Hemp Heyday for Minnesota Farmers?

After winds ripped through her rural Minnesota greenhouse on a blustery July weekend, Angela Dawson played music for her Wunder Woman strain of hemp, in hopes the tunes would perk up the crop. 

When the plants are in their infancy, Dawson plays classical music. As they grow, they graduate to more upbeat tracks. On this morning, Dawson’s teenage Wunder Woman plants swayed to the beat of Beyoncé’s “Before I Let Go.”

“It is a female plant and she has some peculiarities, as — you know — maybe any sort of divine woman might,” Dawson says with a smile. “So we like to give her the treatment that she needs.” 

The male plants that grow from Wunder Woman seeds are culled earlier in the season because they have lower levels of CBD and CBG—the signature components of this strain’s genetics—than the female flowers do. CBD and CBG are two of about 100 cannabinoids found in hemp and are processed into oil or food products. This type of hemp is grown differently and on a smaller scale than hemp grown in an industrial setting for industrial fiber and grain. 

Dawson’s “motherhouse” serves as home base for 40-Acre Cooperative, a collective with a mission to help BIPOC farmers learn about and grow hemp. Situated in rural Rutledge, a city in Pine County with a population of about 250, the 40-acre farm serves about 34 active co-op members. 

The co-op is, like the majority of such farms in the state, growing hemp for CBD, a still sometimes-stigmatized component of the cannabis plant. But this year, the state has cracked opened the door for an even more contentious component found in many strains of cannabis: tetrahydrocannabinol, or THC, the component that causes the intoxicating effect produced by marijuana.

In July it became legal in Minnesota to consume, manufacture, distribute, and sell food and drink containing up to 5 milligrams of any form of THC, as long as the substance is derived from hemp. Hemp is a legal classification that is applied to cannabis containing no more than 0.3% of delta-9 THC. 

The new law provides additional clarity on what buyers of hemp grown for CBD, and now THC, can do with this particular crop. Dawson says she’s already seen increased demand. 

“Now that the law’s changed, things are starting to pick up,” she says with cautious optimism. “The phone has been ringing a lot more from people who actually have money that they want to put toward a crop.” 

For many, the law came just in time, Dawson notes, citing years of uncertainty dogging the state’s first wave of post-prohibition hemp farmers. “People weren’t really sure [during] the last six months what to do.” 2022 has been a turbulent year, with a cold start to the growing season. Shifting legal restrictions resulting from a September 2021 court ruling put the legality of CBD products in question, a loophole that was resolved after the law change. Most persistently and prevalently, a lack of consensus and understanding about hemp, because of its association with marijuana, means it’s still unclear whether lawmakers will look out for farmers when questions arise, Dawson says.

Rebuilding after prohibition

The Minnesota Hemp Program started in 2015 after the Minnesota Industrial Hemp Development Act was passed, motivated by a desire to help farmers find a market for the plant. But hemp farming has deep roots in the state. Though hemp and marijuana were banned in the U.S. after the Marihuana Tax Act of 1937, restrictions were briefly lifted during World War II when farmers across the country were called upon to grow hemp for fiber, which can be used for a multitude of products including rope, textiles, clothing, paper, and insulation. During this time, the federal government built 11 hemp processing plants in Minnesota. 

When the war ended, however, decades of prohibition and stigmatization of the entire cannabis plant ensued. THC was not the only part of the plant that became a target of regulation. 

Three-quarters of a century later, the state has just started to bring back its once-thriving hemp industry—but not without roadblocks. Recreational marijuana still isn’t legal in the state or federally; an average of 10-12% of tested hemp plants per year exceed the 0.3% THC criteria to be legal hemp, leaving many farmers destroying their entire harvest for the year. 

The hemp program began as a pilot project to research opportunities for farmers, says Tony Cortilet, director of the Minnesota Department of Agriculture’s industrial hemp program. At the onset of the program, hemp was not grown for CBD or THC, but for fiber and grain. This changed in 2018, a year when 10% of the state’s 700 acres of hemp was used to produce CBD; that skyrocketed to 78% after the 2018 federal farm bill went into effect in 2019. The bill reclassified hemp for commercial use after decades of regulation that effectively stifled its use as a cash crop. 

