2018 farm bill: Boom or bust for Mass. hemp?

For many struggling small farms in Massachusetts, the 2018 federal farm bill could be a game changer.

The long-awaited measure, signed into law last month, removed hemp — the nonpsychoactive variety of cannabis — from the federal government’s list of controlled substances.

The legislation is seen as an important opportunity to help make small farms financially sustainable — even profitable.

Hemp contains cannabidiol, or CBD, a compound that’s popular for its medicinal properties. CBD oil has gained interest from major food and beverage giants, cosmetic lines, and even tobacco companies that want a replacement crop.

Brightfield Group, a cannabis and CBD market research firm, estimates that hemp could grow into a $20 billion industry by 2022. Hemp Industry Daily projects the hemp-derived CBD retail market alone will reach between $2.5 billion and $3.1 billion by 2022.

The National Hemp Association’s Alex Seleznov told the Journal Advocate that competition is indeed strong for certain parts of the hemp plant — fiber and seeds — but farming for CBD oil could work. The NHA estimates that in 2018, with a yield of about a pound per plant and up to 2,500 plants per acre, a farmer could make about $60,000 per acre. (This is on the high side; a range of sources estimate $35,000 to $70,000.)

That value is currently supported by the low supply of and high demand for CBD oil. Sanford Lewis of the Sustainable Cannabis Project of Western Massachusetts believes that in the foreseeable future, “The market for CBD is going to outpace the market for marijuana.”

There are 14 licensed growers in Massachusetts. The state Department of Agricultural Resources has received 13 applications for license renewal for 2019 and 15 new applications for 2019 licenses.

Ricky Baruch, a farmer who owns Seeds of Solidarity in Orange, hopes to be licensed to grow hemp in 2019. He agrees CBD has more potential than marijuana. “Only a certain amount of the population wants to get high,” he said. “But there’s a much larger market for health and medicine.”

It doesn’t hurt that hemp is also considered environmentally friendly. Said Linda Noel, a hemp farmer and president of Terrapin Holistic Cooperative in Franklin, “Everything you can make from petroleum oil can be made with the cannabis plant. Hemp can save the world.”

With legalization, growers here can now move product across state lines and national borders. However, with that freedom comes more competition. While hemp is highly adaptable, there are some states where it is particularly well-suited, including tobacco states such as Kentucky. And in California, with its mild weather, hemp farmers will be able to grow at least two crops a year outdoors.

Eric Schwartz, a resident of Somerville and cofounder of Farm Bug Co-op, a marijuana cultivator cooperative that is based in Massachusetts, agrees hemp is a great crop. But he disagrees that it works well for the small farmer.

“Hemp . . . will be industrialized and grow into a Big Ag venture. I believe craft marijuana is a better route for small farmers. It has a higher price point and you can make much more per pound in a smaller amount of acreage.”

Tom Denman, a marijuana cultivator from Gloucester, researched the possibility of growing hemp but decided against it. “I was looking with partners at a farm a while back,” he said. “But our market intelligence seems to indicate places like Kentucky will be very difficult to compete with, and likely to drive the price way down.”

Another concern: On Dec. 20, the FDA took a stricter stance on CBD, calling it a violation to label products with CBD as therapeutic if not approved by clinical trials. There has been pushback from manufacturers in the industry and the FDA is holding a public meeting to discuss the issue. A date has not been set. They have approved three pharmaceutical drugs with CBD and THC.

Because state and federal government rules around hemp are fairly new and still unclear, farmers are forming regional associations, as they have done in Oregon, Vermont, and now Massachusetts. On Dec. 15, a few days after the farm bill was signed, 18 small-scale hemp farmers formed the Northeast Sustainable Hemp Association, or NOSHA.

Lewis, one of the founders, said the impetus was the need for sharing information and equipment, mentoring, and gaining bargaining power with CBD oil processors. An association may provide protection against large competitors.

There are bumps to be smoothed over. For example, land is at a premium in Massachusetts, and 800 sites under the state’s Agricultural Preservation Restriction Program are restricted from growing hemp. To change this, the Legislature would have to include hemp in the definition of “horticultural use,” and then a state plan would need federal approval. Under that scenario, opening up land to hemp farming would give farmers more opportunity. Farmers who own these restricted sites have shown interest in growing hemp, Lewis said.

Baruch and Noel are also founding members of NOSHA. They envision a “Northeast brand” for CBD oil. Instead of fighting Kentucky, Canada, and China, these small-scale farming industries are seeing their regions as hubs for high-quality, sustainable hemp production.

“This is old-school. This is what farmers used to do,” Baruch said.

Correction: An earlier version of this story misstated the location of Terrapin Farm.