A promising option is hemp, and Alberta-based AltaGreen is working to bring a hemp-based poultry feed to market in Canada.

Why it matters: Hemp offers a sustainable protein source for animal feed.

Hemp is rich in omega fatty acids, plant proteins and other phytonutrients that can play key roles in supporting bird health. This is particularly important as poultry production transitions away from preventive use of antibiotics.

“One of the things that becomes very apparent is that current feed does nothing to strengthen the immune system naturally,” says AltaGreen CEO and co-founder Doug Kirillo.

“In Canada, we have 2.5 to five per cent mortality in chicks in their first 45 days and if you can reduce that by even one to two per cent by naturally strengthening immune systems, that is significant.”

According to Kirillo, some plant-based proteins like soy are also high in estrogen, which can have negative health impacts in humans if too much is consumed. This is not an issue with hemp, he notes. Product trials have also found that hemp has good feed conversion properties, meaning birds can eat less feed while putting on more weight.

Prior to the COVID-19 pandemic, Kirillo and his chief science officer were involved in a vertical farming project near Edmonton, growing kale and leafy greens, when they began experimenting with industrial hemp in hopes of making hemp oil. The pandemic put an end to their fresh produce sales, but they managed to maintain hemp research.

“We started by introducing products for the pet food and equine market,” says Kirillo, adding this was a strategic decision as the company didn’t need to seek Canadian Food Inspection Agency approval for those markets because their meat isn’t destined for human consumption.

“We now have eight or nine SKUs (stock keeping units) in those areas with some small distribution and we’re looking to raise capital to increase manufacturing capacity or move to a licensing scenario.”

Kirillo sees the biggest opportunity for hemp in the livestock industry. Poultry is a major meat source for hundreds of millions of people around the world. Swine is also a big potential market and interest is growing from the aquaculture industry.

AltaGreen has been working with the University of Alberta and InnoTech Alberta to develop hemp-based feed formulations that can be adapted from poultry to swine and fish feed with only small modifications. They have three products for chicks, broilers and hens and will seek CFIA approval to move to market in Canada once the research is completed, which is expected in the next three months.

Once approval is in place, the company will take a phased-in approach to entering the Canadian market, said Kirillo. At the same time, the team is following up on international interest in its products, including from the United States, where the Food and Drug Administration has just recommended approval of hemp seed meal as a protein source in poultry rations.

Many farmers in Alberta, Ontario and Manitoba are already growing industrial hemp that goes into materials markets like concrete and board. The human food market is growing as well.

“There is no lack of hemp today in the Canadian market. The supply chain is good here and many existing hemp producers are excited to get another avenue to sell their hemp,” Kirillo says.

“Hemp is also one of the best carbon sequestering plants in the world, and the offset with carbon credits will do nothing but increase the outlook for industrial hemp in Canada.”

The company has received funding from Natural Products Canada to help develop a business plan, a go-to market strategy and an intellectual property strategy to support commercialization. They’re key elements that investors and granting agencies look for when making funding and investment decisions, notes Kirillo.

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That didn’t happen.

Instead, the committee of experts reviewing the Cannabis Act barely mentioned hemp in its 91 page report published March 21.

The Canadian Hemp Trade Alliance said the report fails to provide “meaningful guidance” on how Canada should manage and oversee hemp production and processing in the future.

“The expert committee … were focused virtually 100 per cent on public health and safety, protection of youth. And they had no expertise and no mandate to consider hemp,” said Ted Haney, president and chief executive officer of the CHTA.

“But they pretty much just kicked the ball down the court.”

CHTA chair Clarence Shwaluk made a similar comment.

He said the committee could have recommended changes to the Cannabis Act that would separate hemp from “drug regulations and removed obstacles to our industry’s growth and development.”

Health Canada has regulated the cultivation of hemp since hemp was first grown in Canada in the late 1990s, requiring farmers to get a license to grow the crop.

Initially, farmers accepted those constraints. But over the last 10 to 15 years, growers and hemp advocates have lobbied the federal government to de-regulate the crop and free it from Health Canada regulations.

