A session on the emerging hemp economy was part of the recent annual NoCo Hemp Expo, which took place last Friday and Saturday in Denver. More than 10,000 people attended the event, organizers said. It was the sixth such event in the series and by far the largest, according to the organizers.
The event featured a brief address by Colorado Gov. Jared Polis and a speech by United Natural Products Alliance president Loren Israelsen. Polis was a member of the Dietary Supplement Caucus during his time serving in the US House of Representatives and Israelsen was part of a group that helped shepherd in DSHEA, the supplement industry’s overarching regulatory framework.
The economy panel featured Anndrea Hermann, a cannabis industry consultant and Joe Fox, CEO of Blühen Botanicals, a vertically integrated hemp products producer in Knoxville, TN. Also taking part were Julie Lerner, founder of PanExhange, a company that is setting commodity prices in new sectors, including hemp, and Brad Barltett, an attorney in the firm McAllister Garfield who represents tribal governments seeking hemp cultivation approvals.
Where do you concentrate your effort?
Fox, who was a successful real estate entrepreneur before starting into hemp cultivation, said the rapid pace of the industry means that it pays to be nimble in business decisions. The capital he was able to amass in Knoxville real estate gave him the luxury to be able to recruit a ready made set of experts for his new hemp business.
“We are truly vertically integrated. But we concentrated on being balanced in each of those verticals, in genetics, in growth, in extraction and in the finished products,” Fox told the audience.
“This thing is moving in dog years. Every year is seven years in terms of information.”
Fox cautioned the listeners not to let the glittering vistas of the industry and its huge growth potential dazzle their vision. All too many of the startups in the industry will find they have put their effort into aspects of the business that might have been better left to contractors.
“We decided not to over invest in any one vertical. As this market moves we wanted the ability to be able to pivot and capture those opportunities as they arrive. I would caution people to think, what is your core skill set? You don’t have to do everything,” he said.
Barltett said the recently enacted Farm Bill now puts hemp cultivation squarely in the bailiwick of the USDA. There will be a brief interregnum while the agency consults with state governments on working out the rules governing that on a national level, he said. But tribal governments are staking a place at that table.
“Five states have submitted hemp plans to USDA, but six tribes have already done so,” he said. “This thing is moving very quickly.”
Quality assurance, science backing still lacking
Hermann, who has a long history of consulting in the industry in Canada and teaching in the US, said hemp firms need to grow up fast if they intend to compete effectively in this new market. By all accounts, the hemp industry shortly is likely to include major agricultural and consumer packaged goods companies.
“Not too long ago, you’d have people coming in to an extraction facility still with the mud from the field on their boots,” she said. “There is a real need for quality assurance, for people who understand things like HAACP,” hazard analysis and critical control points, a preventive standard for food safety.
“That’s a massive amount of information that has to be held and managed in certain ways. There are still a lot of missing links. We don’t have any grading system for the raw material, for example,” she said.
Hermann said in her view the market, while still in its infancy, is already showing signs of becoming saturated in certain aspects.
“If it were me and I had the money, it would not be going into another CBD extraction facility. It would be going into hemp fiber,” she said.
Hermann said there is a need for more research on hemp and CBD products to underpin whatever claims might be made. Much of the research available pertains to drug form.
“We need more peer-reviewed science. How do we get nutritional claims if we have no backing in the science? You say hemp is great, but how great is it? We need that in a printed paper,” she said.