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Colorado farmers say hemp not the cash crop they had hoped

Overproduction, lack of infrastructure and increasing regulations ended rush to cultivate crop
Hemp has a variety of uses including textiles and paper, but infrastructure is not in place to make it profitable. (Associated Press file)

Earlier this month, award-winning author Finn Murphy visited Durango’s Rochester Hotel to talk about his book “Rocky Mountain High: A Tale of Boom and Bust In the New Wild West.” During the presentation, Murphy spoke of his personal experience with the 2018 hemp boom and bust. While his anecdotes are unique, his experiences were far from it.

“I should have known better, but I drank the hemp kombucha just like everybody else,” Murphy said.

Murphy purchased a 36-acre hemp farm in Boulder County shortly after the 2018 Farm Bill legalized the production of industrial hemp with tetrahydrocannabinol – THC – concentrations of 0.3% or less.

Hemp vs. Marijuana

THC is the principal psychoactive constituent of cannabis sativa, the species from which both hemp and marijuana are derived.

If a plant has a THC concentration of 0.3% or less it is considered to be hemp. Plants with a concentration more than 0.3% are considered marijuana and were not legalized by the 2018 Farm Bill.

While the uses of marijuana are limited primarily to therapeutic treatments, the uses for hemp are extensive.

Hemp can be used to create textiles, rope, food, paper, concrete and CBD oil, said Brian Koontz, hemp program manager for the Colorado Department of Agriculture.

The extensive uses drew hundreds of farmer and entrepreneurs to the crop.

“(The farm) was well over a million dollars, but I thought the farming community hadn’t quite gotten on the bandwagon about hemp and its possibilities,” Murphy said. “I thought I was ahead of the curve and I was going to throw my million dollars down and make so much money that I’d be able to retire.”

Murphy anticipated making about $100,000 gross income per acre farming hemp.

At the same time that Murphy was hopping on the hemp bandwagon, so were hundreds of other Coloradans.

According to the Department of Agriculture, 546 hemp registrations were issued in 2017. In 2018, that number jumped to 1,131, and in 2019 it peaked at 2,812.

In 2018, Murphy’s registration did not go through, leaving him with a conundrum.

Rather than abandoning the hemp dream all together, he opted to convert his farm into a post harvest processing facility. In three weeks, Murphy had dropped an additional $600,000 building three hoop houses and the machinery necessary to dry, buck and trim the hemp.

Additionally, Murphy hired a crew of workers to run the machinery and keep production moving.

“I was pulling $9,900 out of the bank every day to pay these people,” he said. “With all this transient labor, the farm was starting to look like a campground.”

Murphy processed the hemp into smokable flour and CBD and harvested the buds, which he said were selling for $350 a pound.

“I was putting the buds into these 27-gallon cartons that were about 20 pounds per thing. Twenty pounds times 350 was $7,000 a box, and I had thousands of these boxes. I had millions and millions of dollars,” Murphy said.

But when it came time for Murphy to receive his payment, he was met with grave disappointment.

The farmer, who was contracted to pay Murphy on commission as his product sold on the market, could not find anyone to buy, leaving Murphy with tons of essentially worthless hemp products.

“I still have ... cartons filled with about 60 pounds of hemp flour that I give away to people,” he said.

While the bust of hemp in Colorado can be attributed to several causes, the primary contributing factor was a gross excess of product, said Patrick Totty, owner and operator of Zion Farms who has been cultivating hemp since 2014.

“In 2018, supply far exceeded demand,” Totty said. “There was a huge boom of farmers jumping into the (hemp) game and it was just simply overproduced. The people that were producing it did not have wholesale contracts or distribution contracts to sell that much hemp, so a lot of people that planted had harvests that just sat in buildings, rotted and drove the price down to where it didn’t really make sense for anybody to grow it anymore.”

While hemp has a plethora of uses, Murphy says the infrastructure is simply not in place to make hemp products financially feasible.

“Hemp is much more expensive to produce than cotton,” he said. “You can use hemp for bricks, but there’s nothing in any building codes about it. You can use it for rope, but it’s 10 times more expensive than nylon. You can use it for paper, but it’s 15 times more expensive than paper. Hemp evangelists say there’s 25,000 uses for hemp, but right now the (thing) people are using hemp for is for the CBD (cannabinol) oil.”

At least 70% of hemp is grown for cannabinoids oil extraction, Koontz said.

The most popular cannabinoid is CBD, which some believe can treat anxiety, nausea and pain, among other ailments.

However, Totty said the CBD market has been negatively impacted by the overwhelming presence of unregulated products.

“We are seeing a lot of people getting taken advantage of,” he said. “People were producing oils, and tincture and gummies and some of them didn’t even have CBD in them because there was no oversight to check the dosages or active ingredient for quality control.”

He said having oversight from an organization like the Food and Drug Administration will expand the CBD marketplace because more customers will get on board with it.

Even if the CBD market was to be regulated and expand, the demand for hemp would still remain far below the supply produced in 2018, Murphy said.

“Three thousand five hundred acres of hemp would supply all of the CBD requirements for the entire (international) hemp market,” he said. “In 2018, over 80,000 acres were grown just in Colorado, and then there’s 37 other states growing hemp, too.”

In 2018, the U.S. Department of Agriculture, in coordination with the Drug Enforcement Agency, implemented additional federal regulations on hemp farmers in an effort to prevent the production and distribution of marijuana.

The regulations included mandatory criminal background checks barring anybody with a drug-related felony in the past 10 years from growing hemp, as well as requiring hemp growers to register their acreage with the Farm Service Agency.

“The primary reason for the FSA requirement was to document hemp farms in a law enforcement database that’s accessible to all law enforcement across the country,” said Koontz.

Despite the boom and bust cycle of hemp in 2018, Totty continues to foster hope for the future of the plant.

“Where farmers thought they were going to be millionaires – I don’t think that’s going to be the case,” he aid. “I think it’s going to be a commodity crop just like anything else. I think that there’s a huge place in medicinal cannaboids. I’m feeling very optimistic about the future.”

The University of Colorado System has been doing hemp research for 10 years, Murphy said. It is researching whether the introduction of phytocannabinoids starts the endocannabinoid system as well as doing seed biochemistry.

If the medical benefits of cannaboids can be proven, Murphy said, it could greatly expand the market for hemp within the medical and commercial community.

As of this year, the state Department of Agriculture has issued 115 hemp registrations, three of which are in La Plata County.

lveress@durangoherald.com

An earlier version of this story misspelled Brian Koontz’s first name.



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