With the new state edible law expanding the market for hemp-derived THC, the spotlight has shifted back to the hemp farms. Inconveniently for farmers, the legislative session doesn’t coincide with the growing season. Applications to enter the state’s hemp program open from November to April; the edibles law took effect in July, so there will be a delay in gauging its effect on interest in hemp farming. 

“It’s really hard for me to predict how that will go,” Cortilet says, “but I’m expecting to see an uptick in licenses in the next growing season.” 

While industrial hemp farming continues in the state, it’s a very different operation from farming hemp for CBD and THC. The crop price of CBD was high in 2018-19, pushing farmers toward cannabinoid production. While that price has since dropped nationwide, cost is not the only reason farmers gravitated to cannabinoid farming.

“Grain and fiber production [from hemp] requires infrastructure that was taken out of Minnesota after all those years of prohibition,” Cortilet says. “The challenge is getting that infrastructure back. It takes a lot of money and investment.”

There were 348 licensed hemp growers in the state last year, as well as 247 licensed processors. This is a dip from previous years, following a national downward trend after a rush of CBD farmers entering the market caused a glut, Cortilet says. 

As the industry adjusts and looks to the future, Cortilet says it’s important to note changing laws are not the only thing driving increased interest in Minnesota’s hemp market. This year, the state has also established itself as the Midwestern hub for large-scale processors, which can serve farmers across the region. 

Hemp Acres in Waconia aims to become a national leader with this year’s opening of a 37,000-square-foot processing facility. Prairie PROducers in Olivia has also upped its fiber operation. While those facilities are the two large-scale processors Cortilet is aware of, he says more will come online in the near future. 

Up-and-running processing facilities create opportunities for increased conventional, large-scale grain and fiber production, which Cortilet says is a significant new development. Increased production capability bolstering demand for hemp-derived cannabinoid products due to the law change bodes well for rebuilding Minnesota’s once robust cannabis industry, he says. 

The goal is to establish Minnesota and the Midwest as viable hemp growers and processors despite decades of established international competitors, Cortilet adds; before the 2018 farm bill, the United States depended on imports of industrial hemp. Today, roughly 30 countries grow and export hemp. China is the leader, responsible for 20% of the global production of industrial hemp. 

From cider to cannabis

With three processing facilities, all in Waconia, Hemp Acres is the largest hemp processor in not only the state but the Upper Midwest. With specialized equipment, its facilities can process all components of the hemp plant, a pivotal resource for farmers across the region. 

Hemp Acres owner Charles Levine says he’s fascinated by the highly versatile plant and its three commodities. There’s the flower containing essential oils. Then there’s the grain used for food. Third, the stalks of the plant can be used for industrial building materials and a number of other applications.

“I was going to start a hard-cider operation and planted a bunch of apple trees and started going through the process of turning one of our existing steel sheds into a food facility,” Levine says. “Then 2016 rolled around and hemp became legal. I kind of ditched my apple idea and just knew that this was a larger industry to be involved in.”

Levine recognizes a next possible phase as well: the potential legalization of recreational marijuana. He says Hemp Acres is prepared to pivot its operation if full-on legalization happens in the state.

“It would greatly affect our operation,” he says. “The price of CBD has more or less tanked since we first got into it. And there’s just more people who want THC [than want CBD]. I mean, there’s no way around it, people want to get high, just like people want to drink beer. It would open up markets substantially within the state if Minnesota were to adopt recreational cannabis, and we’re all set up to do it.”

Currently, Hemp Acres’ operation is about 15% to 20% CBD extracts; the rest is fiber, food, and grain. 

What does it take to open three processing facilities with tens of thousands of square footage? 

