Indy Star

Inside the ‘wild wild west’ of Indiana’s first major hemp harvest

Assembled from parts scrounged from around Mark Boyer’s farm outside Kokomo, the contraption was held together by tape, a set-up a fellow farmer said was “rigged for disaster.”

The bed of a truck rose, slowly spilling grain into an auger that shoveled it up a tube and dumped it into a wooden contrivance, roughly 10 feet tall. Some of the contents filtered into a huge plastic bag. The rest fell onto a shaking, perforated tray, where it either shook off the end, or was sifted into a basin underneath.

It was a very unusual system for cleaning grain, Boyer, a sixth-generation farmer, admits. But then again, there is nothing usual about farming hemp. At least not yet.

Legal changes in the past year at both the federal and state level have opened the door on hemp, marijuana’s non-psychedelic cousin, for the first time in decades. There are numerous crop varieties that can be used for countless products: CBD oil, food grade oil, hemp milk, protein powder, rope, clothing, paper. It’s even used in concrete. So hemp seems destined for an agricultural gold rush, and officials in Indiana and across the country are preparing for an onslaught of interest.

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Still, it’s not all good news: Hemp’s entrance onto the scene raises a slew of questions: How will we grow it? How will we regulate it? How will we establish a market for it?

“We are just approaching the starting line,” said Boyer, a farmer on the forefront of growing hemp in Indiana. “Hemp is in a really awkward place right now, and we have to make a lot of mistakes first before we get this right.”

Some are warning caution.

“Growers need to look at this as a crop with a lot of risk with it,” said Bob Waltz, the state chemist and seed commissioner who is overseeing hemp in Indiana. “That’s the reality and I think there is a lot of promise, but a lot of homework needs to be done if we want to grow it successfully.”

Indiana is the hemp ‘sweet spot’

Farmers have learned a few things about growing hemp already.

It needs to be planted close to the surface – Boyer put his only a quarter-inch down – and during a dry spell, because hemp doesn’t have much “vigor” to push the sprout out of the ground. The wet spring that wreaked havoc on fields across the Midwest delayed Boyer’s planting by almost a month.

It’s also known that Indiana is considered the promised land for hemp: The climate is right, as is the soil.

“If you look at hemp growing-potential,” Waltz said, “Indiana is the sweet spot.”

Hemp actually used to be grown in Indiana. Boyer’s 84-year-old father grew hemp fiber for the war effort during World War II.

But hemp was effectively made illegal in 1937 under the Marihuana Tax Act and then formally made illegal in 1970 by the Controlled Substances Act. Federal law did not differentiate between hemp and other cannabis plants, such as marijuana. In actuality, there is a very real difference: Hemp does not contain more than 0.3% of THC, which is the part of the plant known to get a person high.

Still, hemp remained on the controlled substances list and was regulated by the U.S. Drug Enforcement Administration until just last year. In December, President Donald Trump signed the 2018 Farm Bill that removed hemp from the list. In other words, industrial hemp became legal to grow across the U.S.

Several states, including Indiana, were already growing it under the 2014 Farm Bill, which allowed research institutions to seek approval from the DEA to grow hemp purely for research.

In Indiana, it was through Purdue University. That was how Boyer got into hemp – he went to one of their field days and left with an idea of his own. He thought someone should plant hemp in a traditional row crop setting and use traditional equipment most farmers have in their sheds to see how it does.

“Then the more I thought about it,” he said, “I figured why not me.”

So during the summer of 2018, Boyer planted about 10 acres on his farm, alongside his corn, sunflowers and canola, as part of a study with Purdue. He was among just a few researchers who planted roughly 15 acres total that year.

But the 2019 numbers, after the changes with the federal farm bill, were a bit different. Nearly 200 people were licensed to plant about 5,300 acres – a growth rate of about 35,000% over last year.

