For profit potential, marijuana may be the way to go. But for an agronomic crop that fits well into a rotation plan and adds a cash crop to the bottom line, hemp might be the better choice for Michigan farmers.
Depending on what happens with the farm bill and the November election, farmers may have their choice between the two cash crops in the very near future.
The first thing potential hemp growers need to know ‑ although most already do ‑ is that hemp is not marijuana. They may look alike, but to know the difference, farmers need to understand the markets. And federal regulations. And bureaucracy. And processing or lack of it. And oversupply potential. And… you know the drill. But there’s one more thing: the stigma.
Stigma comes from a well-known stereotype, fomented by the United States government with an anti-marijuana propaganda campaign that is thought to have gotten its legs with the 1936 movie “Reefer Madness.”
In its desire to protect children from a drug-addled life of crime and supposed mental derangement, the government lumped hemp in with marijuana, mostly because they looked so much alike.
Soon the ubiquitous hemp plant, grown by many founding fathers and required to be grown as a staple crop in the 1700s, was stigmatized as a social problem. Before long, it was labeled a Schedule 1 controlled substance, in the same category as heroin and cocaine, which today keeps it estranged from research and economic opportunity for farmers.
A quick history lesson
The Massachusetts Institute of Technology, in its publication “The People’s History,” wrote in 2000 that: “According to the February 1938 issue of Popular Mechanics (written early 1937), hemp was then on the verge of becoming “the billion-dollar crop.” However, in September 1937, the United States government, under the influence of the lobbying of synthetic textile companies (like DuPont) and several other powerful groups who saw hemp as a big threat to their businesses, proposed prohibitive tax laws, and levied an occupational excise tax upon hemp dealers. Later that year hemp production was banned altogether. The Canadian government, following the American lead, prohibited production under the Opium and Narcotics Act on Aug. 1, 1938.”
The stigma gained traction within political circles, and its stretched logic led to the prohibition we’re in today. But with ballot initiatives burgeoning to make recreational marijuana use legal, and a proposed farm bill provision that would make growing hemp legal again, that all may change soon.
If it happens, the doors to hemp production will open. But for now, research that would help Michigan farmers hit the ground running is stifled by federal law.
Why no research?
“We can’t get seed to start the research,” said Kurt Thelen, a Michigan State University professor (Department of plant, soil and microbial sciences and the Great Lakes BioEnergy Research Center) who’s been charged with leading research into hemp’s potential.
“As long as there are federal restrictions, we need a research permit under Schedule 1,” he said. “We applied (to the federal government) over two years ago, and I haven’t ever gotten an explanation about why it’s been delayed. My own reading between the lines leads me to think if it’s taken off as a controlled substance at the federal level, whether in the farm bill or other legislation, it would fall out of federal control, which would then pave the way for research. We’ve been ready to do it, but our hands have been tied.”
So, too, has farmers’ potential cash crop.
The Canadian model
Since Canada legalized hemp production (under government control) in 1998, it has become a multi-million-dollar industry, according to Kim Shukla, managing director of The CanAscen Group, a for-profit company in Manitoba that works with farmers on purchasing the hemp crop for “multiple purposes.”
“It’s a nice opportunity for famers, who are fabulous at growing it,” she said. “Hemp is an agricultural crop,” unlike marijuana, which is considered a specialty crop for entirely different markets.
“We don’t like to call hemp a commodity crop because the opportunities are in value-added processing,” she said.
Hemp is grown for many different uses, including fiber, seed, grain, oil and pharmaceuticals, commonly known as Cannabidiol (CBD). It is the substance that, when extracted from hemp, lends pain relief without the high induced by marijuana. It is commonly put into foods and also goes into ointments and other health products, and a good bit of it is exported to the United States. But if research in the United States is allowed, the sky’s the limit on the U.S. crop’s potential.
