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After years of red tape and red ink, Mass. hemp companies are finally turning a profit

Change in fortune attributed to 2020 law allowing sales to marijuana operators

Production manager Shannon Fahey fills containers with salve at The Healing Rose production facility in Newburyport. Along with other local hemp and CBD firms, the company is seeing new success thanks to a recent state law allowing them to sell their goods through marijuana dispensaries.Josh Reynolds for The Boston Globe

For years, Massachusetts hemp farmers seemed hopelessly mired in red tape — and red ink.

The federal legalization in 2018 of marijuana’s noninebriating cousin should have been a boon for those growing and processing the crop, coming amid exploding consumer demand for hemp-derived cannabidiol (or CBD) and its wide range of claimed medical benefits.

Instead, the change kicked off an ongoing period of regulatory pandemonium, with authorities in various states issuing shifting and sometimes contradictory interim rules as they continue to await Food and Drug Administration guidance explicitly allowing CBD to be incorporated into supplements and other edible products.

Local hemp companies were caught in the middle of the chaos. Confined by state agricultural officials to making less-lucrative products such as topical lotions, they have watched in exasperation as operators from other states with looser rules or less enforcement openly flout Massachusetts law and flood the shelves of gas stations and even major retailers here with CBD gummies, sodas, and other edibles containing hemp extracts.

This season, however, local hemp growers and processors expect to finally see some green, thanks to new state rules allowing them to partner with marijuana companies that have more legal leeway to make CBD edibles.

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“There have been a lot of growing pains, but I think 2022 is going to be the year for hemp farmers in Massachusetts,” said Linda Noel, a longtime cannabis advocate and farmer who cultivates hemp at Terrapin Farm in Franklin. “The regulations, for once, are clear. We’re poised to succeed.”

The reversal of fortune for the beleaguered industry is largely attributable to a 2020 state law that allows in-state hemp companies to sell their products to Massachusetts marijuana operators. Implemented over the past year or so, the change has connected hemp growers and manufacturers to a fast-growing retail market with a ready-made customer base of cannabis enthusiasts, leading to skyrocketing sales and reviving hopes that the hardy cash crop could help stabilize the state’s shrinking number of family farms.

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It’s a seemingly obvious pairing — after all, hemp and marijuana are two forms of the same species of cannabis plant, with hemp simply containing much less THC (the compound responsible for marijuana’s characteristic high). But the two sectors previously could not do business with each other, thanks to the shifting hemp regulations, marijuana’s status as an illegal drug at the federal level, and strict state rules around the tracking and manufacture of marijuana products.

Now, with the 2020 bill taking effect, shelves at medical dispensaries and recreational marijuana retailers in the state are increasingly packed with a wide variety of products containing Massachusetts-grown hemp. They include CBD lip balms, lotions, and THC-free extracts made by hemp firms themselves, plus tinctures and edibles manufactured by marijuana companies that incorporate raw flower purchased from local hemp farmers or extracts from local hemp processors.

The Healing Rose, a hemp manufacturer in Newburyport that makes extracts and body care products containing CBD and other non-THC cannabinoids, said its revenue has more than tripled over the past 12 months thanks to the law.

“We just got into our 60th dispensary, and we have more lined up and waiting,” said Laura Beohner, the company’s founder. “It’s been life-changing.”

And just as hoped by policy makers and advocates who pushed the 2020 bill, the success of retail brands is also translating into success for farmers such as Noel. She sold her 2021 harvest of hemp flower to a processor who then flipped the resulting extract to Beohner for use in a THC-free tincture, with everyone involved pocketing a tidy profit.

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“I was so proud when I found out that my hemp was going into [Healing Rose] products,” Noel said. “After finally selling my first crop, that was just the crème de la crème.”

The arrangement is attractive for marijuana companies, too: Most prefer to use their limited indoor cultivation space on THC-heavy strains that command the highest prices at retail, not less-intoxicating varieties with greater amounts of CBD and other cannabinoids that may have medicinal benefits. Gaining access to an affordable, outside source of those other compounds has made it more financially attractive for marijuana firms to manufacture edibles containing them, leading to a greater variety of products for consumers who want symptom relief without the high.

John Nathan, the founder of Bay State Extracts in Wareham, is targeting precisely that demographic. His hemp company has been working with Noel and other farmers to produce artisan-quality extracts containing uncommon “minor” cannabinoids such as CBG and CBN. The compounds, which can occur in both hemp and marijuana depending on the strain, are far less impairing than THC; proponents claim they help with sleeplessness and anxiety, among other ailments, though few studies have yet been conducted on their medical potential.

In a reflection of growing consumer interest in such products, Bay State Extracts now counts 40 marijuana companies among its customers, including some of the state’s largest operators. This season, Nathan expects to work with 25 or more farmers, up from just 12 last year.

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“Ninety-five percent of our business comes from that [2020] law,” Nathan said. “Getting access to the dispensary market put us in a position where I could confidently raise the price we pay for hemp. That means more money for farmers and more jobs at my facility — and it also means a more mature market for consumers that’s focused on beneficial effects instead of inebriation.”

Senator Ryan Fattman, a Sutton Republican who co-sponsored the 2020 measure, said he is “happy with the progress that we have made, but there is still work that is needed to be done.”

Nathan and others in the hemp business also attributed their new success to an improved relationship with the state Department of Agricultural Resources, which worked with the Cannabis Control Commission to finish regulations based on the new law in time for the fall harvest.

“Those first couple years, they didn’t really understand the industry or have the resources to handle it all, which created a lot of frustration on everyone’s end,” Beohner said. “Now it’s a lot different: They’re helpful, responsive, and grateful for our feedback. It feels harmonious, like we have a common goal of trying to create a successful local industry here.”

The hemp sector is looking for a few more reforms, however, with advocates throwing their weight behind a pending bill in the Legislature that would let hemp companies sell their own edibles and use organic pesticides on their outdoor crops.

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Still, hemp farmers are celebrating the recent turnaround.

“I don’t think anybody will be stuck sitting on their crop again this year,” Noel said. “I’ve already had a lot of calls about buying my flower. There’s definitely enough market to go around now.”


Dan Adams can be reached at daniel.adams@globe.com. Follow him on Twitter @Dan_Adams86.