Farmers in Arkansas hoping to cash in on the state’s newly legal crop — industrial hemp, a variety of the cannabis plant low in intoxicants — are finding it’s tougher than they expected.
“I think a lot of people came into this program expecting to make the big bucks, or save the family farm, and we’re kind of learning that that’s not the case,” Caleb Allen, the coordinator of the Arkansas Department of Agriculture’s industrial hemp research program, told the Arkansas Times in February. “Maybe 20 or 30 years in the future, who knows, but it’s just too new right now to really say, ‘Yes, this is a definite crop that will save our farm.’ It’s a lot of hard work.”
Industrial hemp is a tempting crop for farmers because of its versatility. The market for the hemp product cannabidiol, or CBD, has skyrocketed, with U.S. sales predicted to reach $20 billion in the next few years. CBD is used in creams and oils for pain relief and calming. A separate variety of hemp is sold for fiber; hemp has long been used to make rope and textiles. It’s been used to make shoes, even biofuel.
Arkansas farmers were allowed to start planting hemp in 2019, part of the state’s Industrial Hemp Research Pilot Program approved under the federal 2014 Farm Bill. During the first year, the state Department of Agriculture licensed 125 farmers to grow hemp. A total of 1,818 acres of hemp were planted across Arkansas, in 51 of the state’s 75 counties.
But of those 1,818 acres, 213 were either destroyed voluntarily, some were planting failures, or others were grown solely for research and left unprocessed. Others were destroyed because they were too “hot” in the intoxicant chemical THC (tetrahydrocannabinol), exceeding the federal 0.3 percent limit on hemp.
Some of the state’s hemp industry’s problems can be traced to agricultural difficulties. The trouble started in the greenhouse for Kim Ellington, 55, a rice and soybean farmer with Jerome Farms Partnership outside of Dermott, who received his license to grow hemp in February 2019. During the germination process, some of his seedlings, which he started in his greenhouse, became diseased. It was a loss that Ellington said has “haunted me all year long.”
Ellington eventually planted around five acres of hemp on his 1,650-acre farm. By the end of the growing season, only two acres were successful, and only half an acre produced plants that “were looking like they were supposed to.”
“If it had been a soybean field, I would have [dug] it up and started it over,” Ellington said.
A particularly wet spring in 2019 also led to poor growing conditions, and around 94 percent of the state’s hemp growers lost money on the crop. Arkansas hemp farmers find themselves at the bottom of a steep learning curve as the 2020 growing season begins.
In addition to the challenges of cultivating a plant that’s new to the humid Arkansas climate, some farmers say that tricky state and federal regulations — and perhaps slow-walking of regulations thanks to a reluctant governor — have hindered the fledgling industry’s first steps.
One of the state’s regulations, in fact, is seen as the biggest impediment to growing hemp profitably: Growers may only sell raw hemp products — the living plant, its seed and leaf material — to licensed processors at wholesale, rather than directly to the public.
In 2019, farmers were unable to sell more than half their crops to processors. Of their yield of 190,554 pounds of flower (buds), 422 pounds of hemp fiber and 6,303 pounds of hemp grain, 107,704 pounds remain unsold (54.6 percent). The product is in farmers’ storage.
The 2018 Farm Bill, which removed industrial hemp from the Controlled Substances Act, allows farmers to sell to consumers. But the state Plant Board promulgated its hemp growing rules under the 2014 bill, which required that hemp be grown only as research and to processors. The first opportunity to alter the rules to allow direct sales, program coordinator Allen said, will come in the 2021 General Assembly, when the Arkansas Industrial Hemp Act could be amended.
Farmers interviewed by the Times about the progress of hemp production in Arkansas were critical of the selling requirement. David Owen, who with his three brothers and Cesar Mendoza owns Hot Springs cannabis company Ouachita Farms, called the selling limitation the “biggest hurdle” for Arkansas hemp farmers. Kelly Carney, a licensed hemp grower and processor and owner of North Pulaski Farms in Cabot, agreed.
“The people who are losing right now, and will lose until that rule is changed, are the Arkansas farmers,” Carney said.
State Rep. David Hillman (R-Almyra), the lead and sole sponsor of the Arkansas Industrial Hemp Act, said he wrote the legislation based on Kentucky’s hemp research pilot program. When Hillman presented the bill on the House floor in March 2017, he told legislators he was initially skeptical of the hemp plant because he associated it with illicit marijuana, but the more he researched the crop and its history in the U.S., “the better I liked it.”
