Texas Sees Its First Hemp Harvest in 80 Years
Entrepreneurial farmers navigate state regulations and unsteady market, but still sees a bright future
It's an overcast October morning in the farmland south of Dripping Springs. The crystalline voice of reggae pioneer Desmond Dekker emits over a Bluetooth speaker as a dozen volunteers work through rows of 5-foot-high plants – cutting the giant, pungent, parakeet-colored colas emerging victoriously through the fan leaves and placing them in Rubbermaid bins.
If you believed your nose and eyes, you might think you're on a marijuana farm, but this is harvest time in Texas. It is the first season of legal hemp in over 80 years.
Put the "J" Back in Texas
Soon those buds will be dried and trimmed. The best flower, which will be sold to CBD users, gets manicured by hand, while the B-grade growths will end up machine trimmed. The remaining biomass doesn't need to be clipped down – it will go to an extraction lab and become CBD oil.
Aaron Owens, a funny, self-assured West Texan who's been ranching outside of Ozona for the last decade and a half, runs the farm. When Texas legalized the production of hemp, via House Bill 1325 in June 2019, he pivoted the Dripping Springs property he'd leased for livestock to hemp cultivation, a decision he's clearly stoked about.
"Looks like that sticky-icky, doesn't it?" he grins, nestling a fragrant bud that would easily weigh 10 grams dried.
On that day, Owens estimates that his 2 acres – he declines to specify what two strains he'd grown, instead dubbing them Garlic Jam and Guava Jam – would yield 6,000 pounds of total biomass, including 1,500 to 2,000 pounds of flower.
For those wondering how well the Central Texas climate allows for cannabis growing: Owen's operation germinated seeds on June 7 and sowed those seeds on July 18. He notes that farms with huge hemp acreage must get plants into the dirt considerably sooner, but mid-summer worked well for a smaller high-end crop. "Our approach is: If you know how to feed your plants appropriately, they really don't need to go in the ground before July 4.
"This is a boutique variety," he adds. "We didn't want to grow regular CBD – there's still material left from last year. This particular variety is a sativa. Ninety-five out of 100 industrial hemp strains are indica and the other five are hybrids. This is the first-ever hemp genetic that actually has a sativa terpene profile, and we were one of four people in the U.S. that got it."
Terpenes make up a tiny fraction of cannabis plant matter but drive the experience. The ratios of the "terps" influence whether a strain is considered indica ("Man, this couch is comfy"), sativa ("Y'all wanna to go play tennis?"), or a hybrid. The farmer further explains that while the common terpene profile in CBD helps users sleep, this featured crop, high in limonene and low in myrcene, would actually increase alertness and focus.
Owens is an owner of Tejas Hemp, which sells oil infusions and salves, and they are partnered with EVG Extracts in Colorado, which uses a process called Terpex to extract cannabidiol oils without heat or ethanol in order to preserve the plant's molecular integrity.
"We've been extracting in Colorado since 2015, but I'm from Texas and always wanted to be in Texas. So now this is the first year we can grow here and we'll be using this material for the same thing. The idea is to do as much business in Texas as possible so we can justify vertical integration of the production here."
Start Small, Grow Big
Lest we forget: Hemp production was not only possible but promising as a lucrative crop less than 100 years ago, before being federally outlawed in 1937.
"I feel confident that Texas could be one of the largest hemp fiber producing states, similar to how it's the largest fiber producing state for cotton," says Coleman Hemphill, president of the Texas Hemp Industries Association. "A lot of the attributes of Texas weather [are] advantageous, both for fiber production and cannabinoids because it's a dry state, allowing more stress on the plants, which makes the valuable attributes of that crop more expressed."
Still, significant hemp fiber production remains a speculative discussion in Texas. "It would happen once we are able to establish a high-volume, low-cost consumer of hemp fiber in the form of the construction industry and textiles," explains Hemphill. "And, at that point, hemp in Texas could be worth tens of billions of dollars."
Hemphill believes that hempcrete – a biocomposite insulating material made from hemp's inner stalk and a lime binder – could be brought in to harden public infrastructure and housing, a particularly useful asset for flood-prone areas like Houston, because it's mold resistant. But perhaps the most emergent asset to Texas' fiber future is the Panda Texas Plains Hemp Gin, a 500,000-square-foot industrial hemp processing plant in Wichita Falls. Purported to be America's largest facility producing cottonized hemp fiber for textiles, the operation estimates a capability of churning through 300 million pounds of hemp annually (bought in bales from farmers). It will reportedly begin partial production in early 2021 and be in full swing by the second quarter.