“We’re celebrating 20 years of legal hemp production in Canada, and we’re still evolving,” Shukla said. “Its products are no longer just in health food stores. It’s in mainstream chains. The government is putting its toe in the door and taking economic advantage that has led to millions and even billions of dollars injected into the government. Industries (processing facilities) are falling all over themselves at the economic activity. They’ll never find such a great opportunity somewhere else.”
How to grow
Before farmers decide to take advantage of the crop’s potential, Shukla recommends that they first read the Canadian Hemp Trade Alliance’s Hemp Production Guide, found at http://www.hemptrade.ca/eguide.
But there are a few basic things to know before investigating the possibilities.
Shukla said hemp is a heavy nitrogen feeder, but does well anywhere corn or soybeans thrive. It does not do well on marginal ground.
“It’s a crop that could be part of a rotation, and if a grower is lucky enough to land a contract with a company that specializes in fiber or pharmaceuticals, it could replace a crop in the rotation,” Thelen said. “I don’t see it as another corn or soybean, but there is some profit potential there.”
The annual crop is spring-planted and fall-harvested with a combine, and is subject to the same kind of pest pressure, although Thelen said that’s another area of research that’s been lacking. He said the seed can blow onto neighboring fields and become volunteer plants, but is controlled effectively at this point by glyphosates. Weed control in a hemp field is relatively easy, Shukla said, because it grows quickly and provides a thick canopy.
The marijuana game
Marijuana growing for recreational use, however, is a different animal. The new model is indoor growing under strictly controlled conditions, but the profit potential is, like the commodity crop, subject to supply and demand.
In Colorado, where recreational marijuana has been legal for four years, oversupply has been a problem, according to a June article in the Fort Collins Coloradoan.
“The average price for a pound of marijuana bud was $846, based on sales from marijuana cultivation facilities recorded between Feb. 1 and April 30,” the newspaper reported. “It's the first time the price has fallen below $1,000 per pound since recreational marijuana was legalized in 2014.
“At the start of 2018, the average price of marijuana bud was $1,265 per pound. The most it's ever been, according to data from the state, was $2,007 in January 2015.
The average price of whole marijuana plants has also dropped from $230 per pound at the start of 2018 to $150 per pound now,” the report said.
“Steve Ackerman, who owns Fort Collins dispensary Organic Alternatives, attributes the sharp fall in price to simple supply and demand.
“Retail marijuana is a relatively new, maturing market with a lot of early entrants and resultant over-production,” he said in a text message to the Coloradoan. “Downward pressure on prices will drive the less-efficient players out of the market and prices will stabilize.”
During the first quarter of 2018, Colorado saw $4.9 million in medical and retail marijuana sales. Last year, the total sales exceeded $1.5 billion for the first time.
The Colorado marijuana industry has generated nearly $5 billion in sales since recreational use was permitted in 2014.”
As you might expect, marijuana growing is a much more capital-intensive investment than hemp, so the options are something farmers need to investigate thoroughly before making a decision.
Still, both options may be worth exploring, said Kevin Robson, horticulture specialist with Michigan Farm Bureau.
“The first thing farmers need to do is be patient and wait until it’s legal to grow either crop,” he said. “And remember, in the case of marijuana, federal laws prohibit its cultivation, so even if Michigan voters legalize it, you can still be prosecuted under federal law.
“In the case of hemp,” he said, “there may be opportunities out there soon after the next farm bill is passed. But again, wait until it’s clear that it’s legal to grow.”
As for the economic opportunities for hemp that may be available as early as this spring, it’s wise to wait, Robson said.
“If legalization of both crops becomes a reality, it will take considerable time before an industry grows up around it,” he said. “There needs to be some serious investment in infrastructure. We need processing plants. Markets need to be cultivated. But as we’ve seen from other states and Canada, there is a very real potential for farmers to get economic gain out of it. Canada has proven that the stigma over either crop can be eliminated by simple exposure to something that we in the United States have been taught to be afraid of for the last 80 years.
“Maybe someday we’ll look back on all these years of prohibition and wonder what we were thinking,” Robson said. “But for now, be patient. Don’t get too high on the possibilities. Not yet.”