Hemp Haven: An Auction and Market Bring the Plant Into the Mainstream – Memphis Flyer

Hemp Haven: An Auction and Market Bring the Plant Into the Mainstream - Memphis Flyer

Step inside the world’s largest bag of cannabis.

That’s what it was like walking into the International Hemp Auction & Market (IHAM) in Franklin, just south of Nashville. A dense but invisible cloud of that unmistakable marijuana scent shot straight to your brain, with notes that were heady, piney, sharp, and somehow undeniably green. The smell was so pervasive, so plainly out in the open, that no doubt was left that hemp had arrived in the mainstream in Tennessee, especially given that sheriff’s deputies quietly patrolled the corridors.

But that’s old news to the hemp buyers, farmers, and agricultural agents who’ve been working with hemp since 2014, when it became legal in the state. For them, any outlaw sheen of the plant’s seedier self has worn off. They are, instead, trying to peek around the corner, to the future of an industry that is still trying to get off the ground here. 

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Photographs by Toby Sells Hempin’ ain’t easy — hemp buyers, farmers, and state agricultural agents meet at the International Hemp Auction & Market in Franklin, Tennessee.

The auction was created to secure one basic element of any new market: price. IHAM founder and CEO Mark Case says he wanted the market to be a “fair playing field of transparency” for hemp farmers.

“For the last few years since we’ve been able to grow hemp, brokers have been able to control the market price for the most part,” Case says. “Of course, supply and demand always does, too, but brokers have a lot to do with it. They can negotiate one-on-one with farmers, and farmers will oftentimes sell out too cheap. Sometimes they’re given bad information and are just manipulated, frankly. This is commonly known throughout the whole country.”

So, Case says he founded IHAM to give the hemp market a “professional, transparent platform” that would force buyers to bid openly and compete with one another. The buyers, Case says, have resisted his auction idea “all the way.”

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Three Days of Green

During IHAM’s three-day run (November 19th to 21st) each general hemp product — biomass, smokeable flower, and oil — was given its own auction day. The halls were subdued and the energy was low in the early hours of the first auction day. Prices just weren’t getting high enough, and the auction officials had halted the action to find a solution.

During that pause, dusty farm boots mingled with loafers on a hardpacked dirt floor, the bottom of the massive bowl that is the Williamson County Ag Expo Park arena. Farmers in ball caps and hoodies watched as buyers in chinos and polos pulled handfuls of green hemp buds from huge, white bags that sat in long rows on the dirt floor. Buyers would crunch the buds, hold them to their noses, inhale deeply, give the buds another look, and toss them back in the bag. And, maybe, write something in a notebook or on a smartphone.

Buyers took note of the information on a white certificate attached to each lot of hemp. Each IHAM lot was given a formal, uniform analysis to establish a level playing field for buyers and sellers. Each certificate gave the bud’s strain (think Cherry Cherry or Hurricane), the THC level (had to be less than .3 percent to make it into the market), and the levels of each cannabinoid found in the strain (22 percent CBD, for example).

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But Tyler Dickman wasn’t looking for CBD (cannabidiol) Tuesday. He was on the hunt for strains with high amounts of CBG (cannabigerol).

“The research is showing there are some pretty good opportunities for cancer research [with CBG] and uses for depression, anxiety, and pain,” Dickman says. “I think those are the big kickers that are gaining a lot of interest.”

Dickman’s company, Candera, is a Salt Lake City-based hemp processing plant. Whatever biomass (hemp bud, stick, and stems) he would buy at the auction would be shipped to Candera’s plant to be juiced, essentially. Candera then sells the juice — hemp distillate — to companies that make consumer hemp products such as oils, tinctures, or lotions.

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Market Problems

Dickman got into hemp about two years ago. The total market is about $1.5 billion now, he says, but he cites projections for a $22 billion industry by 2022. That market realization, he says, would happen more quickly if the U.S. Food & Drug Adminstration (FDA) would formally allow CBD into edible products. This complaint was repeated by almost all of the people interviewed for this story.

“You have the supplement brand market that’s been sitting on the sidelines,” Dickman says. “That’s where the majority of the growth is going to come into play, where mass distribution is already in place. You can go from zero to 30,000 store shelves in a month.”

Case, the auction founder, put the complaint more plainly: “Once the FDA permits it to be a true, edible food product, you’re going to have CBD in cereal.Kellogg’s will have a sticker: ‘CBD inside.’ Pillsbury will have it. It’ll be in milk, bread, everything. That’s when hemp will become a real, stable product.”

So far, the FDA has approved only one CBD product to treat rare, severe forms of epilepsy. New CBD products are flooding markets anyway, says the FDA, because of changes in state laws and the 2018 Farm Bill, which legalized CBD.

