Farmers are buying fewer clones and scaling back planting ahead of the November 12 federal ban
Kentucky hemp prices have collapsed from $40 a pound in 2016 to $2 to $3 today
Synthetic cannabinoids are undercutting legitimate growers, forcing some to auction equipment and exit entirely
Hemp farmers across the country like Jammie Treadwell are facing a serious dilemma this grow season as a looming federal ban on most hemp-derived consumer products takes effect November 12.
This is typically the time of year when her Central Florida farm sees sales of clones, or starters for other farmers, pick up.
“They're not buying them or they're buying significantly less than they have in previous years,” she told Cultivated in an interview.
Hemp is the main crop now at Treadwell Farms in Eustis, Fla., where generations of her family have grown row vegetables, peaches, and blueberries over decades. In response to citrus greening infestations decimating the state’s citrus groves, the company converted its citrus processing plant in nearby Umatilla to a hemp processing facility.
“We wanted to become a hub for developing an alternative crop that would allow our friends and neighbors, whether a small farm or a large farm, to have another option.” Treadwell said.
At its peak the farm was working with about 20 farmers. That number is down to about six today. Her family will soon decide if the farm halts hemp production altogether. It also has a line of branded products, so customer communication has taken precedence, adding new questions related to potential reformulations, labeling and inventory.
“All of these things just add up, and it starts to be this mountain that I have to decide,” Treadwell said. “We've made it through hurricanes, tornados, pests. We've made it through so much, and that's a really hard decision. I've pretty much invested my life savings into starting this business.”
Winding down operations
KellyAnn Salmon hopes to clear out her hemp supply by November.
Her Kentucky family farm in Louisville only dedicated a small greenhouse for hemp production this year. Seeds were planted in May and harvest will be in September, a typical grow season for area farmers.
In 2015 and 2016 hemp production on the farm peaked around 100 acres before the state vastly expanded commercial capacity in 2019. Oversupply and too-little demand has largely defined the economics since then.
In 2016, a yield of 10% CBD would generate about $40 per pound for Salmon Farm.
Today that price is $2 to $3 per pound, and any yield under 5% CBD is unsellable, according to Salmon.
The 980-acre farm, which also grows cucumbers, tomatoes and peppers, had dedicated 20 acres for hemp cultivation over the last several years. Uncertainty led the family in September to shutter its hemp dispensary in Louisville after 10 years in operation. Its line of products under the Kentucky Gold CBD brand are now sold at a market on the farm.
Salmon said small hemp farmers were bulldozed by special interests in Kentucky, where CBD drinks are only sold through liquor-licensed outlets.
“The marijuana, alcohol and tobacco industry pretty much put the nail in the hemp industry because we were competing with them,” said Salmon, who’s resigned to losing her business.
“A lot of the farmers that I know and the store owners I know are preparing to try to figure out what they're going to do next.”
Hemp farmer Alex Mootz.
‘Synthetic cannabinoids’ responsible for businesses going under
First-generation hemp farmer Alex Mootz in 2020 started leasing land in Wisconsin to contract out production services for hemp and CBD oil processors.
Bad business deals and extraction partners nearly ruined his plan, while forcing him to deliver abandoned biomass to Los Angeles, Montana and other far off destinations to find capable extractors.
The owner of Complete AG Solutions has poured millions into the operation, including a decortication fiber separating system, customized combines and other harvesting mechanisms.
His contract work has dried up, a consequence of the regulatory risk and his outspoken criticism of synthetic cannabinoids and bad actors, he said.
“Synthetic cannabinoids are the reason why companies like mine are going under,” he asserted. “We're just being undercut by people buying a cheap precursor and turning it into THC.”
Now he’s trying to unload assets. Most of his farming equipment has already been sent to auction and he hopes to sell his property to recoup what he can.
“My plan is to try to get out of this as unscathed as possible,” he told Cultivated. “I have a wife and a young boy and another baby on the way, and I'm not going to risk our future anymore on the uncertainty of the hemp industry.”
Story edited by Jeremy Berke.