Iowa hemp farms dwindling amid glut for CBD market

Megan and Scott Booher considered just composting their half acre of organic hemp.

The Homestead couple has all the flower they need to produce the cannabis lotions, oils and gummies they sell at Four Winds Farm and no one was buying their surplus. There’s a nationwide oversupply of cannabis, lowering prices and driving some farmers out of the fledgling industry.

“We have so much hemp flower, I don’t know what we’re going to do with it,” Megan Booher said. “The market is definitely oversaturated.”

The 2018 Farm Bill passed by Congress opened the door to hemp farming, and it became legal in Iowa in 2020. But now Iowa has only one-third the number of licenses for growing hemp as it did then.

In addition to Iowa dropping from 86 to 28 licenses as of Aug. 16, the state’s acres planted in hemp are one-quarter what they were two years ago and the crop — once viewed as a promising alternative to corn and soybeans — now is being grown in just 20 of Iowa’s 99 counties, including Johnson but not Linn.

“Every state has seen a drastic downturn in number of licenses and acres in production of hemp,” said Robin Pruisner, state hemp administrator and agriculture security coordinator. “We had a huge glut come into the market. The amount of processing capacity didn’t increase by that same amount, nor did demand.”

Most of the excitement about legal hemp back in 2020 revolved around cannabidiol, or CBD, infused into everything from shower gel and mouthwash to coffee and cocktails. But it often takes just drops of distilled CBD to make these products, Pruisner said.

Iowa’s hemp can’t have more than 3 percent tetrahydrocannabinol, or THC, and any products above that level are illegal. So that cuts Iowa farmers out of supplying cannabis to producers of most recreational products.

The Boohers use cannabigerol (CBG) isolate derived from hemp to make beauty and relaxation products. But they have enough distilled CBG left from previous growing seasons that they didn’t need their 2022 crop.

And because the state charges $1,000 to test the crop’s THC level before harvest, it might have been cheaper to plow it under, Megan Booher said.

Still, they decided to harvest the crop Sept. 27, cutting the hemp plants with hand shears and hanging the plants to dry in a metal outbuilding. The plan was to vacuum seal the dried flower in hopes of selling at some point, Booher said.

Market for fiber and grain

But CBD and CBG aren’t the only options for hemp growers.

Charlie Levine, founder of Hemp Acres, a processing plant in Waconia, Minn., wants to sign deals for up to 10,000 acres of hemp next year to produce more than a dozen hemp ingredients, such as fiber, hurd, pellets, hulls and protein powder.

“We’ looking to contract acres for grain for food and fiber for industrial production,” Levine told The Gazette.

Hemp Acres wants farmers willing to grow between 40 and 1,000 acres of hemp cultivars that produce high-quality grain and fiber. Once they sign a contract, farmers would dry and store the hemp and then transport it to Minnesota when Hemp Acres is ready for production, Levine said.

“As long as it meets all the specs, we pay 55 cents a pound for grain and 10 cents (a pound) for fiber,” he said. A good harvest would be 1,800 pounds of grain and 2 to 3 tons of fiber per acre, he said, which could bring in about $1,500 gross per acre.

Levine is open to working with Iowa farmers, but the state license allows only up to 40 acres per producer. Iowa’s hemp licenses cost between $500 and $1,150 per year and there’s the $1,000 pre-harvest testing fee.

“You’re going to charge someone that much for a license and they can only grow 40 acres?” Levine said. “That’s the minimum we will give out contracts for. Ideally, we want to have larger plots for traceability and consistency.”

Fee review coming

Iowa’s application and testing fees expire July 1, 2023, when the state plans to review program revenue and expenses then to set a new schedule, according to the program’s 2021 year-end report.

The state tested 62 samples for THC in 2021, finding five that exceeded the state’s concentration limit, the report states. Those crops were required to be destroyed. Another 7.31 acres were voluntarily destroyed for reasons that included poor germination, weeds or private tests showing THC levels were expected to be too high.

There’s no shortage of challenges for the hemp industry, which doesn’t have an approved list of herbicides and pesticides and still carries a stigma, Levine said.

Pruisner said the industry needs more consistency and reliability, from cultivars that won’t test too high for THC to markets for selling the harvest.

“There was big time excitement with 2018 Farm Bill, but it’s a whole new commodity that needs its whole new infrastructure to make it into a product.”

Comments: (319) 339-3157; erin.jordan@thegazette.com