In 2018, the federal government legalized the production and recreational use of cannabis. Folks in the hemp industry assumed that legalization of cannabis would help liberate hemp from the Health Canada regulations.

However, the federal focus on cannabis has created more problems, Haney said.

“Being regulated under Health Canada became more difficult after the legalization of cannabis,” he said.

“The focus of the structures … became all cannabis, all the time.”

One major obstacle for hemp is that some bureaucrats and policy makers in Ottawa did understand hemp and the opportunity for Canada’s agriculture and agri-food industry.

However, in the last five years or so, many of those bureaucrats retired or moved on to other opportunities, Haney said.

“We ended up with new officials … (with) very little expertise (and) very little knowledge of agriculture,” he said. “The mandates of Health Canada aren’t related to agronomy … variety approval, licensing, food safety.”

Hemp has been grown in Canada for about 25 years, but the industry has never lived up to its promise. In the 2010s, hemp leaders were predicting that acreage would hit 250,000 by 2018. That target was never reached as the industry went through several boom and bust cycles.

In the last few years, farmers have seeded 35,000 to 50,000 acres of hemp across Canada for the food industry or for fibre.

The expert committee report and the lack of recommendations to de-regulate hemp are a disappointment for Canada’s hemp sector, but Haney believes opportunities remain.

The report and the minimal mention of hemp in 91 pages illustrates that hemp has nothing to do with cannabis.

“They (Health Canada) convened a legislative review, the expert panel has been clear that hemp really isn’t related to their mandate. It doesn’t represent the kind of risks that Health Canada is adept at dealing with” Haney said.

The panel did make one recommendation regarding hemp, saying Health Canada and Agriculture Canada should create an expert advisory body to look at hemp regulations.

For Shwaluk, it’s obvious how that regulatory framework should be structured.

“The government of Canada must fully recognize that hemp is not adult use cannabis or medical cannabis and start treating hemp as a normal agricultural crop.”

—Robert Arnason writes for the Western Producer.

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But while there are more products on store shelves, more cultivars than ever before and high prices for the crop, demand for hemp has been mixed.

“I think the hemp industry (in Canada) is struggling,” said Calgary-based hemp consultant Russ Crawford.

A former president of the Canadian Hemp Trade Alliance (CHTA), Crawford added that while hemp is a viable and profitable crop compatible with Canadian agriculture, he thinks it has a stigma attached, as regulations by Health Canada have steered away prospective growers.

“There are some challenges, not the least of which its affiliation with cannabis,” he said. “It is still overseen by Health Canada and on that basis, there’s a certain amount of requirements for farmers and processors to be registered and licensed and checked and double-checked by Health Canada… Hemp is still struggling with reaching its full potential.”

Other high-priced crops and a relative lack of investment in market development were also cited by Crawford as challenges. Nevertheless, he anticipates a small increase in acres in Western Canada.

“It’s not going to be a huge jump, but it will be a modest increase,” he said.

Meanwhile, Manitoba-based hemp consultant Anndrea Hermann called the hemp industry in Western Canada “growing and prosperous,” citing its increased use as feed.

“We’ve seen a constant gain in the grain side. We have further gains in feed production with having more varieties listed now than ever,” she said, also citing the presence of new fibre processing facilities.

Hermann added that this year’s hemp harvest is critical as supply from previous years is tightening.

“We need more acres this year because what we’ve seen this year is all the organic grain that was grown in 2021 has already been spoken for and/or mostly processed by now,” she said. “It’s not like some years ago when we had such a huge glut (of conventional grain) that we can peel away at that glut for two years.”

As international markets open up to hemp, there will be demand for Canada’s crop, according to Hermann.

“Especially on the food side, Canada has really mastered a lot of the standard production and quality parameters that we’re not quite seeing yet out of the U.S.,” she said, adding that there is budding demand for building materials made of hemp.

“Once we have these manufacturing facilities that can transform this stock fibre, that’s going to increase the demand because we’re going to have more product and we’re going to have that product here in North America versus having to import that product from our colleagues in Europe,” Hermann added.

