Hemp gains traction among California North Coast farmers as market outlook brightens

With a U.S. hemp market outlook lighting up 2021, cannabis businesses like CannaCraft in Sonoma County are going all in on this segment of the industry.

The Santa Rosa-based cannabis producer opened a new hemp division in August hoping to appeal to this specialty market, those people seeking a cannabis product that doesn’t get them high but provides health benefits.

The hemp market is projected to grow this year by 23% compared to 2020, according to New Frontier Data market research shared by national industry panelists of a webcast that aired April 2 titled “The U.S. Hemp Market Landscape: Cannabinoids, Grain & Fiber.”

“It’s our first step into this market,” CannaCraft CEO Jim Hourigan told the Business Journal.

A cannabis product, hemp may be used to make paper, cloth, rope, fabric and building materials. The whole plant can create fuel. Hemp lacks the intoxication properties like marijuana if consumed. Oil is extracted from the plant.

Hourigan also expects hemp products to take the form of ingestibles, topicals and soft gels — the latter on the market now. Other products such as beverages and gummies will be coming soon.

“We found a significant market out there with glowing opportunity,” Hourigan said.

The reason hemp comes with such promise is that there’s a whole market out there that refrains from using products high on THC, the active agent more common in marijuana that elevates mood.

“Some people don’t want to smoke, especially with respiratory issues from COVID. This is a way for some consumers to get back into the market,” he said.

In addition, hemp production was made legal in the U.S. farm bill a few years ago, though cannabis – with its psychoactive properties – remains classified an illegal drug under federal rules.

The U.S. Department of Agriculture relaxed restrictions as of March 22 on cultivators who grow hemp. According to the new USDA rules, the hemp’s federal statute increases the level of allowed THC from 0.3% to now 1%, a concession to avert growers who were eradicating plants when that level exceeded the allowable level.

“We do believe in the promise and premise of hemp. We’ll grow more,” said Carm Lyman, spokeswoman for Sonoma Hills Farm.

The farm outside Petaluma has increased its hemp crops alongside the corn, potatoes, squash and other produce.

“The small lot of sustainably grown Sonoma Hills Farm hemp we grew this year went very quickly. While last year’s crop was really part of a regenerative ag approach to put more nutrients into the soil, we believe the future of hemp holds great promise,” Lyman said.

Apparently, local governments see the demand.

Solano County passed an ordinance in December ending its moratorium on growing hemp. Napa, Marin and Sonoma counties have already allowed for the practice, with the latter entertaining more cannabis growing areas for its April 15 Planning Commission meeting.

“There’s a lot of momentum now (for hemp), even with the COVID effect,” Hemp Alternatives CEO Cynthia Petrone Hudock said during the hemp conference.

The health care and finance consultant tipped her hat to farmers for their work trying to gauge supply and demand. A few years were a little sketchy since the farmers were a bit overzealous growing large crops since hemp legalization and ended up with a surplus. But after reducing 2020’s number of crops, her Pennsylvania-based business has seen a leveling off of market stability.

“They’ve done a great job,” she said.

Consumer interest has surged, but at the same time, regulatory scrutiny has impacted growth in the last few years, she and her fellow panelist, New Frontier Data Chief Knowledge Officer John Kagia, contend. In other words, hemp is legal in many jurisdictions but is still regulated with certain restrictions that reflect residual signs of a stigma.

And all await whether the U.S. Food & Drug Administration provides its blessing to the flurry of CBD-infused foods and beverages hitting the market. CBD is the main medical ingredient many believe provides health benefits.

“That is huge. People wonder if they should take a chance if the feds remain uncertain. I hear some people say ‘I’d sure feel safer if the government says it’s ok,’” she said.

Still, growth abounds — including in the number of licenses to grow hemp issued. In 2016, 1,000 hemp farmers applied. Last year, 21,000 submitted applications to be licensed.

“It’s hard to project where we go from here. The good news is we’re still getting new licenses,” Hudock said.

Susan Wood covers law, cannabis, production, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com.