“It was absolutely a huge year, and it shows in the numbers,” said Justin Swanson, a board member of the Indiana Hemp Industries Association and founding member of the Midwest Hemp Council. “We are finally excited to get government out of the way and let farmers do what they do best.”

Still, despite the changes, hemp won’t be grown as freely as corn or soy. It will be one of the most highly regulated crops in the U.S.

According to the farm bill: All hemp must contain less than 0.3% THC, all growers must be licensed, and states must set up their own regulatory programs approved by the U.S. Department of Agriculture. Indiana, along with many other states, made quick work of passing its own law during the 2019 legislative session to begin the process of creating its own program.

“There was such a big push a year ago for hemp, but there are all these other moving parts that got left behind,” said Seth Maxwell, an account manager for agribusiness Co-Alliance that has helped Boyer with his crop this year. “Now everything else is playing catch up.”

How far should regulations go?

As part of Indiana’s law, it established an advisory committee to help craft Indiana’s regulatory and licensing program. Boyer and Waltz, as well as several others working in the industry sit on the committee, which has met twice.

Waltz and his office will oversee the program. They are working to purchase software, draft the applications and determine the background check process. Even so, Indiana and other states cannot go into full production until the USDA comes out with its own guidance on hemp, which Swanson said should be happening in the coming weeks. 

He said he hopes the USDA has recommendations on how to test the hemp for THC levels because the current system isn’t working.

This year, for example, a few hundred acres of hemp grown for fiber in Indiana came back “hot” – meaning it tested above the 0.3% THC level. The state is offering growers an option to undergo a remediation process to still be able to use that hemp.

But Swanson said there should be different testing protocols depending on the type of hemp being grown – CBD, grain or fiber. The state also hopes to build out its testing capacity by looking to certify various labs to do the work.

Another topic of interest to both regulators and farmers is acreage, according to Marty Mahan, the president of the Indiana Farmers Union hemp chapter. Officials are considering whether to set a minimum number of acres that farmers must grow to get a license.

Landing on the right number is key. Set it too high, many farmers won’t be able to reach that threshold, Mahan said. Set it too low, some farmers might not plant enough to be economically viable.

Still, Mahan – who planted less than 10 acres of hemp as a test this year – thinks that there should be some exceptions for farmers who want to start small and try it out first.

“Farmers are used to be able to go out and purchase seed and know what to expect when they plant it, but we are a long ways away from that,” Mahan said. “We’ve always preached caution, and this reinforces the need to not jump into things.”

Maxwell, with agribusiness Co-Alliance, said he is worried about too many folks jumping in and overwhelming a non-existent market with too much product – like the “wild wild west,” he described it. Waltz has concerns about that, too.

The seed commissioner said they are discussing if they will require individuals to submit proof of a contract that their hemp has been purchased before being issued a license to grow.

“In one sense, that sounds like a great idea,” Waltz said. “But in another sense, it’s a question of how far should a regulatory agency reach on that type of thing?”

Maxwell said that could be a slippery slope. What they really need is a market.

Hemp market is ‘fluff and bluff’

Stacey and Mark Davidson think hemp will take off in Indiana “like you wouldn’t believe.” And their premonitions aren’t off base: Industry analysts have predicted that the hemp industry could hit more than $20 billion in the next three to five years.

But as of right now, the Crawfordsville farmers, who grew 20 acres of CBD hemp this year, said that “everyone is now running into the same problem. Now that we have it, what do we do with it?”

Many farmers have been harvesting their hemp in recent weeks. Quite a few who grew for fiber this year are struggling to find somewhere for their hemp to land.

Some of the markets that growers thought would be available when they planted have since disappeared, said Phil Brewer, vice president of sales at Co-Alliance who also serves on Indiana’s hemp advisory committee. It’s a “whole lot more fluff and bluff than actual reality right now,” he said. Those farmers are now just hoping to store their crop until a market reappears.