Clarence Shwaluk, director of farm operations for Manitoba Harvest Hemp Foods, said his company worked with 80 growers across the Prairies for last year’s harvest and currently has 60 under contract. The company also showcased its new products at the Natural Products Expo West in Anaheim, California last March.

“We introduced a number of new products (there). We’ll be doing some exclusive work with Whole Foods Market based in the U.S. for 90 days and then we’ll expand those products into additional markets,” Shwaluk said.

“Those products are more in line with using hemp as a baking ingredient or in smoothies. (They’re) an additional play on our protein product lines.”

Manitoba Harvest has also been collaborating on a project with Protein Industries Canada since last year, developing new pea and hemp varieties for use in food and ingredient processing with aims to increase protein content while improving starch content and texture.

Overall, Shwaluk seems optimistic about hemp’s standing in the markets.

“I think hemp is positioned well for the protein markets and hemp has some really good attributes as far as the nutritional side of things,” Shwaluk said. “We had a couple of good production years, but we’re going to be a little bit down on acres this year.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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Major producers such as Colombia’s Clever Leaves and Canada’s Canopy Growth are developing and selling medicinal cannabis products to a Brazilian consumer segment estimated at 10 million to 13 million people. This results from a 2019 regulatory change allowing the import, sale and manufacturing of such products.

But permission for cultivation of hemp and cannabis in Brazil would be a bigger prize. If granted, the industry could blossom in four to five years, based on the experience of other countries such as Colombia.

“By 2025, I would like to be planting hemp in the interior of Pernambuco,” said Jose Bacellar, founder of Canada’s VerdeMed, referring to a northeastern state known for illegal marijuana growing.

A proposal that would legalize cultivation was approved in June by a congressional committee. Lawmakers are weighing if it could be fast-tracked to the Senate for approval. If passed there, President Jair Bolsonaro would have to sign it into law.

While Bolsonaro’s far-right positions may seem an unlikely match for the bill, the proposal has support from some members of the powerful farm sector, a key constituency that helped him win the 2018 election.

‘Silicon Valley of cannabis’

In the quiet town of Viçosa in southeastern Brazil — which some call the Silicon Valley of cannabis — researchers are developing a hemp variety better suited to the tropics.

If the law is changed and research is successful, Brazil could become a top grower of cannabis and hemp, experts said.

Sergio Rocha, director of ag-tech startup Adwa which is developing the hemp strain for Brazil, said about three million square km of land would potentially be suitable for cultivating the new variety.

Brazil could overtake China, the world’s largest hemp producer, which has about 670 square km planted.

“Using a part of Brazil’s agricultural land would be enough to give the country the title of world’s largest producer and exporter of hemp fibers, seeds and flowers for medicinal and industrial purposes,” said Dennys Zsolt, an agronomist specializing in the plant.

Brazil bans growing of Cannabis sativa L, the plant that produces hemp and marijuana. Hemp, which has less than 0.3 per cent of the psychoactive compound THC, contains CBD or cannabidiol. This non-intoxicating ingredient has been touted as beneficial for many health conditions including childhood epilepsy.

Growing the plants in Brazil would lay the foundation for a vertically integrated industry. A stable source of the raw material would support manufacturing of medicinal cannabis products, growth of a retail market and exports. Recreational cannabis would remain illegal.

Gabriela Cezar, chief executive of New York-based Panarea Partners investment banking firm, sees Brazil playing a leading role in hemp in Latin America, a region she calls the “epicentre of world hemp production.”

Panarea plans to form a Brazilian cannabis company focused on pharmaceutical products for pets while seeking to broker more cannabis deals in Brazil.

Tropical advantage

Among Brazil’s advantages are lower growing costs because its warm climate allows plants to grow outdoors compared to greenhouses in some countries. Stable hours of sunlight due to Brazil’s proximity to the equator are another plus.

Canopy Growth is “actively monitoring the advancement of hemp regulations in Brazil,” David Culver, the company’s vice president of global government relations, said.

But nothing is certain without the change to Brazil’s law, though some signs suggest the prospects are favorable. When Rocha spoke to a congressional committee about hemp in 2019, he was surprised that conservative lawmakers were not hostile.

“After I finished presenting the maps and hemp’s potential, I was applauded,” he said.

