Huge profits or huge risks? Kansas’ first legal hemp harvests are underway

It took just a few hours Friday for Sarah Stephens Selmon and her business partners to harvest one of the state’s first legal crops of industrial hemp.

With gardening shears, Selmon, her brother, Michael Selmon, and Amy Bosley simply cut the stocks of the 40 plants they’d grown indoors in a Butler County facility and trimmed the leaves from the flower buds. The buds, in particular, are what the partners are after because that’s where most of the plant’s CBD oil is produced. The plants will hang in a drying room for a couple of weeks before they are ready to be shipped to a processor.

Selmon has one of the 207 grower licenses that were issued by the Kansas Department of Agriculture this year under its new, heavily regulated industrial hemp research program, according to Braden Hoch, the state’s industrial hemp specialist. The state set an 80-acre plot limit per license so some growers hold multiple licenses. The agricultural department has also issued licenses to 20 distributors, 34 processors and nine state educational institutions this year.

Some growers, like Selmon, are business startups wanting to cash in on the popularity of CBD products. The program also is luring traditional Kansas farmers who in recent years have been ravaged by low commodity prices and international trade wars and see industrial hemp as a more lucrative cash crop.

“The tide is turning so it’s an exciting time to be in the industry,” Selmon said.

Will it grow?

The 2018 U.S. farm bill legalized the growing and commercialization of industrial hemp as an agricultural product. So far, 42 states have approved industrial hemp programs, according to the National Hemp Association.

Industrial hemp, a close relative of marijuana but with lower levels of the intoxicating THC substance, has several commercial uses. Besides being a source of CDB oil, it can be grown as a fiber that can be turned into fabric, food, paper and biodegradable plastics. The plant is as strong as steel, said Geoffrey Whaling, chairman of the National Hemp Association, and can carry an electric current. Some have already constructed buildings out of hemp.

In Kansas, 1,563 acres have been licensed for industrial hemp production, according to the agricultural department’s Hoch. That’s a relative drop in the state’s sea of 47 million tillable farm acres. Almost all of the industrial hemp growers are doing so outdoors, with a few operating indoors, like Selmon, or in greenhouses. About 90 percent of the hemp acreage is dedicated to CBD production.

Selmon, who is keeping the location of her warehouse a secret for security reasons, is planning to do more than grow plants for their CBD oil.

Before harvesting her first crop of 40 plants, she created 100 clones, genetically identical plants taken from cuttings of the plants she originally acquired from a Colorado grower to start the business. Of the first 100 clones, about 80 survived. She sold 35 of the clones to another Kansas grower and the rest she’ll continue growing for another harvest. A single plant can cost around $10 to $15.

With an indoor controlled operation and continued cloning, Selmon can get as many as five harvests this growing season. From the research she’s done, clones or transplants do much better than growing from seeds, she said. She is growing two varieties of hemp and using two growing methods: hydroponics and soil.

Experts don’t know overall how the industrial hemp crop will perform in Kansas, what varieties will thrive or the best way to go about growing it.

“That’s why we’re operating the research program,” Hoch said, “so large amounts of information can be generated in regards to what does well and what doesn’t do well. The growers who are involved will be generating considerable information on how the state proceeds with industrial hemp.”

$100,000 an acre

Some farmers nationally have reported windfalls of as much as $100,000 per acre from hemp used to produce CBD oil — unheard of figures for those who grow wheat, corn or soybeans.

Those claims raise plenty of eyebrows — and suspicion — in the agriculture industry.

Outdoor operations are riskier than indoor farms, with growers getting only one harvest per growing season — or none depending on Mother Nature and other factors, like plants being killed off because weed killer was sprayed on a neighboring field.

A few days of heavy rain completely washed out the industrial hemp crops being grown in Wichita and Manhattan as part of the Kansas State University’s John C. Pair Horticulture Center, according to director Jason Griffith.

In addition, If a crop runs hot — that is, the THC level surpasses the legal limit — the state can force growers to destroy the entire crop.

The state has six inspectors, Hoch said, who will conduct harvest inspections by taking samples or cuttings from the plants to test the THC level.

K-State’s Griffin cautions larger-scale farmers about the plant, describing himself “as the wet blanket.”

“People are talking about these outrageous numbers,” he said. “Then I step up and say, ‘yes, these numbers are outrageous, but you could lose everything.’”

Uncertainty and risk

Many questions linger about the market for hemp, the equipment needed to produce and harvest it and the banking and regulatory infrastructure needed to support its widespread acceptance.

“This developing industry has a great opportunity, but to be truthful has much uncertainty and risk for farmers,” U.S. Sen. Pat Roberts, R-Kansas, said during a July agriculture committee hearing on hemp farming. “It’s not often that almost an entirely new crop with this level of interest and market potential comes along.”

CBD sales have been strong and nationally are expected to exceed $20 billion by 2024, according to BDS Analytics and Arcview Market Research. CBD is believed to aid with many health ailments, though scientists caution that more research is needed to investigate specific claims.

The Food and Drug Administration has not approved the use of ingestible CBD products. But it’s so far limited enforcement efforts to those products that make egregious claims about health benefits, like promises of treating cancer, said Katie Gates Calderon, an attorney in Kansas City, Mo.-based Shook, Hardy & Bacon’s cannabis practice group.

“They’re not saying yes it’s fine, but they’re also not saying we prohibit it, “ she said. “There’s a lot of shades of gray. But that’s what makes the expansion of the industry — not just the growth of it, but the pace of it — so interesting.”

Another fad?

Ryan Flickner, senior director of advocacy at the Kansas Farm Bureau, worries that hemp may be just another fad to hit agricultural circles.

“I vividly remember the alpaca, llama and emu fad from the 2000s,” he said. But as many people jumped on board, supply quickly outpaced demand.

Even if hemp grows into a more reliable revenue stream, Flickner believes it will remain a niche product.

“The folks that are even thinking about growing 500 acres let alone 5,000 acres of industrial hemp, I think they’re putting their hopes and dreams out there,” he said.

Selmon’s operation doesn’t come near those numbers but she is planning to reapply for a 2020 grower license.

“I’ll probably change some of the things in my research proposal, like I probably won’t do hydroponics,” she said.

But she does plan to expand her operation from this season and eventually transition to a larger commercial operation when commercial licenses become available in Kansas, which is reportedly in 2020.