Fears of Oversupply Intensify After Huge Hemp Harvest

The hemp industry's rapid growth just might prove to be its undoing. Primarily carried by cannabidiol's (CBD) popularity as a natural alternative medicine, the industry has grown in leaps and bounds, especially since last year's Farm Bill made cultivating hemp legal.

As farmers all over the country harvest their crop, it is becoming apparent that there may be a surplus in supply. According to a report released by advocacy group Vote Hemp, the amount of land on which U.S. farmers are licensed to grow hemp quadrupled from 2018 to 2019. Farmers were authorized to produce 511, 442 acres of hemp in 2019, says the report from Vote Hemp.

"There are so many new producers, it feels a bit like a wave. I'm not sure how long it will last," says Nichole Dehne, Certification Director for Vermont Organic Farmers. She says that in their rush to get the lucrative plant in the ground, many farmers may have forgotten to line up buyers. "I'm concerned that there are so many producers that there won't be a market to handle all their products. But I'm hoping I'm wrong," she says.

Vermont farmer Sam Markowski is in the midst of harvesting hemp from his 90-acre farm in Florence. He once planted corn on his farm, but reducing corn prices forced him to abandon it. "That's when this hemp thing came along, and we just said, let's try something different," he says. He adds that Vermont is in the midst of a bountiful harvest, and he is doing all he can to differentiate his hemp from competitors.

While most farmers are growing hemp for its CBD content, Markowski is one of several growers looking to exploit cannabis even further. Groups such as Northern Hemp Commodities are trying to build the market for lesser-known cannabinoids such as CBG (cannabigerol) for their possible health benefits.

He has partnered with industrial engineer Dan Querrey, who developed a technique to extract terpenes from the cannabis without harmful chemicals. Terpenes are organic compounds that give hemp its aromatic qualities. Markowski and the Pitsford native have established a side venture to market organic terpenes products under the brand VT Terps. They are currently exploring a variety of terpenes-infused beverages such as beer, seltzer, and tea.

Like all the hemp farmers in Vermont and countrywide, Markowski has sunk a lot of time, effort, and money into their crop. He hopes his investment will pay off. Analysts think hemp industry companies, such as SinglePoint Inc. SING and HTC Extraction Systems (TSX.V: HTC), are pleased each time farmers go against the prevailing trend and look at a new market for an existing crop like hemp since this ensures sustainability of markets.

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