MIDDLEBURY — There was the U-Haul trip through the Colorado Mountains in a snowstorm and a load of hemp that mysteriously vanished in Oregon, never to be seen again. Tornado-like winds nearly ripped the roof off a greenhouse sheltering 50,000 newly planted starts. There was fungus and a devastating fire.
But the partners who run one of the state’s largest cannabis companies, Northeast Hemp Commodities, have weathered the storms of their first year and are gearing up for another planting season. Building on the lessons of a year that was turbulent for many of Vermont’s hemp growers, the company has refined its strategic plan to focus on selling high-quality seed and the cannabinoid CBG.
“I don’t think what we have learned in the past two years could be taught in a four-year degree,” said Dillon Robinson, the company’s chief operations officer.
The year 2019 was one of much learning for many new entrants to the cannabis business. After the federal government redefined hemp as a regular agricultural commodity in 2018, new growers surged into the market, eager to cash in on the interest in cannabidinoil, or CBD, one of the many compounds in the hemp plant thought to have health-giving properties.
But it was also a rough start for many. An unusually cold, wet spring last year delayed planting, for some into July. The crop was a new one for most, so even seasoned farmers were taken by surprise along the way. And new arrivals to Vermont who had experience with growing cannabis in Colorado also struggled to handle and dry plants in a more humid environment.
The industry was so new that the processing labs and distribution system weren’t in place yet, leaving many growers with nowhere to sell their harvest. And with so many people entering the market, prices for CBD and for other hemp products plunged.
Many growers ended the season with plants standing in the field. Others managed to harvest and dry their plants, but still haven’t worked out contracts with buyers.
Even those with more experience who did find markets ran into problems sparked by the lack of clarity around the legality of producing CBD. Fox Holler Farm in New Haven had a 100-pound legal shipment of organic hemp seized by New York City police who proudly touted the seized products on Facebook as marijuana. The hemp was headed to Green Angel, a CBD store in Brooklyn.
Erin Doble, marketing coordinator at the Burlington-based Heady Vermont, an industry interest group, heard about unexpected mold problems and difficulty finding labor. “They didn’t realize the capacity of how much work it was going to be. A lot of people aren’t going to grow again this season,” she said.
But entrepreneurs who are trying again this year are using the lessons to hone what they’re doing. The Vermont Agency of Agriculture, Food and Markets is not yet accepting Vermont Hemp grower registrations for calendar year 2020.
Carl Christianson, who started Northeast Processing in Brattleboro in 2018, said he initially expected to focus on testing and extraction and selling bulk oil. But he’s found higher demand for consulting services and contract manufacturing.
“Most of our customers were looking for more support than simply being sold bulk oil,” said Christianson, who has 12 employees. “We’re one of the companies working to try to streamline the process for people so there can be more defined outlets for product.”
NEHC grew and hand-harvested 50 acres in 2018, its first year. The company leased 35,000 square feet of warehouse space in Fair Haven and built a mechanical dryer, sending much of the product to a facility in Pittsburgh for processing. Now the group has 60,000 square feet of warehouse for drying. Last summer, the company purchased 15,000 square feet of greenhouse space in Florence for starting plants.
NEHC grew 180 acres last year for CBG, a cannabinoid that isn’t as common or well-known as CBD or cannabidiol. Both compounds are believed to have health-giving properties and are included as ingredients in an array of food, beauty and other products.
“We knew this was going to be a saturated market,” said Robinson. “We were trying to differentiate ourselves from everyone else.”
The partners, four of whom graduated from Middlebury High School together, learned some tough lessons along the way. They spent 17-hour days working in the fields, sometimes under lights. They battled fungus on the plants, and one night a crew of eight struggled to hold the plastic over the greenhouse in a wind and lightning storm, protecting 50,000 newly planted starts inside.
Robinson and Travis Tindall, both 26, drove a large U-Haul out to Oregon together with 9,000 pounds of hemp they had harvested, dried and packed in 2018. The drive took 70 hours because they had to bypass Idaho, where the product wasn’t legal. They summited Vail Pass in a snowstorm.
Company founder Tylor Highter was in Oregon and had found a buyer who was offering them a favorable deal. But somehow their product disappeared, and they were never paid for it.
“It was essentially theft by deception,” said Tindall, the company’s chief production officer. “We’ve lost a lot of money by trusting people that are untrustworthy, and there’s a lot of them out there.”
Last fall, the company shipped 13,000 pounds of hemp biomass to GenCanna, a Kentucky company that the firm hired to make the plant material into a finished product.
“We had some pretty good sales lined up; prices were five times then what they are now,” said Highter.
But in early November, GenCanna had a fire that led to an explosion, and the NEHC product was destroyed. GenCanna has filed for bankruptcy; a lawsuit is in the offing.
The NEHC partners are resilient, and they come with experience in farming, sales, business, construction and mechanics — all very handy at a cannabis start-up. Last summer they leased self-propelled corn sileage harvesting machinery from John Deere and carried out contract cannabis harvesting and baling on an estimated 1,000 acres. They baled 4 million wet pounds of cannabis this year, half of that in California.
(“There were a lot of instances where we didn’t even get paid for harvesting, unfortunately,” said Robinson.)
They’ve started a retail line of plant extracts and have a store near their offices in Middlebury, and Robinson said they’ll focus in the coming year on working with genetics and trying new cultivation practices as they study the yield differences they see in their own fields. They haven’t decided exactly how many acres they’ll plant.
“Now we have more realistic expectations and a good foundation to build off, so we’re kind of rebuilding our vision and getting ready for Round 3,” Robinson said.
Sunsoil, one of Vermont’s largest cannabis growers and processors, grew nearly 100 acres last year and hired 160 part-time workers at harvest time. Co-owner Alejandro Bergad said he expects the company to plant 150 acres this year. It helps that Sunsoil has been in business since 2016, and before that Bergad grew cannabis in Colorado.
“It’s a very hand-intensive process, which means we’re dependent upon labor and building those relationships is key,” he said. “Trying to do it as a one-off would be difficult.”
Despite the struggles of the pioneers, the industry will emerge stronger each year, said lawyer Tim Fair, who with partner Andrew Subin runs a cannabis-focused law firm in Burlington.
“The last year in CBD and hemp production is going to shake out the chaff from the wheat, so to speak,” Fair said. “There were a lot of inexperienced producers — farmers who thought they could just plant hemp and make a fortune.” Now that Vermont has raised the price of a license from $25 to as much as $3,000 and plans to add laboratory certification for plants, “you’ll see less people producing,” said Fair.
Prices for hemp biomass and for CBD have dropped precipitously since last year. But Fair sees a bright future there, too.
“You’ll see demand increase with more and more states coming on line allowing CBD,” he said.