Hemp has been grown for tens of thousands of years around the globe. The fiber from the plant has been used to make garments and canvas for sails. Many early American settlers grew hemp, and in the 1700s, farmers were legally required to grow it as a staple crop. Early drafts of the Declaration of Independence were written on paper made from hemp.
Attitudes toward the plant changed in the early 1900s, when the U.S. government increased its efforts to combat drug use, including marijuana. In 1937, Congress passed the Marijuana Tax Act, which placed an excise tax — the same kind of tax often imposed on cigarettes and alcohol — on all cannabis sales, including hemp, to deter the production and sale of the crop. But during WWII, the tax was briefly lifted to allow farmers to grow hemp fiber to be processed into rope for the U.S. Navy. The U.S. Department of Agriculture even produced a short documentary, “Hemp For Victory,” that encouraged farmers throughout the Southeast and Midwest to grow the crop. Over 400,000 acres of hemp were harvested between 1942-45.
After the war, hemp returned to its highly taxed status, and in 1970 its growth was officially outlawed by the passage of the Controlled Substances Act. This classified hemp as an illegal Schedule 1 drug and banned farming of the plant.
Hillman reminded legislators that though hemp may look like its illicit cousin, marijuana, hemp is significantly lower in THC content.
“You might say, ‘Well, it’s just a lighter version of marijuana,’” Hillman said. “I want to tell you: You could pile a pile [of hemp] up as big as this room and set it on fire, and there wouldn’t be enough THC in there to get anybody high. So that part of it’s safe.”
In addition to products made from CBD oil, hemp has myriad uses in multiple areas of industry. When oxidized, or dried, hemp oil from the plant’s seeds becomes solid and can be used in oil-based paints, in topical creams as a moisturizing agent and in plastics. Pure hemp fiber has a texture similar to linen, and can be used to make a variety of fabrics and furniture. Henry Ford even created a prototype of a car using hemp materials in 1942. The body of the car was composed of a strong plastic material made with hemp fiber and the car was designed to run on hemp fuel. The car’s design was part of Ford’s effort to develop new building materials during the steel shortage of World War II.
Concrete-like blocks made from hemp and lime — sometimes called “hempcrete” — are used as insulation in construction. Tennessee Wood Flooring in Sevierville, Tenn., produces hardwood flooring made from hemp, as does Fibonacci, a company that produces a wood substitute called HempWood in a 16,500-square-foot facility in Murray, Ky.
Hillman told the Times that the hemp plant’s ability to pull heavy metals and toxins out of soil and store it in the plant’s stalk is what “tipped the scales” for his favor of the crop. He added that his wife now gives CBD drops to their family’s dog Troy, a 17-year-old Pyrenees mix who “couldn’t hardly get around.”
“Now every afternoon at 4:30, he goes in the kitchen and stands there and looks at her until she gives him that CBD oil,” Hillman said. “And he feels better, he walks better, he gets around better.”
After the Arkansas Industrial Hemp Act bill passed the Senate in March 2017, Hillman said he received a call from Governor Hutchinson.
“He called me up [and said], ‘David, you know I was at [the Drug Enforcement Administration] … ,’ ” Hillman said. “ ‘I just can’t have my name associated with anything to do with marijuana. So, I’m not going to sign that bill, but I’ll let it become law without signing it.’ ”
The bill, now known as Act 981, became law in 2017. Some hemp farmers, including David Owen of Ouachita Farms, believe the governor’s reluctance to support the legislation — and thus, the hemp program at large — put the Arkansas State Plant Board in a difficult position.
He claims the Arkansas State Plant Board received “basically no guidance” from both the governor’s administration and the attorney general, despite Arkansas farmers “begging” for direction and changes to the hemp program’s rules.
Asked if guidance from the governor on the hemp industry has been lacking, the Arkansas Department of Agriculture issued a statement: “The Department always has, and continues to work closely with the Governor’s office, federal, state, and local law enforcement, as well as legal counsel in the administration of the Industrial Hemp Research Program.”
In 2019, over 90 percent of Arkansas hemp farmers cultivated the plant for CBD production.
