When New Mexico’s nascent hemp industry took hold two years ago, it was swarmed with prospective growers who saw dollar signs in those jagged-leafed plants.
But with the coronavirus pandemic and market forces providing a sobering counterweight, the industry has come back to earth — tethered to the reality that growing hemp, like growing almost any product, isn’t easy and offers few guarantees, let alone guaranteed payoffs.
“The hemp industry has a long, long ways to go,” said Jill Browning, chairwoman of the New Mexico Hemp Association.
Yet despite the up-and-down fortunes of the crop’s early years — “a mixed bag,” as Browning puts it — hemp producers still see great potential dead ahead. As the state and nation show flickering signs of rebounding from the virus-induced economic slump, those in the hemp industry say New Mexico is a prime spot for growers who can navigate the regulatory and technical challenges.
Some hemp producers also believe they can tap the cannabis market if recreational marijuana use is legalized, which seems likely as legislation currently works its way through a Legislature more receptive than in the past.
At least one hemp entrepreneur said his company will explore growing marijuana if it’s legalized. Others in the industry agree there are growers who are in hemp for the long haul and others who are simply biding their time to see if cannabis becomes legal.
Either way, Browning said, New Mexico’s hemp industry has been toughened in its early years. People who venture into the business must realize it is demanding, both in upfront investment and time and energy to succeed, she said. In fact, hemp is more labor-intensive than most regular food crops.
“You really have to work at it,” Browning said.
Survival of the serious
Though the differences between hemp and marijuana have been discussed ad nauseam in the Legislature and elsewhere in recent years, a refresher never hurts:
Hemp belongs to the same plant species as marijuana but is legally defined as having less than 0.3 percent THC. That’s a trace amount compared to cannabis, whose THC content can be more than 15 percent.
The prime active ingredient in hemp is cannabidiol, or CBD, which comes from the plant’s leaves and flowers and is thought to have medicinal properties.
CBD is increasingly used in health and beauty products. Other parts of the plant have various uses.
Hemp seeds, which contain no CBD, can be eaten raw or ground up for protein powder and dairy substitutes. Oil extracted from these seeds is used in skin care products.
Fiber separated from the stalks can be used for clothing, bags, ropes, beauty products, building materials, paper and bioplastics. The woody inner stalks, known as hurds, can be formed into building materials, mulch and animal bedding.
Statewide, 31 growers have licenses for indoor operations, totaling 9.74 million square feet, and four growers have licenses for outdoor cultivation, totaling 37.7 acres, according to the state Department of Agriculture. There are no pending license applications.
People flooded the industry after hemp was fully legalized and created oversupply that caused prices to drop, Browning said. Then demand for hemp products fell during the pandemic as retailers reduced or shut down their operations, she said.
“People got burned in 2019 and then backed way off,” said Jeff Anderson, a Doña Ana County agricultural extension agent. “And then the price fell so much, it scared a lot of people away.”
Would-be growers also found the cultivation required more work and technical expertise than they anticipated, Anderson said.
“If you don’t have any background in horticulture, then it could be very difficult for you to produce hemp,” Anderson said.
The dilettantes who didn’t know what they were doing got screened out, leaving mostly savvy entrepreneurs who have a solid chance of prospering in this field, Anderson said.
Those who run indoor operations tend to be knowledgeable about growing, versus many who went into outdoor farming, Anderson said. That’s why there are only a handful of outdoor growers left, he added.
New Mexico is a good place to grow hemp, but new markets must be developed, Anderson said. The CBD market is now saturated, so entrepreneurs should look at making other kinds of products and ensure they have buyers lined up, he said.
Browning and Anderson both say there’s a common misconception that New Mexico’s hemp industry is booming.
“I wouldn’t say it’s exploding,” Anderson said. “I’d say it’s moving ahead with the people who are serious about growing hemp and making a profit.”
Envisioning the future
One such serious entrepreneur is Loveless Johnson III, co-founder and CEO of AmeriGreen Organics Co. Johnson, who lives in Santa Fe, sells hemp-based products, some with partner vendors, on an e-commerce site.
