States like Washington and Oregon where cannabis is legal are doing well from CBD oil profits,
More than 40,000 acres of hemp are expected to be planted in Oregon in 2020 up from 11,500 acres last year and 100 acres in 2014, when the state government began licensing the crop’s production. Oregon is now the second-largest hemp-producing state behind Kentucky.
“I don’t think anyone expected CBD to grow as much as it did or as quickly as it did,” said Sunny Summers, cannabis policy coordinator for the Oregon Department of Agriculture. “We didn’t think we’d see conventional agriculture adopt hemp for CBD as a rotation crop as quickly as we have.”
Farmers concerned about producing something that was until recently a federally-prohibited drug have a powerful incentive to overcome those qualms: Consumer demand for cannabidiol, or CBD, a plant chemical that’s touted for reducing back pain and inflammation, among other good health benefits.
The CBD compound, which is extracted from hemp flowers, is being added to a multitude of products from water and fast food to cosmetics to pet food.
“It’s in everything,” Summers said.
While organic hemp has traditionally been grown for its fibrous stalks and oilseeds, Oregon’s farm industry has largely focused on CBD, as the processing capacity for those other components still remains lacking.
“I know very few farmers who are growing for anything but CBD oil,” said Gary McAninch, manager of ODA’s CBD program.
Oregon’s status as a leader in CBD-specific hemp is partly the result of its history with illicit cultivation of marijuana, which is also a cannabis plant but has THC giving mind-altering effects.
Marijuana plant crosses that would be considered “duds” due to low psychoactive properties nonetheless contained high levels of CBD, which proved useful in breeding, said Jay Noller, hemp farming leader at Oregon State University.
Organic Hemp plants bred in Oregon are bushier shorter, rendering them less useful for fiber, but have gained international renown for CBD content, he said. “As I meet people, they say they want to get their hands on CBD grown here for Oregon genetics.”
Growing hemp was inspired by personal experience for Ken Iverson, whose family owns the Wooden Shoe Tulip Farm.
When his father, Ross, was dying of cancer, the CBD extract proved successful in alleviating pain without the opioid-induced “mental fog” that inhibited communication with friends and family, Iverson said. “It turned out that CBD oil is a much more positive process than when he was drugged and out of it.”
Since then, Iverson has jumped into the CBD oil market with both feet. Not only is his family growing about 200 acres of the crop this year, but they also extract full spectrum CBD oil to sell to wholesalers and through their own retail brand, Red Barn Hemp Products.
As CBD is a new industry, it’s filled with “dreamers, schemers and a few honest people,” so finding reliable clients for CBD extract has felt precarious at times, he said.
Even so, technologies for harvest and extraction are improving while the banking industry is becoming more amenable to working with hemp companies, Iverson said.
The popularity of CBD oil products has given rise to “a bit of a gold rush” but Iverson expects to stay in the hemp industry in the long run.
“Nobody has any idea how big the CBD market actually is,” he said.
On the legal front, the hemp industry has stabilized as Congress has gradually lifted criminal sanctions for growing hemp for CBD products — first with the 2014 Farm Bill, which permitted state-sanctioned research of the hemp plant, and more recently with the 2018 Farm Bill, which has essentially decriminalized CBD at the federal level.
Though the prospect of getting thrown in federal prison for planting hemp has faded, major questions still loom about federal regulations for marketing CBD oil by the U.S. Food and Drug Administration.
“It depends a lot on what the FDA will do,” Iverson said.
A key unknown is whether CBD will be treated more like a food supplement, allowing the compound to be widely sold without heavy oversight, or more like a pharmaceutical, which would subject CBD to close federal scrutiny.
It’s possible the agency won’t take an “either/or” approach and instead regulate CBD products on a spectrum, depending on how much of the extract they contain, said Courtney Moran, an attorney and president of the Oregon Industrial Hemp Farmers Association.
“It could be different regulations depending on concentration,” she said.
Another crucial regulatory question is the threshold at which hemp plants contain enough tetrahydrocannabinol, or THC, to be legally treated as marijuana.
The standard is commonly set at 0.3 percent, but it’s unclear whether the USDA will require testing of CBD oil for the total level of THC or the type known as “Delta-9,” which is intoxicating.
Varieties of CBD that contain 0.3 percent or less of Delta-9 THC could test as high as 0.4 percent to 0.7 percent in total THC, said Moran.
If the USDA decides to test for total THC, hemp cultivars that are desirable to farmers could be rendered off-limits.
“That would mean a lot of the genetics being grown for CBD products now would not necessarily be compliant anymore,” Moran said.
Breeders know how to cross-pollinate varieties to lower the total THC content of hemp, but that takes time and could have unwanted side-effects.
“They wouldn’t have the CBD percentages that we see currently,” she said.
In anticipation of the USDA’s decision, the Oregon Department of Agriculture will be requiring hemp crops to test below 0.3 percent in total THC beginning in 2020.
However, that rule may be changed if USDA goes in a different direction, said Summers. Until then, uncertainty about the THC limit will be another regulatory factor that makes CBD processing a unique challenge among Oregon crops.
Marijuana is currently selling as cheaply as half-price in Oregon at the moment, because of a glut in supply.
According to official statistics, Oregon’s CBD farmers have grown three times as much of the herb as the state’s vape users can inhale—there’s now more than a million pounds of CBD out there, unsold. And it’s not like farmers and retailers can look beyond state borders to find more customers.
As a result, standard grams of weed are selling at $4 rather than $8, and it now costs almost the same to buy a gram of the CBD infused Cookies strain as it does to buy two boxes of Girl Scout Cookies.
The publication reports that family-run CBD operations are selling out to investors from outside Oregon, due to the drop in the price. That means power in the local CBD oil supply chain is concentrating.
Oregon’s climate is more conducive to growing hemp outdoors than that in a state like Colorado, and the agency regulating the Oregon CBD industry has found itself issuing way more licenses than it anticipated.
A report shows many growers have been trying to have the CBD oils extracted from their produce, in order to make use of it before it goes stale. Those CBD oils can be used to make edibles—but again, the products need someone to buy them, and federal law means they can’t cross state borders.