Although the farm caucus has not taken a formal position, members of the group said a majority in both houses of Congress back the proposal. The farm caucus controls slightly fewer than half the seats in the two chambers, and the law requires approval by a simple majority.

Centre-right lawmaker Fausto Pinato, a member of the farm caucus, said he supports the bill.

“If you are authorizing the sale, why not cultivation?” he said.

— Reporting for Reuters by Ana Mano in Sao Paulo, Jimin Kang in Seul and Maximilian Heath in Buenos Aires.

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In 2018, 41,200 acres were planted, according to Statistics Canada, but the total more than doubled the next year to 91,100. In 2020, that number went down to 53,000, but 2021 was projected for growth to 66,600 acres.

While that estimate is likely to fall short due to oversupply, weather-related issues and competition from high-priced commodities, there is still room for optimism for hemp growers.

“(The industry is) on the edge of turning,” said Kory Lulashnyk, general manager of Parkland Industrial Hemp Growers (PIHG) at Dauphin, Man. “There might be lower acreage currently in 2021, but 2022 and forward looks pretty promising for grain and fibre production.”

Hemp prices reached 80 cents/lb. in 2017 and 2018, but a surplus dropped the price of food grain hemp to 50 cents, according to Lulashnyk. Last spring, companies offered 70 to 75 cents/lb. — not enough to compete with high-priced crops.

Industrial hemp is from the same species of plant as cannabis, but the former must have less than a 0.3 per cent concentration of tetrahydrocannabinol (THC), the main psychoactive compound in cannabis, in the flowering heads and leaves.

Along with the use of its fibres for textiles, hemp’s seeds and their oil have found space on store shelves as health products.

“The grain market seems to be steady and increasing. Personally, I haven’t seen where the grain and the food use are increasing where they’re getting used as an ingredient for some of the bigger food processors and packagers,” Lulashnyk said.

“On the fibre side, we’ve probably seen a lot more inquiries this past year than in previous years. I’ve had inquiries to grow hemp for fibre pretty much across the country.”

Hemp production was first legalized in Canada back in 1998 but is still heavily regulated by Health Canada. In 2020, 1,269 industrial hemp licenses were issued by the federal government, including 582 in the Prairies, with 499 of those for cultivation.

Two of the cultivars PIHG created, Joey and Canda, combined for about 1,876 acres seeded in 2020.

“Here in the Parkland (region), it’s a little restricted as to what crops you can grow. Hemp offers a great choice for the crop rotation and, at the same time, it has a good cash return with a little bit…Herbicide and fungicide inputs are a lot lower,” Lulashnyk said.

Despite the hot and dry weather which has damaged crops and will limit their yields across Western Canada, PIHG’s 2021 crop is growing well.

“(The crop) looks good. It’s growing well. I think it doesn’t like a high amount of moisture and obviously we didn’t have that this spring,” Lulashnyk said. “We have to stay tuned to see how the flowering and the seed development go for the rest of the season.”

While more countries are starting to legalize the growing of hemp, adding competition for the Canadian product, Lulashnyk believes the industry will continue to grow.

“On the bigger picture, there will be a lot of opportunity when it comes to other countries having legalized hemp. Whether it’s selling seed into those places or selling the end products whether it’s the grain or the fibre into other countries that are now going to start processing.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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“It looks like we are looking at another 15 to 20 per cent increase in seeded acres nationally, which should take us over the 100,000-acre level for sure,” he said.

The CHTA gathers data from seed companies as to how much hemp seed has been sold, then estimates how many acres would be planted, he said.

One catch, however, has been a lack of information from Health Canada, which produces A Summary of Notices of Cultivation usually in November/December of every year.

Haney said the CHTA is still waiting for that report, almost six months later — and a big part of the reason, he noted, has been Health Canada’s ongoing struggle to collect the data from licensed producers.

As for prices, Haney said conventional and organic prices have increased about 20 per cent.

“Hemp is remaining competitive with the entire oilseed market, which has been astronomical this year,” he said.

