The globe’s sputtering supply-chain logistics are challenging for all businesses right now. But for cannabis, those challenges can be an absolute nightmare.

When hemp cultivation became legal in all 50 states in 2018, under a Farm Bill that guaranteed that hemp products could cross state lines but gave no guidelines for moving them, Kevin Schultz knew there was a serious business need.

The founder of Illinois-based The 357 Co.’s experience with the Illinois marijuana industry help him see the need for specialty logistics support for these operators.

Hemp, he said, can be trickier to move than marijuana. That’s for two reasons:

• The hemp supply chain frequently crosses state lines.
• Hemp products don’t require track-and-trace technology the way marijuana products usually do.

Hemp Industry Daily caught up with Schultz to find out more about how the global logistics mess is playing out in hemp. His answers have been edited for length and clarity.

How are hemp logistics different than logistics for other regulated products, such as alcohol or tobacco?

With alcohol and tobacco, you have some standardization and you have some guidance. You then have to play within that framework to make sure you’re doing things legally.

Where I saw the glaring hole for the hemp supply chain was after the Farm Bill in 2018 came out. You now have the golden ticket that the cannabis industry wants to bring things over state lines. But they gave you no idea on how to do it.

And I said to myself, without proper tracking and tracing and seed-to-sale and all the stuff I was used to when I was in cannabis, the supply chain is going to need a friend in that logistics component to be able to navigate through this and keep us all out of trouble. …

It’s not like tobacco or alcohol. There’s really no way that we’re being told exactly how to do it. And there’s no standardization across all the states.

How would standardization help?

It’s not like we’re taking this new product that we know for sure is always under 0.3% (THC). There’s always that worry that someone’s going to misinterpret what it is. And I don’t think you have that with tobacco and alcohol.

With alcohol, they’re able to take unprocessed alcohol over state lines to a processor. And I believe that’s one of the biggest bottlenecks in our industry right now. It’s a gray area.

I don’t see anything that says where you can take product that is testing over 0.3% THC from your processor in Kentucky to my processor in Tennessee. I don’t see how that’s not committing a crime.

I believe that’s going to have to come from the USDA. … I don’t know how the supply chain can truly ever scale to the level we all want it to until that opens up.

What’s your advice for going through different states?

We pretend as if we’re in court already. We try to make sure we have everything that driver needs to show law enforcement. We call law enforcement in advance to really get ahead, to say, “We’re coming through your state.”

And our operations team has relationships with many of the departments of ag in states we come through most often.

We always say to plan for when we get pulled over, not if we get pulled over. …

One example, we learned this lesson in the state of Florida. We reached out to the Florida Department of Ag and we asked, “What do you want us to do with it? Tell us exactly what you want us to do.”

And they had some rules with bringing in dirt or soil into Florida. It’s a big no-no. And there is a checkpoint when you go in. They want you to stop and check in.

Something that simple, but most folks I believe are blowing right past it. And they’re just hoping they’re not going to get caught.

Question about fiber logistics. Are you seeing more hemp decorticators and processing sites popping up? The scarcity of decortication facilities has historically been a big gap in the hemp supply chain.

I wish I had good news on decorticators. I still think there’s a ways to go there.

I think you’re starting to see more start to come online, just not as many as we need to cover what’s eventually going to be just an explosive side of this industry.

We keep hearing about this enormous truck-driver shortage. How is that affecting your business?

It’s been challenging for us to build a network simply because some folks won’t ship hemp. Some drivers will not take it, so we spend a lot of time educating our drivers on the rules and regulations on why it’s okay to ship it.

Ultimately, the driver does not have to. Sometimes they get cold feet and say they don’t want to play in that area. They’d rather ship other freight that we have.

If you look at logistics and transportation as a whole, driver shortages mean your capacity shrinks.

I think of some drivers that typically would go on the road are now delivering for last-mile companies, doing the front-of-the-doorstep type shipments. They’re not going to long trips cross country as much anymore.

And there’s a significant amount of drivers that are retiring.

What’s your forecast for how automation will affect cannabis logistics? Will robots and drones be making hemp deliveries?

I think where you’re going to see this from the early adopters is going to be inside the pick, pack and ship locations. Putting orders together inside a factory inside distribution centers.

The last-mile stuff, that’s a different story. When it comes to a product like cannabis and hemp, that’s not going to be here as soon as people think.

