North Carolina growers are betting on hemp | Crain's

North Carolina growers are betting on hemp

Tony Finch, a fourth-generation tobacco farmer near Spring Hope, sees promise in hemp as a cash crop. | Photo courtesy of CMW Media

Hoping it might become the state’s newest cash crop, farmers across North Carolina have been clamoring to grow hemp since the state legalized the activity under a research program that kicked off last year.

Emily Febles, who manages North Carolina’s Industrial Hemp Pilot Program, said the state’s Industrial Hemp Commission received about 100 applications to participate in the program’s first year, which surpassed expectations.

“If you look at most other states with active industrial hemp programs, nearly all of them had only about five or 10 people participating in the first year,” Febles said.

Hemp can be used to make a wide variety of products, including fabrics, textiles, paper, construction materials, cosmetics and personal care products. Congressional Research Service reported last year that U.S. hemp sales were close to $600 million annually.

While growing hemp for commercial purposes in the United States has long been prohibited under federal law, it’s regained ground under the Agriculture Act of 2014, which allowed certain institutions and state departments of agriculture to grow hemp for research or under pilot programs. Industrial hemp production was legalized in North Carolina under such a program, the research of which will be used to inform the activities of future growers.

North Carolina State University’s various extensions have been holding a number of educational events around the state to bring potential growers and other interested parties up to speed on the budding industry. One of those events took place at the Chatham County Center of North Carolina in Pittsboro on March 19, and reviewed the current regulations for industrial hemp production in the state, the pilot program’s application process, end markets, and more.

Febles said the events typically attract a good sum of people.

“I would say about 80 percent of the people that come are interested in growing hemp, but want to learn more before they decide to fill out an application for a license,” Febles said.

Replacing tobacco

Interest in the industry makes sense, especially among smaller family tobacco farmers, many of whom have had to diversify their crops to stay afloat as tobacco has steadily fallen from its pedestal as a leading North Carolina cash crop due to a mixture of foreign competition, deregulation, and fewer people choosing to smoke.

Tony Finch, a fourth-generation tobacco farmer near Spring Hope, said he remembers the days when growing 15 or 20 acres of tobacco was enough to “keep food on the table and send the kids off to college.” Today, that’s no longer the case – not by a long shot.

“You have to tend about 500 acres to make any money these days,” Finch said. “That gets you into a lot of overhead and requires more help, and that’s not family farming. That’s corporate farming.”

Looking to diversify, Finch got into hemp, growing about 10 acres of it last year. Where tobacco gets him about $2 per pound, he says the hemp flower gets him $25 per pound.

His buyer is Industrial Hemp Manufacturing, a subsidiary of the publicly traded Hemp Inc. The CEO of that company is Bruce Perlowin, who spent nine years in prison for smuggling marijuana in the ‘80s and ‘90s. Industrial Hemp Manufacturing operates a large hemp mill in Spring Hope that’s equipped to produce fiber, loss circulation materials and absorbents from kenaf and hemp.

Hemp’s potential impact on North Carolina is currently uncertain, but the future could be bright. Kentucky, which launched its pilot programs in 2014, reportedly saw under $5 million in hemp profits in 2016, and is poised to grow.

A report from Brightfield Group projects that the U.S. market for cannabidiol – or CBD – in particular will hit $1 billion by 2020. CBD is a non-psychoactive compound made from industrial hemp that’s largely marketed for its therapeutic effects. It’s sold in all 50 states.

Hemp University, another subsidiary of Hemp Inc., recently held an educational symposium in Charlotte that was focused on CBD.

“In North Carolina last year, about 70 percent of growers were growing for CBD, so there’s a lot of interest,” said Rick Rainbolt, president of Hemp University.

Experts say it’s hard to predict just how much of a boon the crop will be for North Carolina. It faces obstacles, and there is some concern at the federal level that legalization efforts for hemp are a back-door attempt to decriminalize marijuana.

But Febles says the program has many promising players and growers, and doesn’t expect enthusiasm to wane just yet.

“There is a lot of interest here in North Carolina,” Febles said.

March 14, 2018 - 7:54pm