After the Gold Rush: Hemp Done Right Can Make Cents in Indiana
Published: Friday, January 22, 2021
Will Weaver firmly believes in the healing power of hemp for various human ailments as well as financially strapped farms hemorrhaging money.
However, with this being the first year hemp will be grown as a commercial crop in Indiana, the president and CEO of northern Indiana-based U.S. Hemp Co. is cautioning farmers against adopting the gold-rush mentality that followed its approval for research cultivation in 2018.
Last week, the Office of Indiana State Chemist issued a warning ahead of the planting season about predatory seed suppliers actively working in the state.
Getting hoodwinked into buying suspect seed, which could lead to catastrophic results, is a real concern, Weaver confirmed while sitting in his New Paris office last Friday. But there are numerous, other factors farmers need to weigh before getting their hopes up about adding hemp to their crop lineup.
First and foremost, if a farmer spurred to action by the new regulations doesn't already have a buyer for this year's crop, he or she should probably start planning for the 2022 growing season.
U.S. Hemp, for example, has arrangements to buy biomass directly from select farmers, but trying to start today for this year isn't feasible because the soil and water testing and other procedures needed to secure an agreement couldn't be completed in time.
"The No. 1 thing would be that you need to have a contract signed and in place of where that (crop) is going to go and who's buying it before you even buy seed," Weaver said. "Otherwise, there is no step 2."
It's critical to understand the nature of the hemp market because the number of buyers and processors didn't even keep up with farm output under the previous rules.
"Obviously, the retail side of it is booming," Weaver said. "Forbes (magazine) calls it the biggest-growing business globally right now, but that's at the retail end of it.
"Instead of it being limited to the 100 licenses or X amount of acres like it was originally, from what I understand it's wide open to anybody right now and I don't believe that's a good idea. The industry in general is overproducing in this market as far as raw materials go."
Weaver also feels hemp farming is also moving to the next stage without adequate oversight to ensure certain standards—along the lines of those used for corn, soybeans and food products—are being met.
"When it comes to producing the raw materials, we're lacking regulation bad," Weaver said. "I'm not one that's a big-government fan by any means, and I don't think the government does a lot of things right, but this industry lacks regulation and data—the two most critical things we need.
"If you're a corn and soybean guy, the Department of Agriculture has all the data you could ever want. We know how many acres were planted, average bushels, who grew what from seed corn to field corn to soybeans. We don't have any of that (with hemp) and no one's tracking that from a state or federal level."
That's makes it difficult for hemp producers and processors to build a business plan that addresses demand in relationship to supply.
"What we're seeing now is an oversupply and because it's unregulated, we're not all being held to the same standards because there aren't any," Weaver said. "We in the business are creating standards for ourselves as a selling point, but no one is required to follow them.
"I don't know how we organize this business better. We're in a dangerous place right now with a lack of regulation. With no education on this, a lot of people are going to invest money and lose money. I'm super disappointed with some of the product that's being produced and how the business is going thus far."
U.S. Hemp does everything possible to validate the quality of its Serenity line of tinctures, salves and other products made for human consumption and pets with what is generically referred to as CBD oil. However, nothing is stopping unscrupulous producers from making less potent CBD products that reflect poorly on the entire industry.
If hemp production was described as the wild west while still being restricted at the state level, it's moving into uncharted territory under the new regulation allowing any farmer in the state to grow as much as he wants.
Industrial hemp grown for everything from health supplements to building materials, and a seemingly endless list of potential uses, can contain, by law, no more than .3 percent THC, the psychoactive ingredient in marijuana, which comes from the same family of plants.
"Our laboratory here is food-grade, top of the line, best of the best," Weaver said. "On our website you'll see all the COAs—certificates of analysis—of what's in all the products we make. But we're only required to make sure we stay under .3 THC, and that's it. From there out, you have a commodity you can sell to anybody any way you like, and that is really what's hurting us."
Hemp produced for recreational marijuana, which is still illegal in Indiana, adds a whole other layer of complexity.
U.S. Hemp was among the first companies to get a license to grow hemp and is the biggest such operation in Indiana, Weaver said. Its headquarters and processing facility are located in a facility once used to make travel trailers.
It's a vertically structured, seed-to-shelf operation that got into hemp production on the ground floor in early 2018. Consequently, it is well-established to navigate an uncertain and unpredictable landscape.
"We produce the genetics, we farm it, we harvest it, we dry it, we process it, we turn it into oil and we turn it into retail product," said Weaver, adding that the company's seed dealer, KLR Farms, is on the state's approved list of dealers.
In 2020, Weaver and his four co-owners planted 230 acres of hemp, down from 400 in 2019, at an undisclosed location near New Paris—security from poachers either unaware of what industrial hemp is or using it to cut with similar-looking marijuana remains an issue—and crude and processed oil is made on-site. The seed-breeding operation is in Oregon and product manufacturing, labeling and packaging are done at locations throughout the nation.
Farmers also need to know that a whole list of challenges exists between planting and processing.
"It is not corn and soybeans; it's far more difficult," Weaver said.
The OISC seed warning underscores the risk of dealing with unknown sources. Seed can be found on the Internet for $40-$50 a pound, Weaver said. However, KLR Farm seed sells for $1 per seed, at 1,340 seeds per acre. About 20,000 seeds only fill a gallon-size, plastic storage bag halfway.
It's important to plant "feminized seed" that produces plants with buds from which the oil is extracted. Male plants have to be removed from hemp fields to prevent fertilization and seed-production. A bad supply of seed could be 50 percent male.
"Out of our entire fields, we had 11 either hermaphrodite or male plants, so that's a really good ratio," Weaver said. "If you buy general seed by the pound, you could have to wipe out half of your field before it has a chance to pollinate your female plants. That's a problem.
"We have a long way to go to get to where your corn and bean dealers with Beck's, Pioneer and those guys are at."
To Weaver's knowledge, U.S. Hemp and another company in Colorado are the only companies doing large-scale, machine harvesting.
"If you're currently a farmer and you're looking at this, you gotta know that none of your equipment works to plant it, your irrigation doesn't work to water it and none of your equipment will harvest it," Weaver said. "They don't sell the equipment, so you've got to design, modify and make it yourself to make all that happen."
Without proper equipment, Weaver recommends farmers start out with acreage that can be managed manually by hand.
Testing is also important to make sure THC levels are in line. It's a difficult proposition because stress, such as dry conditions, can induce hemp plants into producing too much THC. And, if one plant test positive, or "hot," the entire crop has to be destroyed.
Despite all the caveats, Weaver is committed to producing a "a safe, good-quality product" he has found from personal experience to be effective at treating a wide range of health issues. And with one acre of CBD-producing hemp being more profitable than 10 acres of corn, it can help keep at-risk farms in business.
"If this is going to be that profitable, and we can teach people how to grow five or 10 acres that can change a life or save a farm—we literally saved three in 2019—we keep saying we're going to get this business straightened out and get the proper regulations," Weaver said. "These farms are just dying trying to make a living and I'd like to think we can help do something about that by diversifying their crop."
Return to Top of Page