They’re underestimating the importance and the role that those drivers play, whether it’s a 21-and-older age verification or the handling of the product from the truck to the doorstep. Our drivers really play a really big role.

I do feel like the world’s going in that direction. But I think you’re gonna see that inside the distribution centers before you actually see (robot delivery) out on the streets.

Kristen Nichols can be reached at kristen.nichols@hempindustrydaily.com

Federal agriculture regulators continue to approve hemp production plans for state and tribal programs following the Jan. 1 deadline when pilot programs were due to expire and the final rules under the 2018 Farm Bill were set to take effect.

Most recently, the U.S. Department of Agriculture approved hemp production programs for Alaska, Arizona and Montana.

All current hemp license holders in these states must apply for new licenses.

According to the Arizona Department of Agriculture, with approval to comes eligibility to USDA crop insurance, loan and conservation programs for hemp producers including:

• Whole-Farm Revenue Protection.
• Noninsured Crop Disaster Assistance Program (NAP).
• NRCS-administered conservation programs, including the Environmental Quality Incentives Program, Conservation Stewardship Program, Regional Conservation Partnership Program, and Agricultural Conservation.
• Easement Program Farm loans, including operating, ownership, beginning farmer, and farm storage facility.

Arizona’s newly approved hemp production plan allows producers to grow and sell new products such as hemp baby greens commercially, according to Robert Masson, an agriculture extension specialist for the University of Arizona’s Yuma County Extension.

“Baby leaf hemp can be grown in Arizona and shipped nationwide,” Masson told KYMA and KECY Yuma TV stations.

There have already been several trials done in edible hemp greens, he said.

“Moving forward, I think the big win for us will be the leafy green production,” Masson said.

“I think that will go great in a salad blend. I think that consumers will really get behind it. We’ve done some initial nutritionals and it’s very healthy.”

Fiber and grain hemp have been shown to be of higher interest now than CBD, according to Masson.

In Alaska, the state agriculture division director David Schade said hemp holds economic promise for the state, which produced the crop on 70 outdoor acres and in 14,000 square feet of indoor space.

“We have clean water, clean soil, clear air, so we can, in the right regions, grow great plants,” Schade told Alaska Public Media.

Schade said that harvest will likely grow under the new USDA approved plan.

“The goal is diversification of Alaska’s economy with the addition of a new crop for our farmers,” he said in a press release.

“Industrial hemp is one crop where Alaska is not years behind the Lower 48 in development.”

Montana, which has been one of the largest hemp production states since the hemp pilot program began under the 2014 Farm Bill passed, licensed 37 producers who planted 2,540 acres in 2021.

According to the state hemp program, the majority of the planted acres were for grain (1,700 acres), followed by fiber (590 acres) and CBD (250 acres).

About 2,000 acres of hemp were produced on tribal lands in Montana.

Applications for Montana outdoor producers are due to the Montana Department of Agriculture by May 30.

Hemp was lauded as a climate-smart commodity for its use as a construction material by U.S. Agriculture Secretary Tom Vilsack this week as he highlighted new funding opportunities for farmers.

Speaking at a university in Missouri, Vilsack pointed to hemp Monday when he announced that the U.S. Department of Agriculture will invest $1 billion in climate-smart commodities.

The new Partnerships for Climate-Smart Commodities fund will go to farmers, ranchers and forest landowners who use climate-smart practices, Vilsack said.

“For far too long in rural America, we’ve taken products of the land and from the land, we’ve shipped them someplace else, where opportunity is created someplace else, where wealth is created someplace else,” Vilsack said.

“With this opportunity, we now have a chance to change it from an extraction effort to a circular effort. The ability to essentially create climate-smart commodities, the opportunity to convert waste into wide variety of bio-based materials. I saw some of them today – hemp in construction material, for example.”

“Those processing facilities can be located right where the crops are being grown.

“They can be sustainably produced; they can be a higher value; they can create jobs in rural communities; they can increase farm income; they can expand population centers in rural places, taking pressure off our urban centers; they can restore life and vitality in our small towns.

“That’s the opportunity side of this – we just need to understand the opportunity we have, and we need to fully seize it.”

The USDA defines a climate-smart commodity as a commodity crop produced using practices that reduce greenhouse gas emissions or sequester carbon.

