Hemp has been called the next big cash crop for American farmers. The crop is insanely versatile, with applications in a variety of industries like textiles, construction, and nutrition. On top of that, it produces a group of unique chemicals called cannabinoids which have medicinal properties. Cannabidiol (CBD) especially has been receiving a lot of attention, and experts say the CBD industry might be worth $20 billion by 2024.
The 2018 Farm Bill legalized hemp after decades of prohibition, giving farmers permission to grow the crop under state and tribal programs. Nearly a year later, the U.S. Department of Agriculture (USDA) released its interim final rule on hemp, giving the industry a more comprehensive regulatory structure.
Colorado farmer James Bennet was in the hemp game way before it was commercially legal. Since 2014, he has raised 1,000 acres of hemp across multiple states, and he’s picked up a few things along the way. Now, his goal is to provide guidance to farmers who are looking to join the high risk but high reward hemp industry.
Bennet says since hemp hasn’t been grown commercially in the U.S. for a long time, the genetics are unstable. On top of that, he adds, it’s hard to grow and is labor-intensive. “This isn’t a crop that we can drive across a scale and leave with a check.”
He says that there’s plenty of money on hemp, but you have to be smart about it. He encourages farmers to learn more about the market chain between farmers and their final payout before making any major moves. Get to know the entire process, from planting to extraction and sale, and make sure you have buyers locked in before planting a single seed.
“I’ve seen people take a run for it. They started a little bit chaotic and felt like they were chasing their tail at the end of the year. It’s really important to try and get that market chain developed before you go out with stars in your eyes and grow a whole bunch of it.”
He advises prospective farmers to start small and scale up as they gain more experience. Hemp seeds don’t have a seed coat, and this affects germination as they’re more vulnerable to rot. “You might plant that seed and get 20% germ rate in the ground. When these seeds cost a dollar apiece, that’s a chunk of change that just went out the window,” he says.
He adds that with proper management, a small farm could generate a lot of income. “I’ve seen people make more money on one acre than other people have made on 100.”
Experts believe that Bennet’s advice is sound, and hemp industry players like Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) would urge prospective farmers to think seriously about what he says before venturing into hemp production.
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