CBD is sold for a variety of uses, including treatment of chronic pain, anxiety and inflammation. In 2018, the Food and Drug Administration approved Epidiolex, a highly concentrated CBD extract, for the treatment of seizures associated with two epilepsy syndromes. CBD products are widely available: They’re sold in specialty hemp or CBD stores, but also in pharmacies, gas stations, health food stores, grocery stores and with many online retailers.
Owen described himself as a “true believer” in the benefits of CBD and other cannabis products. In 2009, Owen was diagnosed with Crohn’s disease, a chronic and often debilitating inflammatory bowel condition, and in 2010 he underwent a surgery that removed four feet of his small intestine. He uses a potent CBD extract that he says has allowed him to stop taking the biologic drugs he took for the disease.
Other Arkansas hemp farmers have described similar experiences with CBD products. Cabot grower and processor Carney sells a “full spectrum” CBD hemp balm, which means it contains trace amounts of cannabinoids other than CBD, and he uses the topical to relieve pain in his shoulder.
“One of the things that makes me feel good about growing [hemp] is that when I first started, I was not necessarily as big a believer as I am now,” Carney said. “This stuff works.”
Though Hillman said his elderly dog seems to find relief from a CBD extract, he has not tried it himself.
“Does CBD oil work? I don’t know, and I don’t care,” Hillman said. “If you take it and it makes you feel better, whether it’s up here [in your mind] or in your body, doesn’t matter to me.”
Dermott hemp farmer Ellington said he wanted to grow CBD because of what he read about the market and its success in the U.S., but acknowledged he “didn’t do enough homework” on the production of hemp for CBD.
“I just kind of jumped into [hemp production] because I thought, ‘I can do this, [I can] do a few acres, we can handle it, [and it] won’t cost me a whole lot,’” Ellington said. “Which it didn’t, but I’m not gonna get a whole lot out of it.”
Ellington had a total vested interest of $12,000 in his hemp crop, saying that he didn’t invest any further because he “knew if I pumped a lot of money into it, I would not get it back.”
Owen and his three brothers, along with co-owner Cesar Mendoza, initially invested $200,000 in Ouachita Farms’ hemp-growing enterprise, which employs eight people in Saline County. Owen said about half of the upfront cost was used to prepare the land for hemp production, including the digging of a well, the installation of an irrigation system, and the cost of seed, soil and manual labor. Damon Helton, who also owns Olde Crow General Store in Benton, owns the land that Owen farms.
Owen’s team planted five acres of hemp in 2019, but only three acres yielded saleable hemp. Because he’s growing to produce CBD, he used the buds from the plants, storing them in a temperature-controlled drying facility to preserve the plants’ terpenes, oils that give the plants their odor and taste.
“I feel like that was the most common mistake we saw in Arkansas this year: People weren’t fully versed on not just the drying process, but the curing process,” Owen said. “We’re talking about a five-week period here, and if you don’t do it right, your crop is just gonna smell like hay.”
The strain of hemp plant that’s used to grow fiber has been bred to grow 10-13 feet tall; the stalk of the plant is what’s processed into fiber. Hemp grown for fiber yields fewer and smaller flowers, or “buds.”
The strain of hemp grown for its high CBD concentration has been bred to produce more buds, which produce CBD, and these plants usually grow 4-5 feet tall. Hemp grown to make CBD products requires individual attention, and Allen said he’s heard some farmers describe their experience growing the plant as “boutique gardening and not farming.”
Just like those who cultivate cannabis for medical marijuana, hemp farmers must try to keep their crops free from male plants to keep the bud-producing female plants from being fertilized. If fertilized, female plants will focus on generating seed, reducing the CBD in the bud.
“It’s not as finicky as an heirloom tomato, but it does have vulnerabilities,” North Pulaski Farms’ Carney said.
Carney, who planted his crop to produce CBD in May, said his began flowering around late June. Carney said outdoor growers harvest in September and October, while indoor growers who cultivate the plant in greenhouses have more flexibility.
If you were to drive past Carney’s hemp fields in late summer or early fall, you’d probably be able to smell them from the road: “It reeks like marijuana, it looks like marijuana, it just doesn’t contain the THC that marijuana does,” Carney explained.
Keeping a hemp crop’s THC level below 0.3 percent is crucial to putting the crop on the market, so monitoring and maintaining is important.
