Hemp State Highlight: North Carolina puts out big welcome mat for hemp industry

, Hemp State Highlight: North Carolina puts out big welcome mat for hemp industry

(This is the first installment in a series that will look at the hemp markets in U.S. states over the next few months. Other installments: ColoradoNevadaNew YorkNorth DakotaOregonTennesseeVermont and Virginia.)

By Kristen Nichols

Dozens of states are slowly experimenting with industrial hemp cultivation and processing, authorizing limited tests through land-grant universities. Not North Carolina.

North Carolina has gone all in on hemp, which state officials see as a natural fit for an economy once dominated by tobacco farming and textile manufacturing.

North Carolina is finishing its first hemp-growing season with more hemp growers, more acres in hemp and more hemp processors than any other state in its first year of hemp production.

“We’re just getting geared up,” said David Schmitt, chief operating officer for Industrial Hemp Manufacturing, which produces CBD oil and processes hemp fiber in Spring Hope, N.C.

North Carolina’s hemp enthusiasm makes the state a natural launching point for a closer examination by Marijuana Business Daily, which is bolstering news and analysis of the burgeoning hemp and CBD markets.

Here’s what you need to know about North Carolina’s hemp market.

Industry snapshot 

As of this year, North Carolina has:

  • 97 licensed hemp growers
  • 1,930 outdoor acres under cultivation
  • 159,000 square feet of indoor greenhouse cultivation
  • 19 licensed processors, mostly producing CBD oil

With a flexible no-deadline application process, no acreage minimum or maximum, and a regulatory scheme that allows hemp growers to pursue any end product for their crops, North Carolina has seen strong interest from farmers wanting to grow the plant and entrepreneurs interested in processing it.

North Carolina allows hemp to be used for:

  • CBD extraction
  • Seed or seed oil
  • Fiber

As in other hemp states, the initial value for growers in North Carolina seems to be in CBD oil extraction.

Market considerations

Though prices vary by state and there is no official tracking of hemp commodity prices by any standard exchange, North Carolina hemp growers report the market is fetching:

  • About $20-$30 per pound of dried flowers or buds for use in CBD extraction, more if the plant CBD content is high. Yields are highly variable, but a healthy hemp plant can yield about a pound of such material.
  • Less than $1 per pound for seeds to be eaten as food products.
  • About 10 cents a pound for stalks to be turned into fiber
  • About 10 cents a pound for seeds intended to be pressed for seed oil.

“The strongest market right now is for hemp floral material. Realistically right now there’s no market for fiber,” said Scott Propheter, CEO of Criticality, a hemp processor in northeastern North Carolina.

Growing pains

North Carolina’s first year wasn’t without any glitches – some natural and some manmade.

“We lost some acres due to heavy rains,” said Burt Eure, who is working on developing hempseeds at his White Hat Seed Farm in Hartford, in northeastern North Carolina. “The jury’s still out trying to find the variety that’s going to work for us.”

Some growers were also plagued by “weed control issues and pest issues,” damaging their entire first hemp crop, said Sandy Stewart, Research Stations Director for the North Carolina Department of Agriculture and vice chairman of the N.C. Industrial Hemp Commission.

In addition, North Carolina saw isolated thefts from hemp fields, likely from folks who confused hemp with marijuana. Sheriff’s officers in Edgecombe County stepped up patrols of area hemp farms after they arrested five people in September on charges of trespassing or theft.

Looking ahead

North Carolina is likely to modify how it regulates hemp in coming years, Stewart said.

He told growers, for example, to prepare for possible application deadlines. Last year the program got started too late to give growers a deadline, but that will likely change, he said.

Stewart and others agreed that hemp participation in North Carolina is going to increase next year, maybe even double.

“I think you’re going to see some big growth,” Propheter said.

What that means for prices is too soon to say. As long as prices don’t plummet, North Carolina could surpass hemp leaders Kentucky and Colorado by 2020, operators say.

“Within two or three years, North Carolina will lead the nation in industrial hemp, no question,” Schmitt said.

Kristen Nichols can be reached at kristenn@mjbizdaily.com