The USDA’s Commodity Credit Corporation will be used to fund pilot projects to provide incentives to:

• Implement climate-smart production practices, activities and systems on working lands.
• Measure or quantify, monitor and verify the carbon and greenhouse-gas benefits associated with those practices.
• Develop markets and promote the resulting climate-smart commodities.

Applications will be taken in two groups, sorted by the size of the proposals. Deadlines are:

• April 8 for the first funding pool (proposals from $5 million to $100 million).
• May 27 for the second funding pool (proposals from $250,000 to $4,999,999).

Learn more about eligibility and how to apply here.

No part of the global economy has escaped the COVID-19 pandemic, which has claimed more than 2.5 million lives around the world and sickened countless more.

But few industries were in the kind of infancy the hemp industry was in when the World Health Organization declared the virus a global pandemic on March 11, 2020.

The resulting lockdowns, travel bans, economic collapse and distancing requirements hit just as many farmers were about to plant their first-ever legal hemp crops. Hemp acreage plummeted.

Nascent extractors and hemp processors saw equipment delayed by manufacturing shutdowns. Those that managed to find equipment couldn’t open for business because of mandatory stay-at-home orders.

And while many marijuana retailers were deemed “essential” businesses, depending on the state, hemp-specific retailers were generally closed.

CBD brands that had scrambled to get on shelves of mass-market retailers such as department stores had to immediately pivot to online-only sales.

Market analysts at the Brightfield Group, a Chicago-based data research firm, declared 2020 an “extinction event” for CBD brands, with 50% or more of an estimated 3,000 brands closing.

But the hemp industry didn’t fold up shop because of the challenges. Some companies successfully adapted business plans; others made new ones to adapt.

Hemp Industry Daily caught up (virtually, natch) with some hemp entrepreneurs to reflect on how the industry has reacted to the pandemic and get their predictions for what’s next.

Time to focus

The shutdowns and disease challenged all businesses, of course.

But some hemp entrepreneurs say the unexpected halt to business gave them time to breathe and refine business plans in a go-go young industry.

“It gave me an opportunity to pause,” said Larisa Bolivar, founder and CEO of Colorado-based Bolivar Hemp Co.

She developed a cosmetics line, bought property in Oklahoma to start a new cultivation site and even finished a book she had been working on for years.

“We were all feeling that same rush – you know,  we’ve got to get to market, we’ve got to be No. 1,” she said. “But that’s not always good for launching a business.

“You really have to be strategic. Now, we have room to grow and we have plenty of time. I think COVID kind of reset that clock for everyone.”

One entrepreneur even started a new business, with locations on two continents.

Wendi Young set up an extraction company with locations in Colorado and Belfast, Ireland, while overcoming closed borders and shutdowns across jurisdictions.

Young said she was inspired in part by having to take time off to care for a sick relative.

“There was just a lot of time to really start thinking about, you know, what you want (and) what you want to accomplish,” she said.

Other entrepreneurs found new resilience from their own employees.

“We really saw our team come together in a very big way. Just looking at seeing how people are taking care of each other – I think that was such a big, monumental outcome of COVID,” said Priyanka Sharma, co-CEO of Kazmira, a hemp-derived cannabinoid extraction company based in Colorado.

“It was nice to be able to step back from your own process, see what could be changed with what you were doing over time. … When you’re so in the weeds, you don’t get to step back and see where you can make changes.”

Next normal

So, which changes from the COVID-19 pandemic will stick with the hemp industry?

Andrew Bish, chief operating officer of Bish Enterprises, a harvest-equipment manufacturer in Nebraska, said the pandemic has sparked market attention on non-flower uses for the plant.

“We’re seeing a dramatic upswing in the grain and fiber markets,” Bish said.

“I do think some of that increased demand in grain is coming from people eating at home and looking for more plant-based options, which is really exciting.”

In addition to opening new market demand, the pandemic gave operators an opportunity to close underperforming lines.

“It was a good opportunity to think about really what our primary goals were in the industry,” said Margaret Richardson, chief compliance officer and legal officer at Global Widget, a CBD manufacturer in Orlando, Florida.

“We could think about, in terms of product offerings, really what we wanted to offer.

“It gave us a chance to trim some of the products that weren’t as successful and refocus on formulation. … We came out on the other side, I think, stronger.”

The full discussion on COVID-19 impacts to the hemp industry can be seen below.