When hemp plants become “stressed,” they start producing higher levels of THC. Several factors or “stressors” can increase the THC concentration in a plant, including soil temperature (the growing range is roughly between 65-83 ºF), amount of shade, proximity to nearby plants, and type and amount of fertilizer or mulch. Much of the research the state’s farmers did concerned the effects of these different stressors on a plant’s THC level.
State Department of Agriculture inspectors check greenhouses and plants in the field for compliance with the THC limit, and the department’s lab is the only one in the state authorized to run compliance testing.
Allowing farmers to receive compliance certification from third-party labs, Owen of Ouachita Farms said, would allow farmers to receive the compliance test from the same third-party lab from which they receive lab tests throughout the growing season; Owen said consistency in lab results is key to a crop’s success. Farmers would also like a longer turnaround time to harvest their crops after the state deems a crop compliant: The window now is 15 days; Owen advocates for a 28-day window before harvest.
Another profitability roadblock: There’s a big disparity (not just in Arkansas, but nationwide) between the number of farmers growing hemp and the number of processors processing hemp, and that gap has created what program coordinator Allen and many farmers described as a “bottle-necking effect” in the state’s hemp industry.
In 2019, 33 processors were licensed in Arkansas’s industrial hemp program, but not every processor processed material, Allen said. Only a bit more than half of those licensed accepted hemp material from Arkansas farmers in 2019. Those who did processed 197,263 pounds of hemp, bringing hemp farmers a total of $329,381.
Many hemp growers strongly recommend that any farmer considering applying for the Industrial Hemp Research Pilot Program negotiate a contract with a processor before the growing season begins to guarantee a return on their investment. Otherwise, hemp has to be put in storage until a buyer is found. Jody Hardin, an organic farmer from Grady, said this can be a tricky step for farmers, as hemp needs to be stored securely in a low moisture facility or the crop will rot — and growers are left with no profit to show for their labor.
Despite the obstacles faced by Arkansas hemp farmers in their effort to turn a profit from their crop, many remain optimistic about the industry in the state, though they acknowledge its growth will be a gradual one.
Ellington of Jerome Farms Partnership said that in his lifetime as a farmer, he’s learned the value of failure.
In 2020, Ellington is no longer growing hemp for CBD products. Instead, he’s growing industrial hemp for its seed and as a fiber crop. Because the strain of hemp used to grow fiber contains much lower concentrations of THC and CBD, Ellington said it’s his “hope” that the fiber crop will be easier for farmers to grow and be incorporated into their crop rotation along with other traditional row crops, such as soybeans, rice and corn.
“Growing [hemp] for the CBD oil is more of a horticultural-type growing, where you take a few acres with extremely high input,” Ellington explained. “Our operation is just not geared for that. We’re geared for more production. The industrial hemp, I’m hoping, we can incorporate it into another crop in our cropping rotation. This is just me looking down the road … but I think the bigger picture for hemp is the fiber and stalk part of it.”
Carney echoed Ellington’s sentiment, saying the hemp fiber crop will be the “least risky play” for Arkansas farmers in the future — but only once the infrastructure required to purchase and process that fiber on a large scale is present in the state. Brad Fausett, a licensed hemp grower and processor and owner of Hawgs Hemp Farm in Conway County, noted that a fiber crop is unrealistic for smaller operations Arkansas hemp growers.
“A small grower can’t even consider a fiber crop,” Fausett said. “He doesn’t have enough land, he doesn’t have the equipment, he doesn’t have the $3 million he’s gonna have to spend to get new equipment for it. There’s just a lot of barriers … for the bigger agricultural move here, with hemp.”
Hillman, the sponsor of the Arkansas Industrial Hemp Act, said he thinks it will take between 15-20 years for the state to develop the infrastructure needed to expand the fiber industry, but he added that it took decades for crops that are now staples in Arkansas to become ubiquitous.
“When [William] Fuller grew the first rice in Arkansas in 1906 … he didn’t raise enough rice to replenish his seed. So it was a failure,” Hillman said. “When soybeans were introduced in Arkansas in the ’30s, they were mainly for a hay crop, and in the first couple years they were a total failure. And look where those two crops have us now. I can list a dozen other fads that came and went, but you don’t know until you try. And this is something that has enough potential that it needs to be tried in Arkansas, and I commend these people that are willing to go out there and try it and see if it works. They’re the most passionate people I’ve ever worked with in agriculture.”