Boyer is slightly better positioned. That’s because he processes the hemp grain himself with a cold press he purchased several years ago to make sunflower and canola oils. Boyer, owner of Healthy Hoosier Oils, now is using the press to make food-grade hemp oil, too.

That is partly what allowed him to up his hemp acreage to 50 this year.

But most farmers don’t have that capacity – they need processors to turn their crop into a product.

People want to be in processing and building out the infrastructure, Waltz said, but “we need a lot more of that, and that takes money on the table.” It takes a large investment to construct buildings and purchase equipment to turn hemp into the various products.

“It’s a gamble to do that and not know what your supply is going to be,” Waltz said. “It’s a bit of the chicken-and-the-egg game that has to be played.”

A strong market for hemp exists overseas, where the crop has been legal for years. Brewer said it will be difficult to compete with something so established.

“Can we create a better product than what they’re getting, and can we grow it, process it and move it to them at a competitive price?” he asked. “We can do it better if we put our minds to it, but we have to prove it.”

A few more risk-takers would help do just that, Maxwell said. He hopes more people will “step up” and “invest in the unknown” to create a market for hemp, the way Boyer has for farming it.

That includes continuing to create new uses for the crop. There are believed to be thousands, and different ones in the works every day.

Boyer, in fact, is working with friend and fellow farmer Nathan Hunt to test using hemp meal – created with the byproduct from Boyer’s pressed hemp seeds – in livestock feed. That use has not yet been approved by the FDA, but last week the two farmers sent three hogs they fed a hemp meal mixture for several months to Purdue for analysis. The results will also be shared with the USDA.

Waltz knows a viable market won’t be created overnight, and when the initial interest wanes “it will look pretty dire.” But he believes those who stick it out will one day benefit from a successful market.

“If we create the right business environment for hemp,” he said, “we have not just the hope but the expectation for this to be a very productive crop.”

Hemp on the horizon

With farmers still in the thick of this year’s harvest, it is unclear how productive Indiana’s 2019 hemp crop will be. Early estimates are that only about 3,000 of the approved 5,000 acres were planted, given the difficulties with the wet spring.

Waltz’s office of the seed commissioner, along with Purdue, are anxiously collecting the data. They plan to use the research from farmers like Boyer and the Davidsons to put together guidelines for others looking to make their foray into hemp.

Once Indiana’s licensing program is in place, which officials hope will be soon after the new year, they are expecting quite the “pulse” of interest, as Waltz described it.

Some predict the number of licenses in 2020 could more than triple. If there are nearly 800 licensed growers planting an average of 50 acres, Waltz postulated, that’s 40,000 acres of hemp – about 35,000 more than this year.

Still, Brewer said, hemp won’t be the end-all-be-all.

No one in the field would recommend betting the farm on it, which officials worry about with the current craze. A lot of rumors are circulating about what farmers could get per acre, Boyer said, that just aren’t realistic.

Most of current interest is in growing hemp for CBD oil, but Swanson said he thinks that’s the short game and is nearing a saturation point. The longevity, he thinks, is in growing hemp for fiber and seed, which are being used in many emerging products.

Another use coming onto the scene is smokeable hemp, which appears much more similar to marijuana but still is below the 0.3% THC and won’t get consumers high. Indiana originally criminalized the possession of smokeable hemp in its 2019 law because of the difficulty in distinguishing it from marijuana. However, a federal judge just last month ordered that Indiana stop enforcing that aspect of its law, ruling that it went against the federal farm bill.

The case is still under review, but Mahan said it could be a “game changer” if that ruling is upheld and smokeable hemp is made legal in Indiana.

Hemp is a game changer in general, Boyer said, adding that it’s the biggest thing to happen to agriculture in Indiana in his lifetime after ignoring this crop for nearly 80 years. He doesn’t want to be seen as a Debbie Downer for preaching caution, but he wants to make sure building this industry is done right.

“We may be a little late to the party,” Boyer said, “but we have the opportunity to show up best dressed.”

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