend borne out by new data from The Brightfield Group revealing that the number of brands in the CBD industry has dropped from 3,500 at the end of 2019 to 2,000 today. Still, with new innovations on the rise and Delta-8’s stubborn but steady ascendance, there is hope that the rebound of the hemp market will not be a matter of “if” but “when”.

 


Choose Your News

Subscribe to the Green Market Report newsletter that gives you original content delivered straight to your inbox.

 Subscribe

We respect your privacy. See our privacy policy.


About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 26 mins

Researchers Seek to Remove ‘Trip’ as Popularity of Psychedelic Treatments Grows

@GreenMarketRpt – 3 hours

The Weekly Stash Video September 30, 2022

@GreenMarketRpt – 3 hours

Florida Drops Criminal Charges Against Former Ascend Wellness Chief

Back to Top

Choose Your News

Subscribe to the Green Market Report newsletter that gives you original content delivered straight to your inbox.

 Subscribe

We respect your privacy. See our privacy policy.