In recent months, hemp farmers across the area have made public complaints about Owensboro’s newest hemp processing facility, Bluegrass BioExtracts. According to farmers, contracts haven’t been followed through on and many growers have lost significant amounts of money due to Bluegrass BioExtracts backing out of contracts to process farmers’ hemp.
However, agriculture officials have said Bluegrass BioExtracts isn’t backing out of contracts, and that the issue is much more complicated than that.
Clint Hardy, Daviess County extension agent for Agriculture and Natural Resources, said Bluegrass BioExtracts is fulfilling its contracts with growers, but that those contracts gave hemp processing facilities every imaginable reason to reject crops.
“The wording in those contracts held them at little obligation,” Hardy said. “They were up-front with people. It was a big risk to grow it — everyone knew that. That’s why so many decided not to grow hemp.”
Every processor had contractual agreements with farmers, but if those farmers didn’t meet the expectations listed in the agreement, the processing facility did not have to process that crop. Hardy said there was a lot of money to be made — as long as everything went perfectly.
Growing a perfect hemp crop is a very difficult thing to do, Hardy added.
“They’re very specific on what they had to have, or they wouldn’t accept it,” Hardy said. “If I’ve grown hemp for 10-12 yeaars, sure, I’d have given it a chance. With no knowledge, I wouldn’t have [taken the risk]. The financial incentive pushed some to do it.”
Contracts between processing facilities like Bluegrass BioExtracts and local and regional hemp farmers were narrow and left no margin for error. Field all over the local area tested too high for THC, Hardy said.
“They’re only allowed to have .3 percent THC — a lot tested between .3 and .6 percent,” he said. “Then you’re looking at blending stem into it to bring the THC down, but processing facilities [don’t want the stems when they’re creating CBD oil].”
Those whose crop tests over .6 percent THC get a visit from state police, Hardy said. They aren’t criminally charged, but they must destroy their entire crop.
“The expectation for a high-value crop has sailed,” Hardy said.
According to Hardy, hemp farmers are struggling all across the region and state, and it’s also come down to a supply that outpaced a demand for hemp, crashing the price in the process.
“We’ve only had it back for four years. It’s like inventing an entirely new consumer product and trying to increase demand too,” Hardy said. “Very little percentage of the population has interest in using this stuff.”
Hardy is referring to CBD products, which many farmers hoped would be the key to making hemp a successful cash crop. Hemp is processed into CBD oil through companies like Bluegrass BioExtracts, but the demand for CBD oil hasn’t been high enough to warrant processing every farmer’s hemp.
In 2015, hemp farmers grew the plant for seed and grain product, but there was no money in that market, Hardy said. In 2019, processors quickly switched from seed product to CBD oil, based on the number of people using CBD products.
“2019 comes and everyone in the state and nation has a place to create CBD oil,” Hardy said. “In agriculture, we hope CBD is the next Tylenol and every consumer has a bottle on their shelf in the next 10 to 20 years. But right now, we’re only four years into this. That experiment is still ongoing.”
Hemp farmer Ben Alvey grew a 12-acre hemp crop this year and chose to have his hemp processed somewhere other than Bluegrass BioExtracts. Alvey said most farmers knew the risks associated with growing hemp, and that many of those farmers have received bad news regarding their crop.
“Most peoples’ Plan A hasn’t come through,” he said. “That’s the same for most growers — not just here.”
Alvey said, although there was the potential for a lot of money in this new industry, the infrastructure simply hasn’t been established in time, and that caused a lot of issues for processors and growers alike.
“Right now, I’m currently waiting on a test from the Kentucky Department of Agriculture for THC percentage,” Alvey said. “I think it’ll test OK.”
Alvey’s first test revealed his crop had a THC percentage that was 1/1000 too high. Alvey said the field tests take the most potent bud on the plant, which tested a little high in Alvey’s case. A mix of buds in the bag being tested should mean the percentage will go down. But part of the infrastructure issue with hemp stretches all the way to the state level, and though Alvey was supposed to receive his test results in a mandated 45-day period, which is specific to Kentucky, that deadline has come and gone, and Alvey still has no results.
“You can get them in four days from any lab in the nation,” Alvey said. “If it goes through the DEA next year, it’ll just get worse.”
According to both Alvey and Hardy, the regulations for hemp growers are going to become even tighter next year. As difficult as this year has been for farmers, Alvey said hemp growers will face even more stringent rules in 2020, as established by the United States Department of Agriculture.
“There will be no retests [for THC] and harder testing,” he said. “They’ll take a plant at half maturity and only have 15 days to harvest. They’re lowering the accepted THC levels too. It’ll be mandatory that it goes through a DEA-certified laboratory. I”m not sure there’s more than one of those in the entire state of Kentucky.”
Alvey did say hemp grown in Kentucky has a reputation for being higher quality than in other states, and that other hemp processing facilities have started to figure that out.
“They’re interested, but they’re not wanting to trade money for it,” he said, adding that toll agreements have been offered by processing facilities to farmers. High quality crops can give farmers a 60 percent cut, while the processor gets 40 percent.
The price for hemp is extremely low, overall, selling at about a quarter of the price per acre than it sold for last year. Alvey predicted 2020 will see a 90 percent decrease in hemp grown by farmers across the local area.
“The message for 2019 was, ‘Approach cautiously. Don’t sign something you can’t fulfill. Don’t spend more money than you’re willing to lose,’” Harvey said. “I wish things had turned out differently for people. With the policies in place, I think we should’ve put the brakes on it until we knew more about it.”