WHITING, Vt. — By the time Dustin Sherman started growing hemp on a former dairy farm in this small Addison County town, he had been preparing for months to bring his crop into a saturated market.
Sherman knew that hundreds of people had rushed to grow hemp last spring, and not all were going to find a place to sell their crop. So he spent the winter networking at hemp-related events in the region, finding buyers for the plants he would harvest in October.
And as it started to seem clear this summer that prices for hemp were going to drop steeply in the fall, Sherman decided to sell his hemp as smokeable flower — a product used like tobacco.
“I put in a lot of time and hours going around the state meeting people,” said Sherman, 35, who learned how to grow cannabis after spending a few years in the industry in Colorado. “And that’s why we’re selling a lot of product now.”
As the hemp harvest in Vermont reaches its height this fall, farmers who lined up buyers are still expecting to make a profit in the new industry. But many who planted this year without buyer contracts are likely to lose money on the crop, as demand for the product has not met supply.
The number of growers in Vermont has more than doubled in the last year, while the market has not kept pace. Industry experts predict that for some farmers, it won’t even be worth harvesting all of the hemp they grow this year, because they won’t have a place to sell it.
“There are going to be quite a few farmers leaving hemp the harvest in the fields, due to lack of manpower,” said Tim Fair, a Burlington lawyer who focuses on the cannabis industry. Fair said his firm frequently receives requests from growers looking for someone to buy their crop.
If farmers cut the plant but don’t have the storage or drying capabilities to handle it immediately, they’ll also lose money, Fair said. And even if they have a buyer, hemp prices are plummeting.
Bill Lofy, the co-founder of Kria Botanicals, a company that purchases hemp to extract CBD — a chemical found in the plant used as an alternative medicine with very little psychoactive effect— said that while he paid farmers from $100 to $150 per pound for the crop last year, this year he has only paid $20 to $55 per pound.
Lofy said his business has purchased 17,000 pounds of hemp this year, all from farmers he contracted with months ago. But he’s still hearing from farmers who want to sell him their hemp, and he has turned down about two dozen requests in the last two months.
“As much as we strongly support the local farming economy, we just don’t have the capacity to purchase all the hemp that is offered,” Lofy said.
Fair’s law firm partner, Andrew Subin, monitors an online forum called Kush Marketplace, which he described as a “Craiglist for hemp.” “I get push notifications on my phone from Kush all day long, so I can see the prices starting to crash,” he said.
Daniel Maclure, a real estate broker and agent in the Northeast Kingdom, planted 8 acres of hemp this spring on his farm in Barton, Vt. He said he won’t do it again.
“You’ll probably see a decline in (permit) applications next year because it’s so much work,” said Maclure, a former dairy farmer who struggled with mildew in his hemp plants this summer and doesn’t expect to make money this year. “People don’t have a clue until they get into it.”
Maclure estimated that he spent $100,000 on fencing, turning his barns into drying facilities, seeds, labor and other costs.
“It’s kind of a disappointing learning experience,” he said.
A new Vermont crop After the 2018 Farm Bill made it clear that it was legal to plant hemp for sale in Vermont, new growers flooded in.
Real estate agents said they fielded calls and visits from people from as far away as Europe and Asia looking for inexpensive land where they could grow hemp. According to the Vermont Department of Agriculture, 1,142 growers have registered with the state — more than double the number last year — and those registrations now cover 9,000 acres of land.
However, farmers and industry observers have been saying since last spring that too many people jumped into growing hemp without thinking ahead to matters like drying, harvesting and selling the plant — essential steps that are expensive and labor-intensive.
Jane Kolodinsky, the director of the Center for Rural Studies at the University of Vermont, which tracks the state’s hemp industry, said that while many farmers started growing the product to diversify their offerings, it’s not a “magic bullet solution” to agricultural downturn.
Many expect the hemp market will eventually become more mature, with potential uses as a material in the construction, garment and plastic industries. But for now, growers must rely on a limited pool of buyers, particularly those in the CBD market, Kolodinsky said.
“Until there is someplace to sell that product, you’re stuck unless you’ve already made those contracts and have a buyer guaranteed,” she said.