And share your insights and predictions live Thursday with Hemp Industry Daily editor Kristen Nichols at 4 p.m. ET/1 p.m. PT on Clubhouse.

Hemp farmers are gearing up to plant their fields only two weeks after Texas froze over during Winter Storm Uri – a freak snow and ice storm that caused more than $600 million in damages to the state’s agricultural economy.

According to early data from the Texas A&M Extension Service, other industries such as citrus, livestock and horticultural crops were among the sectors that were hardest hit.

“Freezing temperatures and ice killed or harmed many of their crops and livestock as well as causing financial hardships and operational setbacks, said Jeff Hyde, director of the AgriLife Extension Service at Texas A&M University.

“And the residual costs from the disaster could plague many producers for years to come.”

According to AgriLife, some of the state’s biggest agricultural losses by commodity were:

• Citrus: At least $230 million.
• Livestock: At least $228 million.
• Vegetables: At least $150 million.

Hemp dodged a bullet

It’s likely that hemp farmers with interests in other segments sustained damages.

But when it comes to hemp itself, farmers were mostly spared, as many in the new hemp state hadn’t planted their crops yet. Texas came online and allowed for commercial hemp production for the first time in 2020.

“Generally here in South Texas, we won’t be planting until March or so, but the further north you go, that will be closer to June,” said Noel Garcia, chief operating officer and head crop production consultant with TPS Lab in Edinburg, Texas.

But hemp might be tough enough to withstand snow and maybe some cold, depending on the intended use of the crop, according to Eric Singular, director of communications and business development with International Hemp, a hemp-genetics provider based in Denver.

Singular said a Texas farmer who had planted a test plot containing one of the company’s fiber varieties last fall was monitoring a volunteer crop that has reseeded to see whether it would survive the deep freeze – and so far, it looks as though it has.

“As people have always suspected, it is a robust crop, and especially when you get snow, before you get really low temperatures, you have that insulation effect of the snow that’s protecting it from going from getting too cold. That seems to be really helpful,” Singular said.

He saw the same thing happen in Colorado last September, when an early snowstorm blanketed hemp crops before the temperatures dropped.

“Once it melted off, they seemed to be protected, whereas crops that had to deal with freezing-cold ice are the ones that did not make it – and it is very different, from a fiber and grain crop to a cannabinoid crop,” Singular said.

Another sector that experienced significant losses was the Texas greens industry, which includes 4,000 nursery, greenhouse and related businesses – some of which are home to young-plant producers who grow hemp seedlings and clones for farmers and might produce smokable flower indoors.

Texas currently bans the sale but not the production of smokable hemp, though the ban is on hold pending a lawsuit to be heard later this month.

In 2020, Texas licensed 1,103 hemp farmers with 5,646 outdoor acres and more than 15 million square feet of indoor production.

Texas’ greenhouse industry is still assessing the damages to greenhouses and nurseries, a process that will likely take several weeks.

Most greenhouses, however, are sturdy enough to withstand sufficient snow-loads, and young-plant operations are typically high-tech enough to keep backup generators on hand to maintain a comfortable environment for seedlings and clones, TPS Labs’ Garcia said.

Village Farms International, one of the largest producers of greenhouse tomatoes, bell peppers and cucumbers in North America, converted half its 1.3 million-square-foot Texas greenhouse facilities to hemp.

The company said last week that operations have continued uninterrupted amid the recent power outages and water-supply shortages that much of Texas experienced because of the winter storm.

Ready, set, plant!

Planting outdoors is safe now, but Texas farmers will need to move rapidly to get their seeds or young plants in the ground before May 20.

After that, the soil temperature gets too warm and seeds won’t germinate, said Troy Owens, a farmer in Bay City, Texas, who grows organic corn and organic hemp.

Last year, he planted 500 acres of hemp for grain and applied chicken manure fertilizer, only to have rains wash out the crop.

By the time he replanted, the ground temperature was too hot and he lost much of his crop.

“I feel comfortable planting after the last freeze, all the way up to May 20,” Owens said.

Owens said he waited to plant his corn and plans to sow hempseed this week, though the fields are still a bit wet. This season, Owens has scaled back his hemp production to 150 acres.

Laura Drotleff can be reached at [email protected]

Solar-powered vehicles built from hemp are being reserved from an automaker in San Diego, which expects to go into production by the end of 2021.