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The FDA says on its website that it “recognizes the significant public interest in cannabis and cannabis-derived compounds.” However, it is now working to answer many questions about the drug, like its toxicity to the liver, the effects of using many CBD products at once, and the effects of CBD on special populations like children, the elderly, or pregnant women.

Another common gripe at IHAM about the hemp market in Tennessee was the lack of processors in the state, companies or individuals that can juice hemp stalks and buds. Many farmers have gotten into hemp farming recently; the state has gone from 360 licensed farmers in 2017 to more than 3,300 at last count. But without processors to move the product through the market, a glut of hemp remains available, pushing prices down. 

Recruiting more processors to the state is one of the major goals of Tennessee Department of Agriculture officials working in the hemp space, says Kyle Hensley, a business development consultant in the department. One of his colleagues works on recruiting “big fish” processors, while Hensley says he works with smaller operations, which was one of his goals for attending the IHAM in the first place.

“If you’ve got a processor in a rural county, and they can process for 10 to 15 farmers, that’s economically impactful,” Hensley says. 

James “Tad” Fuller, owner and operator of Electric Farms in Camden, is a processor in West Tennessee, as well as a grower. “People have come up to me, specifically, just to say, ‘What do people expect? To come here and have their biomass sold so easily?'” Fuller says, adding, “There’s no infrastructure for processing.”

Fuller hopes to use that market weakness as a strength for his company. Once they bought a 20,000-pound bud dryer, he says they immediately had calls for jobs to process 60,000 pounds.

“Now we know the demand is there, just like with the food industry,” Fuller says. “So we’re going to be able to scale up and be able to help more farmers obtain a better market price for their products.”

Hemp Pioneers

In the ringed concourse above the auction floor, hemp growers sold pre-rolled CBD joints, CBD-infused lip balms, smokeable flower, and more. Hemp-industry companies were there, too, pushing their hemp-testing services, soil additives, hemp buckers, dryers, trimmers, and harvesters.   

Kailee Howard was working the table for her family’s company, New River Botanicals. She says her family went all in on hemp, despite what some others in Scott County thought about it.

Her family grew 70,000 hemp plants on several acres of Howard Farms this year. They extracted the distillate themselves with another family-owned company, HKH Industries, which sits about six minutes from their farm. They also make and sell end-user products (oils, rubs, and lip balms) through their brand, New River Botanicals, which they bottle in-house.

The Howard-family operation is truly a farm-to-bottle CBD business, an inspiring feat in the fledgling hemp industry in Tennessee. But not everyone in Scott County approves.

“We’re a very Christian-based, Bible-believing, Baptist community,” Howard says. “So, people were overthinking the process of what hemp really is and taking it to the next level. And that’s not what it is.”

She says the education that CBD is “good for you” is ongoing. Using it and finding its benefits, Howard says, is “trial and error,” much like learning to fly in the state’s young hemp industry.

Kolton Williams admits folks weren’t initially sure about the 18 acres of hemp he’d planted on his Kentucky farm this year. “The first three weeks, everybody would stop in the middle of the road and look at our field,” says Williams, chief operations officer for Kentucky Haze Hemp Co. “As the months went on, they [drove by] faster. By the end, no one was stopping anymore.”

Diane Williams, the company’s chief financial officer, says hemp was an experiment for them. They’ve grown (and still grow) typical row crops like corn, soybeans, and tobacco, and still have cattle.

“The market’s not good for any of those, really,” Kolton Williams says. “So, [hemp] is our glimmer of hope.”

That glimmer is shown in the dark-green nuggets snuggled together in several Mason jars arranged in neat rows on the table before them. They are the smokeable flower of a strain called Hurricane the couple raised this year. A single bud sample of Hurricane is $20, 20 grams sell for $100, and a one-pound package is $250.     

Back on the auction floor, Cameron Franklin sniffed at a jar of buds, held it up to the light, and then held the jar up for inspection by his friend, Chaz Akers.

Franklin is a native Memphian now living in La Vergne, south of Nashville. That’s where he tends a plot of hemp for his company, Gryndhouse CBD. “It’s Grynd with a ‘y,'” Franklin says. “The ‘y’ is because we work hard.

“An event like this gives people like myself an opportunity to meet more experienced people,” says Franklin, who describes himself as a “small grower, just starting out.” He adds, “It also helps point grassroots people in the right direction and to see the beginning of the process and the beginning of the industry with numbers and finances.”

That’s, in part, how Franklin hooked up with Akers. His company, Image, is primarily an e-cig manufacturer that also helps hemp companies like Franklin’s get off the ground with branding and labeling.

“When [the hemp industry came] along, we saw all of its uses as an alternative and possible cure for disorders like anxiety and others that cause kids to have seizures,” Akers says. “I want to do something to help those people. This plant can help people.”