With Vermont dairy farms closing at a rate of 10% per year, policymakers and farmers have seen hemp as a way for struggling farmers to make money using land and equipment they own.
“But you can’t just go into it blind thinking there’s a pot of gold at the end of the rainbow and all you have to do is grow this,” Kolodinsky said.
She noted hemp businesses that are vertically integrated — meaning they grow, manufacture and sell hemp products to consumers directly — are best poised to succeed in the nascent industry.
Vertical integration When Alejandro Bergad and Jake Goldstein set out to build their hemp company, Sunsoil, in 2016 they decided that handling every stage of the business was the only way for them to ensure a return on their investment.
So the two friends and business partners, who received a $7 million infusion of capital from investors in 2018, have built two 20,000-square-foot drying barns, one in Hardwick, Vt., and one in Hyde Park, Vt. They also make CBD products from the hemp in their facility in Hardwick.
This year, the company has about 200 workers signed up to help with the harvest, earning $20 an hour plus lunch. On a recent mid-October day in Hyde Park, about 125 of those workers were pulling Sunsoil’s plants from the fields, hanging them up to dry in the warehouse-like heated wooden barn, and removing the flowers and buds by hand.
Bergad and Goldstein, who grew up together on an intentional community in southern New York, also have observed the drop in prices, but they welcome it. The pair said they want to make CBD products available to as many people as possible.
“I see a lot of deflationary pricing coming,” Bergad said. “We’ve been leading that charge.”
Sunsoil recently launched a program at the Healthy Living store in Burlington where CBD buyers can bring in their own container to purchase unflavored CBD oil at 2 cents per milligram. Nationally, the industry average is an ever-moving target, but it runs between 5 cents and 25 cents per milligram.
“It’s just a testament to what can be done through efficient practices,” Bergad said. “We’re trying to democratize CBD and make it more accessible.”
Meanwhile, the two are running one of the largest CBD businesses in the state, if not the largest. They invested more than $1 million in their two two-story drying buildings, which warm to about 140 degrees and can dry 10,000 square feet of biomass in 24 hours. They grew 100 acres of hemp on land they lease or own, and expect to end up with 84,000 pounds of their own high-CBD hemp that they’ll process themselves.
Bergad said he watched the Colorado cannabis market mature and become saturated, and he sees similar patterns in Vermont.
“I see the mistakes folks are making, and I wish I could warn everybody,” he said. “Farmers are going into this without knowledge of where they are going to dry their products in a sanitary environment, and without knowledge of where they are going to fit into the supply chain.”
“A lot of folks are doing this on speculation; we get emails from folks wanting to sell us wet product because they have nowhere to dry it,” he added. “It’s going to rot in the fields.”
Stephanie Smith, the chief policy officer with the Vermont Agency of Agriculture, said the state is in the process of surveying hemp growers and processors to determine how the pricing of the crop has changed.
She said the department is advising farmers who may not be able to find buyers for their crop this fall to store it and sell it next year, when demand may increase again.
“It is just a great opportunity and remains so,” Smith said of the Vermont hemp industry. “But farmers have to dial in what their business plans are and research what they’re good at and develop products that are in support of Vermont’s hemp economy.”
Another cannabis market awaits Sherman, a New Jersey native who like Bergad had worked for years in Colorado’s cannabis industry, grew only 5 acres of hemp this year in a former cow pasture on a 180-acre dairy farm with his business partner. Sherman chose Vermont because he loves the state and likes the Agency of Agriculture’s hemp program.
“The $25 license is not bad, too,” Sherman said.
That fee, based on acreage, is going up in January. He expects to make money selling in Massachusetts, New York and New Jersey this year, but not enough to ensure he’ll grow hemp again next year.
“Now that people are getting their harvest in, the price remains to be seen,” Sherman said. “It’s already really low.”
And Sherman is waiting to see if the state Legislature finally decides to legalize commercial sales of marijuana. (Hemp and marijuana are both cannabis; hemp is the term used to describe the plant when it has less than 0.3% THC content.)
“That’s where my heart lies,” Sherman said. “If THC gets commercially approved here, and it’s feasible to do that, I will.”