The products range from clothing to CBD health elixirs aimed at easing anxiety and insomnia, he said.
He plans to open an indoor growing operation in a 54,000-square-foot space in Truth or Consequences, focusing on indoor growing because the pandemic has made farming much more difficult. In part, that’s because many field workers fell ill with COVID-19, he said.
Johnson said he wants to expand into making hemp building materials and animal feed after the Food and Drug Administration approves expanding hemp’s use for food additives.
The FDA doesn’t allow animals that are fed hemp to be sold as food, but that is expected to change in the next couple of years, Johnson said.
But it’s legalization of recreational marijuana that excites hemp growers because it’s new territory, one with risks and rewards.
“We certainly will take a look at it once it does to see if it makes any sense to get into the cannabis business also,” Johnson said.
If a limited number of cannabis licenses are issued, then hemp companies should be placed toward the front of the line because they already are equipped to produce it, Johnson said, noting hemp and cannabis are processed the same way.
He said he is awaiting federal legalization, which would enable him to sell cannabis products in the same outlets nationwide as his hemp products.
Stephen Sisneros, founder of New Mexico Hemp Enterprises, grows his product in an Albuquerque greenhouse. At the Albuquerque Downtown Growers’ Market, Sisneros has sold hemp leaves as garnish for salads and other foods, he said. He also sells hemp in small bulk quantities.
He said he and his cousin are opening a juice bar where they will sell farm-fresh smoothies and salads, and give customers the option of adding raw hemp leaves.
He can’t sell it to stores without a permit from the state Environment Department, which regulates hemp after it’s harvested, he said.
Sisneros is working to form a co-op with five growers while pursuing a hemp manufacturing license. He said the industry is split between growers focused solely on hemp and those who are waiting see if cannabis is legalized.
“A lot of people are doing hemp because they can’t do cannabis,” Sisneros said. “People are really getting into practice right now” for cannabis.
He foresees many hemp vendors opening cannabis shops if it becomes legal. He said he plans to wait to see if cannabis is legalized at the federal level before wading into it, so he can get tax write-offs.
But others say they will remain focused on hemp. Jeff Apodaca, vice chairman of Santa Fe Farms, see his company’s future in industrial hemp products.
The company grows hemp on 750 acres, Apodaca said. This coming year, it will work with farms in New Mexico, Colorado, Texas and California to supply hemp to manufacturers of CBD items, supplements and beauty products.
The company will advise the farmers on how to grow the most ideal hemp plants, including through genetics, said Apodaca, an Albuquerque businessman who grew up in Santa Fe and ran for the Democratic nomination for governor in 2018.
By the end of 2022, Santa Fe Farms aims to open a factory that will produce building materials such as insulation, roofing and hemp bricks to replace wood framing, Apodaca said.
The factory also will churn out bulk fiber and hurd, and sell it to manufacturers to make textiles and paper. He said hemp has a bright future as pulp for paper because the plants take only 120 days to grow versus 20 years for a tree to mature.
Apodoca said he has no interest in exploring cannabis, although he supports recreational use being legalized.
“With cannabis, your market is New Mexico,” he said. “With hemp, our market is the world.”
Both Apodaca and Johnson say hemp is a good crop for a desert state like New Mexico because it consumes up to 75 percent less water than alfalfa and corn.
Browning said she’s not sure hemp conserves that much water. And in some ways, it demands more daily work, such as weeding and swatting pests, because certain chemicals can’t be used on it, she said.
Hemp must be planted a certain way and harvested a certain way, she said. And growers must test the plants to make sure they don’t exceed the legal THC threshold, she said.
All that additional work makes it “a high-dollar crop,” she said.
As for trying to combine cannabis and hemp, Browning said it could only work in conjunction with hemp plants grown for CBD. Hemp plants cultivated for fiber have too many seeds that would spread to the cannabis plants and ruin them, she said.
The hemp industry will flourish on its own when the fiber is used more in clothing, construction materials and to replace plastics, Browning said. At the same time, factories and other infrastructure must be created to produce it en masse, which will lower prices and make it more attractive to consumers.
“Once those systems are place, then the usage of fiber hemp can be astronomical,” Browning said.