Will there be a hemp industry in Wyoming?

It may be some time before the state has a profitable crop

Posted 4/2/19

Hemp still has a long way to go before it can become an important commodity in Wyoming or the nation as a whole.

Gov. Mark Gordon recently signed legislation that provides funding for testing hemp …

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Will there be a hemp industry in Wyoming?

It may be some time before the state has a profitable crop

Posted

Hemp still has a long way to go before it can become an important commodity in Wyoming or the nation as a whole.

Gov. Mark Gordon recently signed legislation that provides funding for testing hemp produce, and President Donald Trump signed a federal bill in December that removed hemp from the list of Controlled Substances Act, clearing the way for interstate commerce.

Those actions might make it seem like hemp has been given a green light to diversify Wyoming’s agricultural industry, but the crop has a few more hurdles before legal production begins in the state. And even if all regulatory barriers were gone today, and hemp could be grown like corn or wheat, there are a slew of technical barriers to overcome.

The state’s agricultural industry is moving into unknown territory with hemp. No one can be certain what the industry will look like, but with prohibitions removed, producers can at least find out.

“We’re experiencing what it’s like to see an industry coming online and being birthed,” said Shawn Murphy, publisher of Hemp Business Journal and the founder of the annual Hemp Business Summit.

Emerging market

Washington-based Vote Hemp, a non-profit industry advocacy group, estimates that 78,176 acres were planted with hemp in the U.S. last year. By comparison, American farmers planted 90 million acres of corn — with Wyoming producers alone planting nearly 85,000 acres of corn in 2018.

Hemp is barely a blip on the agricultural radar, but the number of acres grown last year was three times higher than the previous year. And from 2012 to 2017, hemp-based product sales climbed from about $250 million to $820 million.

“Now, it’s out of the bag,” Murphy said.

The Hemp Business Journal estimates the industry will hit over $1.8 billion in sales by 2022; that’s based on the assumption that further regulatory barriers will be removed.

Murphy is among an army of entrepreneurs who speak enthusiastically about hemp’s possibilities. He listed off products that can be produced with the raw agricultural product — including food, industrial materials, textiles, supplements, bioplastics and biofuels.

“But that’s not where all the hype is right now,” Murphy added.

The biggest share of hemp-based products sales is cannabidiol (CBD) products. CBD is a group of extracts chemically similar to the main psychoactive chemical in marijuana, THC, but they do not have any psychoactive effects. The extracts are used in a variety of supplements and pharmaceuticals for treatment of disorders, including epilepsy, anxiety, and pain.

CBD product sales in 2018 represented 23 percent of total hemp sales, and the Hemp Business Journal estimates it will dominate the market for the foreseeable future.

Technical barriers

Though the crop is possibly one of the first that humans cultivated, the industry has been artificially suppressed by state and national regulations. While the crop was kept at bay, agricultural technology that has revolutionized farm production for all other crops left hemp in the rearview mirror.

A handful of major agricultural commodities, such as sugar beets, have had the benefit of development of biotechnology allowing for better yields, better quality and lower use of pesticides.

The approval process for genetically modified produce, such as Roundup Ready beets, can take several years from development to market and easily cost $100 million or more to get approval.

Hemp will have to be a much larger commodity before such technology will be profitable.

The same is true for registration of fungicides, herbicides and pesticides. Before a farmer can use any of these on a crop, there is a lengthy and expensive process to test the produce for safety.

“You don’t want people eating something toxic,” said Mike Moore, manager at the Wyoming Seed Certification Service in Powell.

That means weeding and pest control are going to require a lot more labor for hemp farmers.

Then there’s the farm equipment. While years of engineering development have gone into planters, sprayers, and harvesting apparatus, these may not work well with hemp.

“The John Deeres have not weighed in,” said Eric Steenstra, president of Vote Hemp.

Powell producers?

Seaton Smith, co-owner of GF Harvest near Powell, is looking to get into processing hemp seeds for food products. As far as he can tell, the equipment he currently has will process the seeds just fine.

“We just have to put a different seed in it,” Smith said. However, he currently can’t do any testing.

Smith expressed frustration with the fact he can buy hemp hearts, as they are called, at Walmart, but he can’t buy hemp seeds to test with his equipment. If he could get the operation going, he believes it would take off.

“It’s one of the hottest products out there,” Smith said.

Food products accounted for 17 percent of the sales of hemp products in 2017, according to Hemp Business Journal.

GF Harvest markets its products as locally produced, and a processing facility would address an issue that could undermine a hemp industry in the Big Horn Basin. Moore said a colleague in Colorado — which has a much more developed and robust hemp industry — told him the costs for transportation beyond 10 miles are too high to maintain a profitable crop.

With a processing facility right here in Powell, local producers growing hemp for food would be in a great position.

Another issue is the market. With hemp being produced in such small quantities, there is no futures market. Farmers like to have a buyer before they start planting. For the time being, they’re going to have to carry a lot more risk.

Research

Another barrier to realizing hemp’s potential is that no one is quite sure the best practices for growing hemp in Wyoming.

“What we know is we don’t know much about Wyoming and hemp,” Moore stated.

There’s lots of research into hemp agronomy, but most of it is in climates that are very different from what we have here in the arid, irrigation-dependent Big Horn Basin.

Jim Heitholt, crop physiologist and director of the University of Wyoming’s Powell Research and Experiment Center, said the center has not performed any research into hemp. However, he said they have been discussing and planning possible hemp projects, not only here in the Basin, but also at other centers across the state.

There are a lot of questions to answer, Heitholt explained, such as the optimal planting date, adequate weed control options, rates of fertilizer that are required and irrigation needs.

“After years of field research on other crops, I’ve learned that it is best to be patient, listen to suggestions from the industry and design experiments that have potential to provide useful information,” Heitholt said.

None of that can proceed until all the right approvals are obtained. The Wyoming Department of Agriculture still has some formalities to go through with the U.S. Department of Agriculture before the Wyoming department can license farmers to grow hemp in the state.

It’s uncertain if any research or farming will begin this growing season.

“We’re in a holding pattern,” Heitholt said.

A word of caution

As some pitch hemp as a potential boon for producers, Moore, the seed certification manager, said he is concerned for the people who think the crop “will save the farm.”

Beyond the initial challenges, the supply of hemp has been artificially suppressed, despite demand for the product. Once the licenses start being issued to grow the crop — in Wyoming and other states — producers could flood the market with hemp. Prices would then tumble.

When the state starts issuing licenses, Moore is recommending to interested farmers that they start out with just a couple acres and see how it goes; profit from a large-scale operation is likely many years down the road.

Still, Moore also sees a lot of potential with hemp.

“We need new crops,” he said, “so I’m excited.”

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