“The revenue streams in the industry continue to diversify. By that I mean the vast majority of revenue derived by our industry, up until 2018, was farmers growing hemp for the seed harvest and selling that as pedigreed seed and for food processing. Also, selling it for the European birdseed market.”

More recently, producers have garnered revenue from the sale of hemp stalks or straw. This, he said, will further improve with a third hemp processing facility to open in Canada.

And the export market is looking bright, Haney noted.

“Our exports went up 20 per cent in 2020 and we expect to see a similar increase in 2021,” he said.

On the downside, the harvesting of hemp flowers and leaves struggled in 2020 in Canada as well as globally. In Canada, that aspect saw a tough year because of “overreaching regulations by Health Canada,” and not due to consumer demand, Haney said.

“The black market continues to serve consumers’ needs in the high-[cannabidiol, or CBD] extract concentrate market,” he said.

The ultimate goals of removing risk and protecting Canadians – and removing organized crime from the cannabis industry – are not really happening when it comes to the CBD market and particularly as it relates to hemp, he said.

One hope on the horizon will be using hemp for livestock feed, he predicted. The industry still needs to get approval from the Canadian Food Inspection Agency (CFIA) for the registration of hemp seed and its seven derivatives to be used as livestock feed.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Smiths Falls, Ont.-based Canopy Growth, whose cannabis brands include Tweed, Tokyo Smoke, Van der Pop and Spectrum Therapeutics, announced Thursday it will shut down its Tweed Grasslands production facility at Yorkton to “further align production in Canada with market conditions.”

The Yorkton site, a 90,000-square-foot former dairy plant, came to Canopy Growth as part of the Ontario company’s takeover of medical marijuana firm rTrees Producers Ltd. in 2017.

Canopy Growth said in 2017 it planned to expand the plant on the 11-acre Yorkton property to over 300,000 square feet and ultimately create between 40 and 50 new permanent jobs.

However, the Yorkton plant’s closure — and other moves announced Thursday — are expected to lead to “a headcount reduction of approximately 85 full-time positions,” the company said in a release.

Among those other moves, Canopy Growth said Thursday it will “cease its farming operations” at Springfield, N.Y., citing ” current market demand for hemp.”

It also said it will cease operations at its cultivation facility in Colombia and will shift to an “asset-light” model to maintain its Latin America production hub in that country, sourcing raw product from local suppliers and continuing formulation and encapsulation work through its previous agreement with Procaps, a pharma processor based in Barranquilla.

Canopy Growth said Thursday it has also now exited its operations in South Africa and Lesotho and is “transferring ownership” of all of its African operations.

Canopy CEO David Klein, in Thursday’s release, said the moves stem from a strategic review carried out “to optimize our cost structure and reduce our cash burn.”

The company announced last month it would close two B.C. greenhouses, at Aldergrove and Delta, cutting about 500 positions, and also scrapped previous plans to open a third greenhouse at Niagara-on-the-Lake, Ont. — Glacier FarmMedia Network

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Bill MacDonald, professor and co-ordinator with Commercial Cannabis Production at Niagara College recently introduced aspects of cannabis production to attendees of the SouthWest Agricultural Conference held in Ridgetown.

Why it matters: Cannabis production presents an opportunity for growers across Ontario, but expertise and understanding of its production are limited because it has been legal to use recreationally only since October, 2018.

Only female plants are grown within cannabis production. Bracts are important to cannabis production and are found on the buds of female plants.

Within the bracts are trichomes, which produce cannabinoids such as cannabidiol (CBD) and tetrahydrocannabinol (THC), both of which provide the feeling of relaxation and are thought to have anti-inflammatory properties.

The term cannabis covers both hemp and marijuana. Although both are the same species, cannabis sativa, marijuana has been bred for its THC content, making it more common for cannabis production.

“Hemp is classified as having 0.3 per cent or less THC,” says MacDonald at the Jan. 7-8 conference.

It’s important in production of cannabis, that the plants don’t go to seed.

“We are producing trichomes, we don’t want the energy going to seeds. It’s weight that is unusable.”

Much like poinsettias, cannabis is a short day plant, requiring 12 hours or less to flower.