For quality CBD bud, Franklin says he looks at the numbers, but he also looks for smells of fruit or pinecones and “you want to see some bright colors.”

Fuller, the owner and operator of Electric Farms, says people around Camden (close to the Tennessee River, between Jackson and Nashville) “love us.” The locals were used to seeing the company’s aquaponically grown lettuce in grocery stores, so they were a known entity when the farm added hemp products to their product line.

Electric Farms has about 10,000 square feet of indoor growing space, including some plots in Memphis. They also offer services to other hemp farmers, such as bucking (separating flowers from stems), trimming, and drying. The company is also a sales rep for the aquaponic systems and dryers they use.

Fuller is quick to tout the benefits of his products and the systems he sells, but it’s not a facade, just a salesman’s pitch. Fuller says his heart is in the hemp industry.

“The thing with growing hemp is I don’t have to ask myself if what I’m doing is affecting someone in a bad or good way,” Fuller says. “I know it’s helping them in a good way. There are a lot of people [in the hemp business] focused on the short-term and money. I really don’t like it, but I can’t change it. They may look at it like a stock market or some other thing, but it shouldn’t be represented that way.”

Back at the Auction

The trading floor’s quiet was broken later in the afternoon with a booming voice from the white dome above announcing that the auction would resume. Buyers and growers had buzzed around the floor in the nearly two-hour break, making phone calls, scribbling notes, or just “bullshitting,” farm jargon for “networking.”

The auctioneer urged buyers and sellers to get closer to him in one corner of the auction floor as he introduced the first lot — thousands of pounds of green hemp biomass lumped into several large, white industrial bags. He started the bidding at $1 per percentage point of CBD. The first lot rang in at nearly 13 percent CBD. Buyers checked their phones’ calculators and began punching numbers. If the lot was 7,980 pounds at $1 per point (for 13 percentage points), the lot’s starting price was $103,740.   

The bidder repeated the opening price again for all. Satisfied that all buyers were on the same page, he began that unmistakable machine-gun, auctioneer chant. The chant — meant to pump energy (and, thus, more money) into a live sale — is usually punctuated with a pointing finger and a high note, letting people know who the high bidder is. The price fell, first to 80 cents per point, then to 75 cents, then to 70. But neither the price nor the chant were enough for the afternoon’s first lot, and the auctioneer went silent.

“Tell you what,” the auctioneer said plainly. “What will you give? We have to have a starting price. 50 cents? 35 cents? We’ve got to start somewhere.”

But no one bit. So, since no buyer could be found for the first lot, the auctioneer moved on. The next lot of hemp was listed at 15 percent CBD but had been shredded into an unrecognizable mass of green, like an enormous bag of oregano. One buyer walked to the bag, grabbed a handful of the stuff, smelled it, and proclaimed, “This shit is dirt” to no one in particular. The auction also started at $1 per point, fell to 35 cents, but, ultimately, found no buyer.       

As the chant rang out over the next lot, buyers paced, talked into AirPods, or texted into cell phones, possibly to money people back at their headquarters. None looked eager to jump into the fray. After maybe an hour, the auctioneer’s chant hit a punctuation note — an offer had been made. His chant rose higher but lured no other buyers. The afternoon’s first sale (for 50 cents per point) was made and met with a gentle smattering of applause. 

“Hold Out”

The biomass auction crawled into the evening hours. Prices fluctuated from 50 cents to a high price of $1.35 per point.

“We were a little surprised at some of the auction prices,” says Darlene Gunther, secretary of the Tennessee Hemp Industry Association (TNHIA). “They were not what we’d hoped for, obviously.”

The auction’s second day focused on smokeable CBD flower. The product had been bucked, trimmed, dried, and was ready for consumption. The bags of the buds on the auction floor were smaller, but that big, green smell struck like a hammer.

The auction had gotten off to a late start, as officials wanted another check of product information. In the calm, a pastor offered prayer that included an anecdote about how CBD helped his wife, that it’s a misunderstood product but one “given by God.” His prayer came with a request for “fair market prices” of the products.

Gunther was patient with the wait. “It’ll be interesting to see how it all washes out, this being the first of its kind,” she says. “Everybody’s interested in supporting this crop. It has such a phenomenal value to the farmer and the consumer.”

Case, the auction’s founder, says he knows that evidence of CBD’s benefits are, so far, anecdotal. But anecdotal evidence is all anyone ever had of being healed by Jesus, he says. He notes that “zero people have died from CBD,” unlike the tens of thousands who die from prescription drugs each year. So, for the “countless testimonies” he’s heard about CBD, he believes the drug “is here to stay in Tennessee.”

“It’s also valuable — far more valuable than most buyers are willing to pay,” Case says. “It is in oversupply here, but CBD reduces in value very, very slowly. It can be held for a year or two if it’s packaged right. So, I’m encouraging farmers to hold out.”

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