Hemp State Highlight: North Carolina puts out big welcome mat for hemp industry

(This is the first installment in a series that will look at the hemp markets in U.S. states over the next few months. Other installments: North DakotaOregon and Vermont.)

By Kristen Nichols

Dozens of states are slowly experimenting with industrial hemp cultivation and processing, authorizing limited tests through land-grant universities. Not North Carolina.

North Carolina has gone all in on hemp, which state officials see as a natural fit for an economy once dominated by tobacco farming and textile manufacturing.

North Carolina is finishing its first hemp-growing season with more hemp growers, more acres in hemp and more hemp processors than any other state in its first year of hemp production.

“We’re just getting geared up,” said David Schmitt, chief operating officer for Industrial Hemp Manufacturing, which produces CBD oil and processes hemp fiber in Spring Hope, N.C.

North Carolina’s hemp enthusiasm makes the state a natural launching point for a closer examination by Marijuana Business Daily, which is bolstering news and analysis of the burgeoning hemp and CBD markets.

Here’s what you need to know about North Carolina’s hemp market.

Industry snapshot 

As of this year, North Carolina has:

  • 97 licensed hemp growers
  • 1,930 outdoor acres under cultivation
  • 159,000 square feet of indoor greenhouse cultivation
  • 19 licensed processors, mostly producing CBD oil

With a flexible no-deadline application process, no acreage minimum or maximum, and a regulatory scheme that allows hemp growers to pursue any end product for their crops, North Carolina has seen strong interest from farmers wanting to grow the plant and entrepreneurs interested in processing it.

North Carolina allows hemp to be used for:

  • CBD extraction
  • Seed or seed oil
  • Fiber

As in other hemp states, the initial value for growers in North Carolina seems to be in CBD oil extraction.

Market considerations

Though prices vary by state and there is no official tracking of hemp commodity prices by any standard exchange, North Carolina hemp growers report the market is fetching:

  • About $20-$30 per pound of dried flowers or buds for use in CBD extraction, more if the plant CBD content is high. Yields are highly variable, but a healthy hemp plant can yield about a pound of such material.
  • Less than $1 per pound for seeds to be eaten as food products.
  • About 10 cents a pound for stalks to be turned into fiber
  • About 10 cents a pound for seeds intended to be pressed for seed oil.

“The strongest market right now is for hemp floral material. Realistically right now there’s no market for fiber,” said Scott Propheter, CEO of Criticality, a hemp processor in northeastern North Carolina.

Growing pains

North Carolina’s first year wasn’t without any glitches – some natural and some manmade.

“We lost some acres due to heavy rains,” said Burt Eure, who is working on developing hemp seeds at his White Hat Seed Farm in Hartford, in northeastern North Carolina. “The jury’s still out trying to find the variety that’s going to work for us.”

Some growers were also plagued by “weed control issues and pest issues,” damaging their entire first hemp crop, said Sandy Stewart, Research Stations Director for the North Carolina Department of Agriculture and vice chairman of the N.C. Industrial Hemp Commission.

In addition, North Carolina saw isolated thefts from hemp fields, likely from folks who confused hemp with marijuana. Sheriff’s officers in Edgecombe County stepped up patrols of area hemp farms after they arrested five people in September on charges of trespassing or theft.

Looking ahead

North Carolina is likely to modify how it regulates hemp in coming years, Stewart said.

He told growers, for example, to prepare for possible application deadlines. Last year the program got started too late to give growers a deadline, but that will likely change, he said.

Stewart and others agreed that hemp participation in North Carolina is going to increase next year, maybe even double.

“I think you’re going to see some big growth,” Propheter said.

What that means for prices is too soon to say. As long as prices don’t plummet, North Carolina could surpass hemp leaders Kentucky and Colorado by 2020, operators say.

“Within two or three years, North Carolina will lead the nation in industrial hemp, no question,” Schmitt said.

Kristen Nichols can be reached at [email protected]

3 comments on “Hemp State Highlight: North Carolina puts out big welcome mat for hemp industry
  1. From NC on

    I agree that North Carolina can become a market leader both regionally and nationally. It has a great deal of resources that could be leveraged to get ahead of the curve. It’s physical location is excellent both in terms of climate and geography. There have been some solid investments made from the private sector in terms of human hours and capital to help get them in a position to handle large scale production. BUT there are definitely some areas that need to be addressed.

    Here are some of the areas that I feel need some attention:

    1. Lack of funding for the program on a state level. This is a massive bottleneck in terms of getting the political machine aligned with the economic realities of what is required to help develop a truly robust hemp based eco-system.

    2. Lack of structure as it relates to rules/regulations. This will have a huge impact on viability as the program matures. Testing procedures & fees, Licensing fees, taxation, tracking of crops, etc…can be a make or break for the producers and this needs to be addressed early on to come up with a model that makes sense for all parties.

    3. General lack of knowledge of the crop itself. This can have a lasting impact on those interested in getting involved in hemp cultivation/processing.

    Main areas of concern-
    Genetics- acquisition, strain selection tied to crop usage (CBD extraction, fiber, hemp hearts, etc)
    Cultural practices- Feeding regimen, Water needs, propagation, pre-post harvest management

    4. Lack of effort to explore the economic impact. I think many people are fixated on finding a crop that could replace soy, corn, tobacco etc…vs focusing on Hemp specifically. Fiber production is important but will not play a huge part until the rules and regulations get clarified. Most of the short term profit will be tied to CBD concentrates and that should be the focus for the time being. The farmers can get a better ROI on less acreage and learn about the nuances of the crop and scale up as needed.

    The first season was a bit rocky for both the ag department and the growers. There was a great deal of early loss due to lack of preparation and education. Things take time and there is a learning curve for all parties, but some of this could have easily been avoided.

    I think NC has a great shot at becoming a market leader. If some of these concerns were addressed I think they would have a better shot at getting there faster and more efficiently. Most of the pain could be alleviated by a small infusion of capital from the state and bringing in the right people to help get the program off the ground with some very clear goals laid out for the next several seasons. The farmers are in place and the capital is there. They just need a strong team to lead them.

    Reply
  2. denis barden on

    lol colorado and oregon are light years ahead of north carolina
    i know individual famers with acreage planted that amounts to 25-50% of the entire states acreage

    Reply
  3. From NC on

    I agree that there are people outpacing NC at the present time. It is a bit of an apples to oranges comparison at this point.

    Logically, states that have had legal cannabis for many years would have an easier time launching than a state which is still bogged down in prohibition. Zero knowledge base in terms of cultivation, testing, infrastructure regulation etc..is hard to overcome.

    First year numbers from Colorado were what 200 acres and in 2016 at 6000 acres? Oregon started in 2015 with 13 permits and 9 actually planted. Oregon in 2016 was 77 permits with 1200 acres (on record under production) according to my fact finding. I think if NC managed the program properly over the next few years they could be competitive and definitely gain a strong foothold on the east coast.

    Reply

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