There are many ways to make a profit growing hemp, but they all come with caveats. The most honest answer to “what is the most profitable hemp crop to grow” is —it depends. If you are thinking about growing hemp commercially, the first thing to do is understand the ins and outs of the hemp marketplace. Here at Colorado Breeders Depot, we introduce new potential hemp growers by explaining the current status of the four main market outlets for hemp:
- Hemp-Derived Cannabinoid Oil
- Smokable Hemp
- Hemp Fiber
- Hemp Grain
Growing Hemp for Cannabinoid Oil
To grow high cannabinoid hemp, growers plant hemp seeds known to produce high percentages of CBD (or CBG). The hemp plants are grown to the flowering stage, then the flowers and leaves are harvested for ‘hemp biomass.’ The biomass is taken to a lab to extract the cannabinoids.
Growing consumer demand for cannabinoid oil, especially CBD, skyrocketed hemp-derived CBD prices in 2017 and 2018 when hemp production was only legal in a few states on a trial basis. Hemp was legalized federally in the fall of 2018.
However, with federal legalization, eager hemp farmers rushed into hemp production in 2019, creating an unfortunate market glut. From April 2019 to April 2020, the prices for hemp CBD biomass dropped from $38 a pound to $8.10 a lb. Not surprisingly, total hemp production dropped in 2020, with roughly half as much hemp biomass grown. So, what’s ahead? Well, most high cannabinoid hemp growers are cautiously bullish for 2021 sales.
There are still significant opportunities, including demand for less available cannabinoids like CBG. Consumer interest in CBD use is continuing to chart upwards. If the U.S. approves infusing food and beverages with CBD (currently illegal), a substantial new market will generate more demand for CBD production.
Growing Smokable Hemp for Profit
Smokable hemp is grown using high cannabinoid hemp varietals (like biomass). However, farmers are selling only the flower. The prices have been good for smokable hemp, but it is a much more expensive crop to grow than biomass with a much smaller market share. Smokable hemp growers carefully hand-pick and hand-cure just the hemp flowers. It is then sold to smoke shops (or online) for consumers interested in smoking premium quality hemp. Or it is ground and used to make pre-rolls.
The smokable hemp market was a bright spot in 2020 when biomass prices were dropping, and the prices were continuing to increase month-over-month at the end of 2020. However, buyers are picky and high prices are commanded only by premium quality hemp flower. Thus, most growers produce smokable hemp in greenhouses where conditions can be controlled (most hemp grown for biomass is made outdoors). Also, smokable hemp growers need proper drying and cure rooms which often require infrastructure investments.
Worryingly, some states have outlawed either growing or selling hemp smokable flower. Concerns that law enforcement can’t tell the difference between smokable hemp versus marijuana have encouraged some states to ban it outright. Smokable hemp is an excellent opportunity for farmers that may already have greenhouse space (some smokable hemp growers rotate a hemp crop with other crop production) and have the time, knowledge and mindset to invest in producing a hand-crafted crop. But, make sure to check in with your state laws on growing (and selling) smokable hemp before taking the plunge into smokable hemp production.
Growing Hemp Grain for Profit
Hemp grain is grown by letting hemp flowers cross and produce seed (aka grain) which is then harvested similar to harvesting wheat or other grain crops. Hemp grain is an increasingly popular food item in the nutrition and wellness industry. Hemp is said to be the most nutritionally complete food in the world. Hemp grain is pressed into food-grade oil (containing no cannabinoids), is sold as “hemp hearts” (seeds) and is turned into hemp milk.
Hemp grain is very easy and inexpensive to grow compared to growing hemp for biomass or smokable hemp. Commercial farmers consider growing hemp for grain (or fiber, see below) similar to growing corn or wheat. It is typically direct-seeded and grown in large acreage fields. It is planted very densely, discouraging weeds and is harvested mechanically.
However, hemp grain does not fetch high prices. Typically, hemp grain growers might make around $250 to $300 an acre, depending on current hemp grain prices. Growing hemp grain is a good option for farmers with large acreage and equipment they can adapt to hemp production. Hemp grown for grain can be an excellent rotational crop to plant in between other commodity crops, like wheat, corn or soy.
Growing Hemp Fiber for Profit
The fourth product a hemp plant can be harvested for is what made hemp famous — its fiber.
Hemp stalks are harvested for two types of fiber:
- Hurd — short fibers used for things like animal bedding, hempcrete, hemp insulation and hemp paper.
- Bast — long, premium-grade fiber that can be used in textile production.
Although hemp was once grown almost entirely for its fiber (hemp was raised in the American colonies), when it was finally legalized after 80 years of hemp prohibition, there was no infrastructure to process hemp fiber.
Without U.S.-based processing plants (which cost millions to build), there was no marketplace to sell hemp fiber to. Not surprisingly, to date, there has been very little hemp explicitly grown for fiber production. However, hemp fiber processing is starting to come online. Most notably, a new Texas-based fiber processing plant is expected to begin processing hemp fiber in 2021.
What should growers expect from the hemp fiber market? Well, the marketplace for fiber is in its infancy. Most hemp industry analysts believe for the long-term, hemp fiber will generate the largest volume and most reliable market for hemp farmers, especially because consumers are demanding more environmentally-friendly textile choices. Like grain, hemp fiber can be grown relatively cheaply and is suitable for large acreage production.
What Hemp Crop Should You Grow?
So, what should a new hemp grower do? It depends on what sort of farm, experience and interests you have. Each type of hemp crop has its challenges but also opportunities. That’s what is so amazing about hemp in general — it is such a useful, versatile plant!
If you would like to get more into the “weeds” (bad hemp pun!) and explore what type of hemp crop might be the right one for your farm, please contact us at Colorado Breeders Depot. We have varietals appropriate for any hemp crop you might like to grow. We also evaluate, consult and advise our hemp growers, from assessing the market potential and risk to teaching you how to grow hemp.