Ellington said that in his experience as a business owner, five years is the “magic number” a new venture or industry takes before it starts becoming profitable. He said he’s confident that the hemp crop’s versatility, low impact and relatively quick yield time — a hemp crop can be harvested between 130-150 days after it’s planted — will position it as a worthwhile product for both farmers and consumers, so long as it’s not priced out of their reach.
Cabot hemp farmer Carney said he believes hemp fiber could eventually be a better crop for row farmers than some of the existing industry staples.
“To a cotton farmer who’s growing cotton, [hemp] is a much more profitable product they can grow in their soil,” Carney said. “To a corn farmer, they can make more money growing fiber, as long as there’s a place to buy it.”
Ouachita Farms’ Owen, in defiance of state law, sold raw hemp products from his crop — including packaged CBD buds and pre-rolled CBD joints — to the general public. He did so because he believes the State Plant Board is in error in prohibiting the sale of smokable flower.
His argument, which he spelled out in comments to the Arkansas Democrat-Gazette in November, is that state rules include language that says if any state regulation conflicts with federal law, the federal provision “shall control to the extent of the conflict.” Because selling smokable flower is legal under the federal 2018 Farm Bill, he believes that should override the state’s prohibition on sales to the public.
After the newspaper published Owen’s comments, he received letters from the State Plant Board saying the board was moving to remove his growing and processing licenses. Owen and his partners then met with the board’s hemp committee and agreed to stop selling their raw material to the public and remain compliant with the state until the smokable hemp provision is changed.
Hemp law sponsor Hillman said the sales restriction was included in the legislation “as a safeguard” to comply with the 2014 Farm Bill.
“It was in [the legislation], and I knew why that was in there, but I did not foresee the chance we were missing here in Arkansas to sell our own product,” Hillman said.
Owen was hopeful that the Arkansas State Plant Board would remove its restriction at its March meeting, but it did not. He said he believes that several hemp growers who grew in 2019 will choose not to grow in 2020 because of the restriction. Otherwise, he said, they would face serious “financial risk.” Coupled with the issue of third-party labs not being able to test crops for compliance and a general lack of resources for the program, Owen said he sees little incentive for farmers to participate in the cultivation of hemp at all.
Program coordinator Allen said higher licensing fees on farmers and processors approved by the State Plant Board in March will bring in needed revenue for crucial aspects of the program, including more staffing and resources, equipment for sampling and testing hemp, and travel costs for state inspectors who drive to and from hemp farms and the Department of Agriculture’s lab. The Plant Board is now working to meet federal guidelines to put the state, rather than the U.S. Department of Agriculture, in charge of state hemp production plans. Requirements include licensing standards, procedures for testing for THC concentration levels in hemp and for the disposal of noncompliant hemp, and procedures for handling violations of the rules. The plans must be submitted by Oct. 31.
Meanwhile, Arkansas will continue to operate under the 2014 Farm Bill’s research pilot project provision for the 2020 grow season. Program coordinator Allen said the USDA is working with states on a “case by case basis” to help align their hemp programs with federal guidelines, adding that the Arkansas DOA is coordinating with the USDA on “Arkansas’s individual needs.”
Allen explained that the benefit of the Arkansas Department of Agriculture running its own hemp production program is rooted in the state’s ability to tailor its program to its own needs and experience.
“I think of it … as, do you want Arkansans running the hemp program — we’re an agriculture state — or do you want Washington, D.C., coming in and running the program?” Allen said. “And I do know USDA’s program is pretty bare bones; they’re still trying to figure out what they’re going to do and how they’re going to implement their programs. But I can see a very large majority of states wanting to have control over hemp production in their state.”
Allen said the state department hopes to accomplish all of the necessary changes for USDA approval — including the creation of a “corrective action plan” for negligent license holders who violate the rules of the hemp program — through rule-making with the State Plant Board.
He’s hopeful about the future of hemp in Arkansas, but said its progress will take time. “I think Arkansas farmers, as soon as we learn more about this crop and this industry, I think they can really grab it by the horns and do some awesome things, because we’re an agriculture state,” Allen said. “I have total faith in our farmers to figure that out. But at the same time, we’ve got to crawl before we can run. Changes don’t happen overnight. It’s a slow crawl, but we’ll get there eventually.”