Aptera Motors, a startup, high-efficiency vehicle manufacturer, has developed a three-wheeled vehicle that can transport two people, and uses a solar array that can be supplemented with more solar panels on the hood and rear hatch to extend the car’s range to 1,000 miles.

The body is made of a composite of carbon, Kevlar and hemp – proven in racing cars to provide strength and safety, KGO-TV reported. The vehicle is designed to reduce wind resistance, which impacts range.

The manufacturer has already seen massive interest in its new Paradigm vehicle, and 8,000 people have paid deposits on the vehicle, which will be sold for $26,000 to $46,000, depending on features.

Comparatively, its two biggest competitors, the Tesla Model 3 and Lucid Air, sell for $36,000 and $77,400, respectively, according to International Business Times.

The emission-free vehicle also has a 100-kWh battery that can be plugged in to supplement solar power. On solar power alone, it can be driven 45 miles per day.

Aptera is building a factory in San Diego and the cofounders project sales of 2,000 vehicles per year to start, with a goal of 20,000 per year as it develops a fleet of models.

Canadian Rockies Hemp Corp., a decorticator and processor near Edmonton, Alberta, says its expansion plans to become the largest hemp processing facility in North America are back on track after a $14 million (CAD$18 million) infusion from Merida Capital Holdings, a private equity cannabis investment fund.

The loan will be used to help the processor finish expansion plans to 60,000 square feet that were put on hold for nine months last year after the processor’s original financing fell through, the Alberta Farmer newspaper reported.

The company’s CEO, Aaron Barr, told Hemp Industry Daily by email the financing glitch was related to the COVID-19 pandemic. With construction resuming, he said, the company has some 5,000 acres of hemp in Alberta growing under contract from 20 to 30 farmers. CRHC harvests, bales and transports the hemp to the processing site.

The expansion should be complete by summer.

CRHC is privately held and sells hemp hurd and pellets for animal bedding and cat litter and fiber for textile processing. Barr says the area’s arid climate allows outdoor hemp storage for two to four years without decay, a competitive advantage compared to processors in humid climates who must store bales indoors.

Levi’s is teaming with a Danish fashion brand GANNI to offer denim jeans, jackets, dresses and tops made of cottonized hemp.

The collection promotes the items as more sustainable than cotton-based denim.

“The hemp used to make the fabric is all rain-fed with a proven lower footprint than conventional denim, traditionally made from cotton,” Ditte Reffstrup, creative director of GANNI, told Teen Vogue.

The cottonized hemp is so soft and luxurious in feeling, you honestly can’t tell it’s not conventional denim.”

Levi’s already has a limited selection of cottonized hemp offerings in its WellThread line. The American denim maker’s Levi’s x GANNI collaboration goes on sale Wednesday.

“This collaboration was an opportunity to [use] next level sustainable materials with cottonized hemp,” Karyn Hillman, chief product officer at Levi’s, said in a press release.

Hemp farmers may have seen something new in their mailboxes this winter, as federal agriculture officials prepare for the 2022 Census of Agriculture, which will include hemp farmers for the first time.

Over the last two months, the U.S. Department of Agriculture’s National Agricultural Statistics Service sent “content tests” to a sample of 36,000 producers from various agriculture segments across the country.

The content tests are brief surveys to help the agency market projections for the larger census.

The NASS conducts the Census of Agriculture once every five years, giving the USDA a complete count of U.S. farms and the people who operate them.

The ag census looks at land use and ownership, operator characteristics, production practices, income and expenditures, and is a source of uniform, comprehensive agricultural data for every county in the nation.

Through the census, agricultural producers provide information that can influence decisions that shape their industry segment and the future of U.S. agriculture.

According to USDA-NASS, there will be several tests running concurrently through this spring to address producer requests and technological trends, including the inclusion of previously reported data.

NASS is also testing the way it collects its data. The content test is a short survey that includes a handful of screening questions to determine if operations meet the definition of a farm, helping to fine-tune the accuracy of the sample list for the upcoming census.

Most important for hemp producers, the NASS is testing questions for the new commodity, which will be included for the first time in the 2022 Census of Agriculture.

All content test results will be considered for incorporation in the upcoming census, and in accordance with federal law, USDA-NASS will keep all responses confidential and uses them only for statistical purposes.

Farmers who received a content test can get assistance for completing it by calling 888-424-7828.