Still, Zachary Maxwell, president of Texas Hemp Growers (representing 230 members, with more than half growers), sees the high cost of processing hemp fiber as a major market barrier, and farmers growing for fiber need to be relatively close to a production facility or transport costs could make it unprofitable. He says, "There would have to be significant changes in American priorities" – as in paying more for sustainability, for it to find prominence in the building and textile markets. "The reality is smoking and ingesting hemp is the current thing."
Hemphill's organization reports CBD, the lion's share of current outdoor grows, has the highest per-acre value for farmers but is still deemed a specialty crop. "There were over 1,000 licensees who applied for permits and most of them grew a very small amount of acreage – a 10-acre hemp farm is large this year," he says. "Dialing in the production model is still ongoing work for farmers. So, to a large degree, 2021 will be more representative of what the capabilities are for growing hemp in this state."
Maxwell agrees that farmers approached hemp modestly. "We've mostly seen less than 5 acres," he says. "The idea was 'Start small, don't try to grow 20-40 acres without experience,' though we do have members who did 20 acres and there's a collective in the Lubbock area that did 40 acres apiece. Up there, they're trying to row-crop it and harvest with machines."
One aspect of process experimentation that couldn't fully play out in 2020 due to permits arriving in April, is assessing how many potential growing seasons there are in Texas. "You could do auto flower early in the year or late in the year and get two crops," says Owens, referring to varieties that flower based on age, not the ratio of daylight and darkness.
Holden Hylander, who grew 8 acres of hemp in southwest Austin and Blanco County, believes that there could be three annual harvests, a combination of auto flower and full-season grows. "That's probably what I'll try next year," he says. "I'll do an acre or two of auto flower and try to replant in July and see if I can still get substantial plants out."
Hylander harvested an acre per week of "high-end CBD and CBG hemp flower" from August through October and he considers it a successful year with 16,000 plants, counting 10 different strains – and he's enthusiastic about the quality. Hylander also owns the Wildseed Hemp dispensaries in San Antonio and Marble Falls, plus a processing business, Texas Cannafarms, that manufactures hemp-derived products and sells to retailers who can privately label them. One of his specialties is keef-collected CBG hash, made from the cannabinoid known for its anti-inflammatory qualities. As such, he represents an entrepreneurial trifecta of growing, processing, and retailing in Central Texas' hemp market. "That means I get to make a little more money than just the regular farmer," he says.
Rates for CBD and bulk biomass have slipped in 2020 from the previous year, based on consensus from various national hemp price indexes, but Maxwell is optimistic the CBD flower market is stabilizing. "Oregon fires knocked out a considerable amount of acreage and Colorado got hit with an early freeze in September, which probably lost a significant amount [of] harvestable CBD, so I think it'll be in shorter supply," he explains. "CBD flower is very popular and growers can produce some high-end varieties for $500-1,000 per pound, while the kinds that are in every CBD shop might go for $200-300."
Genetics vs Generics
Earlier this year, the Texas Department of Agriculture issued a list of 364 approved hemp varieties, with names like Honolulu Haze, ACDC, and Stormy Daniels. Maxwell points to Goliath and Cherry Wine as two high-CBD hemp strains that have been popular with Texas farmers in the first growing season.
"They both have a lot of buyer interest, and Cherry Wine tends to perform well in a lot of different environments because of how long it's been bred," he explains. "Newer strains that come into the market are the ones that can have an issue. I've talked to farmers that have had problems with CBG varieties going into flower immediately. If you could imagine a nugget of cannabis growing straight out of the ground, that's what it looked like."
Meanwhile, Hylander reports that three of the four CBG strains he grew this year turned out "phenomenal." The farmer and hemp product retailer sees customer interest in emerging strains and wishes the state didn't limit growers to established varieties.
"We basically get the stuff that was cool to grow two years ago, because it has to have a track record of two years in another state and a couple other [qualifications] for it to be on the Texas list," he bemoans. "So we don't get to grow any of the new innovative strains. There's a company out of Oregon and they made Hawaiian Haze, Suver Haze, Sour Space Candy, and Lifter. Well, we're allowed to grow those, they're on the list, but last winter they crossed all those strains together. We can't grow them even though they're crosses of approved strains. So, as a retailer, to get the new trendy stuff, I have to go out of state to buy it, I can't grow it myself."