As with other plants, disease and insects pose problems. Unfortunately, cannabis production has limited pesticide options.

Currently, there are 25 pesticides registered for use on cannabis, including Milstop, Opal Insecticidal Soap, Rootshield and Botanigard.

The pesticides can only be used for indoor and greenhouse production. There are no pesticides registered for outdoor production.

“(Farmers) are extraordinarily limited for cannabis — you are pretty much growing organic and using environmental controls,” MacDonald said.

In 2017, following three recalls of cannabis for medicinal purposes due to unauthorized pesticide use, Health Canada announced it would begin a series of unannounced inspections, along with mandatory testing for the presence of pesticide active ingredients in all products.

Cannabis can be grown indoors, outside or in a greenhouse, all three of which provide different opportunities.

When grown indoors, everything about the production is artificial, yet production is consistent.

“Year-round production provides year-round employment,” MacDonald says.

The air within the production system is filtered, allowing for more pest and disease control. Although once disease does enter the system, it spreads quickly.

Indoor production means high construction costs. Large amounts of energy are consumed and can be difficult to scale.

Growing within a greenhouse offers year-round production and employment as well.

It provides natural light, but supplemental light is used extensively.

“It’s a high-value crop so it’s worth the supplemental lighting.”

Within a greenhouse, growers have to compensate more for the environmental swings by adding heat in the winter and cooling in summer.

It’s ideal for all vents to be screened to try and contain pests and diseases.

Last year was the first year in which Health Canada allowed outdoor cannabis production.

With outdoor production, growers are at the mercy of the weather.

“You have to hope for a (good) fall for harvesting. But you can get very good yields,” MacDonald said.

All fields have to be licensed by Health Canada. As well, proper security systems must be installed, such as cameras, motion sensors, fencing and barbed wire.

This type of production has lower energy costs.

Pesticide and pollen drift can be concerns, but in 2019, MacDonald said there didn’t seem to be as much of a problem as farmers predicted.

MacDonald says that the current industry is over capitalized.

“Everybody wanted to get in, everyone wanted to make money and everyone thought they were millionaires overnight.”

Now, investors are wanting to see their return on investment.

MacDonald says the future of cannabis production is all about returning to the basics.

Those include agronomic understanding, breeding for cultivars that are resistant to powdery mildew and learning how to produce a high quality crop.

MacDonald also says that micro-cultivars will be a production opportunity.

He says facilities of 2,200 sq. feet or less, though small, can still provide a profit and there’s opportunity for on-farm sales.

“It’s in the federal legislation. It’s still making its way through the province. As far as we know you will be able to have farmgate sales.”

“It’s not rocket science. Produce a good crop, control your costs and control pests and diseases.”

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The company, which reported a smaller-than-expected third-quarter loss on Friday, is conducting a “thorough strategic review” of its production facilities as it seeks to cut costs and become profitable, executives said.

“There’s not a lot of market demand for cannabis production facilities,” David Klein, former finance chief of the company’s biggest shareholder Constellation Brands, said in an interview. “There’s a lot of capacity in Canada and no logical buyers.”

More than a year after Canada legalized recreational marijuana, producers are scrambling to turn a profit as lower-than-expected demand and exuberant expansion hit sales and lift costs, while a cash crunch threatens many companies’ survival.

Canopy first needs to ensure it generates as much cash as possible, said Klein, who became Canopy’s CEO last month.

“Then, what we do as a secondary step with the assets… we’ll figure that out over time,” he added.

Canopy shares were up 16.2 per cent at $30.10 in afternoon trade in Toronto, paring its one-year loss to 53%.

Canopy had cash and equivalents of $1.56 billion as of December, down from $2.48 billion at the end of March 2019.

“We will be pretty aggressive in managing capital expenditure going forward,” Klein said. “If we just take those measures, we have cash for the foreseeable future.”

Canopy also plans to expand in the U.S. cannabidiol (CBD) market, he said.

CBD is a non-psychoactive compound in cannabis, and is also derived from hemp, the production and distribution of which the United States legalized in late 2018.

“We’re in the process of building out a sales infrastructure in the U.S. so that we can call on the large retailers and get shelf placements,” Klein said.