"I think that list should be a suggestion," he continues. "You should be able to grow whatever you want as long as it passes the lab tests."
"State" of Affairs
The Texas Department of Agriculture began accepting requests for hemp farming licenses on March 16 and issued the first of them at the start of April. But for some operations, that may have been too late in the season.
An article on the Texas Farm Bureau website detailed the experiences of farmers in Matagorda County, who acquired seeds after gaining licenses and then encountered the learning curve of planting a new crop in Gulf Coast's clay-composed soil. They eventually opted for an industrial grain drill to put seeds directly in the ground and by then, it was May. Much of their crop was drowned by heavy spring rains. Hemphill knows those farmers and says that when they replanted, the ensuing crop wasn't established enough for the summer heat and got "droughted" out.
TDA Commissioner Sid Miller couched hemp as both "high profit" and "high risk" in April. "My job was to get this program started," he said. "It's now up to farmers and processors to build that Texas hempire."
Stakeholders, however, have often found the state's policies less than ideal. In August, the Texas Department of State Health Services included an unexpected passage into their Consumable Hemp Program prohibiting "the manufacture, processing, distribution, or retail sale of consumable hemp products for smoking." That means flower, pre-rolls, and vape cartridges would be outlawed statewide.
Sarah Kerver, who owns 1937 Apothecary, an Austin-based hemp products store, told the Chronicle that smokable hemp products account for more than half her sales. She was one of four plaintiffs that challenged DSHS in Travis County District Court and were granted an injunction that will allow the continued creation and sale of smokable hemp products, at least until the case goes back to court in February 2021.
Zachary Maxwell says Texas Hemp Growers donated $15,000 to the plaintiffs' legal efforts because a smokable ban would imperil both hemp retailers and growers. "We'd like to see a better response from the retail/consumable side," he says. "For a crop that's federally legal, I don't see any reason for this punitive compliance and regulatory process that basically babysits this stuff from seed to sale – it's oversight."
As a whole, Maxwell characterizes the agriculture department's handling of hemp regulations as "mostly okay," but contends some regulations pose financial issues for farmers.
"They're charging $75 for every transportation manifest," he reveals. "Usually when the farmer needs to sell their crop, they have to send a sample to the buyer who wants to see it, smell it, taste it. TDA makes them pay a $75 fee when they send that sample out. So if I'm a farmer and I want to sell to 10 different retail stores, I need to pay for 10 transportation manifests – just for the samples, then another 10 just to send my crop to them. Moving ahead, we'd like to see those fees consolidated."
Hylander also characterizes the costly transportation manifests as evidence of the state "nickel and dime-ing" farmers. He also laments that TDA's systems are not automated. "You have to wait for humans to read your manifest or verify your testing, which should be instantaneous, but it takes them 3-4 days just to put the same information on their letterhead," he says. "If we see there's a huge storm coming and we should cut before it, it might take three days to get a manifest, two days for the lab to do the testing, then another four days for the state to give me my actual paper.
"It's not a big deal if you're doing an acre of a strain, but if you wanted to do just 10 plants of a strain, all the registration and fees make it unfeasible," he says. "Because of that, I don't see there being much R&D or innovation coming out of Texas."
Recreational Training Wheels
Eleven states and Washington, D.C., have legalized marijuana and 22 more states have medical programs that allow prescriptions for cannabis with THC. Thus, Texas, with a narrow CBD-only medicinal system that has just three providers (the largest being the Manchaca-based Compassionate Cultivation), stands among the shrinking minority of states with antiquated cannabis regulations. When that inevitably changes, Texas hemp growers will be prepared to make the switch.
"I mean farming's farming," shrugs Owens. "Let's just say, a lot of people like marijuana; a lot of people like hemp. Right now we're focused on hemp, but the good thing is all the skill sets you can acquire with hemp, they can transition immediately."
Highlander, who has a background in California's first medical, then recreational climate, is more blunt about the prospect of growing marijuana. He equates the current era to "recreational training wheels."
"It's the only reason why I'm doing hemp, for which you make 10 times less for the same work," he says, noting that Texas, with its huge population and years of highly limited access, could quickly become the biggest legal cannabis market in the county.
"My goal is to operate under Texas' hemp rules, then when recreational comes around, hopefully [the state] will look back at people who've been honest and fair with the system and give us preferential treatment in terms of licensing."