The company could move some Canadian resources to the U.S. to enable the expansion, he said.

Canopy executives said they aim to lift gross margin to 40 per cent in the short term, from 34 per cent in the third quarter, and will reduce share-based compensation by as much as 40 per cent from the third quarter’s $56.8 million.

“They’re nowhere close to posting a profit… and their free cash flow is quite negative, but it’s going in the right direction,” said Jason Zandberg, an analyst at PI Financial, who expects Canopy to follow rivals Aurora Cannabis, Tilray and Hexo in cutting jobs.

— Reporting for Reuters by Shariq Khan in Bangalore and Nichola Saminather in Toronto.

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He persevered when some of his hemp plants grew white with mildew and others failed lab tests and had to be destroyed. With his harvest now complete, Maclure has one more challenge to overcome: selling his surviving crop and recouping an estimated $140,000 investment.

“It’s heart-wrenching thinking about all the work and money you put into it,” said Maclure, who farms in Barton, Vermont, about 35 miles south of the U.S.-Canadian border. “I’m not sure I’m going to be venturing out in this again.”

Maclure is one of thousands of U.S. farmers who poured into the crop after the passage of the 2018 Farm Bill, which legalized the cultivation of hemp, a form of cannabis with low concentrations of THC, the main psychoactive agent in marijuana.

Many of them are now trying to survive a glut that has flooded the market, market experts say, driving down prices and in some cases leaving farmers with few buyers.

About 65 percent of U.S. hemp farmers lack a buyer for their crop this season, leaving them few alternatives, according to a July survey by Whitney Economics. Hemp has less infrastructure than other crops, so farmers cannot rely on selling their crop to a local grain elevator.

“People entered in on speculation,” said Chase Hubbard, hemp commodities analyst at The Jacobsen, a price reporting agency. “The results could be tragic for some small farmers.”

The 2018 Farm Bill coincided with a boom in the market for food, drink and cosmetic products laced with CBD, an industry that Wall Street firm Cowen & Co has estimated to grow to $16 billion by 2025.

Enticed by projections that hemp would bring $750 in profits per acre – well above the $150 or less from a typical acre of soybeans – farmers placed their bets on a crop that had been illegal for most of their lifetimes.

Last April, as farmers planted, a pound of hemp biomass sold for about $40. Now, as farmers harvest and take their crops to market, the same amount sells for $18-$25, according to PanXchange, a commodities platform.

Sam Baker, a fifth-generation tobacco farmer from North Carolina, grows tobacco seed, hemp and hemp seedlings. After selling millions of seedlings to growers this year, about 400 people have called him, asking him how to sell their crop.

“Crews planted 75, 80, 90 acres and didn’t know what to do with it in the end,” he said.

Some farmers are discovering that the crop is more labor intensive and comes with more risks than many hemp-backers claimed. As a consequence, many are exposed to everything from mold to the danger that cultivated crops contain higher-than- allowed levels of the psychoactive chemical THC, which give users a high, and have to be destroyed.

Some of Maclure’s plants tested “hot” for THC this year, so his crew had to cut the offending plants and crush them outdoors.

“You’ve grown nothing but trash,” said Maclure.

As hemp becomes a commodity, small farms cannot keep up with larger operations that can sell their crops in bulk at lower prices, wholesale buyers say.

“Mom and pop are not going to be able to compete on this playing field,” said Michael Gordon, co-CEO of Kush.com, a major hemp wholesale marketplace. “The hemp industry is more like canola oil than craft brewing.”

Despite the difficulties, some farmers remain optimistic about the budding industry. Farmers with established supply chains and experience report that they are turning a profit this season.

New U.S. Department of Agriculture interim rules released this week will likely pave the way for hemp farmers to qualify for better insurance and financing, lessening their risks in the case of poor weather or if their buyer disappears, said Ken Anderson, founder of Wisconsin-based hemp processor Legacy Hemp.

Meanwhile, industry professionals predict that many first-time hemp farmers will leave after this disappointing first harvest.

“They’re going to get the heck out of Dodge,” said Gordon.

– Additional reporting by David Randall

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