“Money and a lot of hard work,” Levine says. He bounced ideas off a friend in the early phase of growing his business. “I said, ‘Let’s grow hemp,’ and he’s like, ‘Great, where am I gonna bring it?’ And that’s when I said, ‘OK, well, I’ll make a facility.’” 

While part of the industry is built around the value of cannabinoids, Levine challenges people to learn more about the whole plant. “Most people have never tried hemp as food, and it’s one of the most nutritious plants on the planet.”

Seeds of uncertainty

There are still many unknowns about the future of the state’s hemp industry, and Angela Dawson hopes lawmakers and leaders don’t forget the trials of the not-so-distant past. 

Most recently, farmers and processors buying hemp to make CBD suffered setbacks after the 2021 court case Minnesota v. Loveless. The Minnesota Court of Appeals found that although the legislature had, by definition, removed hemp from the state’s list of Schedule I drugs, the definition included hemp only in the form of leafy plant material under 0.3% THC, not in liquid form. Essentially, the legislature tried to match the federal farm bill in 2019, but it only included dry hemp in its language. 

After the Loveless ruling, liquid and edible hemp products that had been thought to be legal in Minnesota since 2019 were clarified as illegal controlled substances. The decision was later appealed to the Minnesota Supreme Court before the recent law change clarified the state’s definition of hemp, but not before major damage was done, Dawson notes.

Farmers work by season, planting seeds in May and harvesting around October or November. After the Loveless ruling—which landed right around harvest—Dawson says clients buying her hemp to process into CBD products didn’t know what to do. They were afraid of inadvertently breaking the law. This left the co-op with extra product and no profit that year. 

“The farmer is taking the most risk,” Dawson says. “If we put the crop in because people are asking for it, then they just change the rules at the last minute …” Dawson still worries about a lack of clarity in the recent legislation and asks that lawmakers educate themselves about the industry as it expands.

Good things from bad law?

So is hemp the holy grail for a difficult agricultural economy and an entry point for future farmers? 

It’s hard to say, says George Weiblen, professor in the College of Biological Sciences at the University of Minnesota. Weiblen has researched hemp for two decades and warns that prospective farmers must do their research before entering the industry. He says it’s difficult for any startup to compete in an environment where states like California, Colorado, Oregon, and Washington are oversupplying the nation. Customers looking to buy locally in the current environment will likely pay a premium, similar to craft beer versus commodity beer. 

Issues around the 2022 legislation boil down to its lack of structure. It was a tactical bomb thrown in a state that had fallen behind its peers, but it created more uncertainty than it resolved. While a license is required to grow and process hemp, a retailer doesn’t need one to sell hemp-derived cannabinoid products. The Board of Pharmacy is charged with regulating the retail side of this market but says it is ill-equipped to do so. Like Dawson, Weiblen says the farmer always shoulders the most risk. 

“This gummy law [legalizing edibles]—I don’t know what to say about it,” he says. “It’s half-baked.”

The Reclamation Farmers

As a Black woman working to support other farmers of color who have been pushed out of the industry over the years, Dawson says hemp offers an opportunity to start small and build—especially for farmers who have been disenfranchised by programs meant to support them, including grants through the USDA, an institution that has been accused of discrimination. (In its best-known case, 1997’s class-action lawsuit Pigford v. Glickman, plaintiffs have yet to receive compensation.) 

Even as hemp becomes an increasingly viable crop, Dawson emphasizes the importance of addressing existing discrimination within farming. Today, only 49,000 farmers—1.4% of the total in the U.S.—identify as Black or mixed-race, down from nearly 1 million, or 14%, 100 years ago, according to the USDA. As traditional farming scales up and corporatizes, Dawson says hemp can be a crop that brings underrepresented populations back into the space. 

“We call ourselves reclamation farmers,” says Dawson, a fourth-generation farmer whose parents were among those stripped of their land in past decades.

“They weren’t educated. I’m the first one in my family to go to college and get a degree. They were put in sharecropping agreements that stripped all of their equity. So even though they ran farming operations, they had no ownership or equity, and they lost the farm.”  

Now, Dawson works to bring diversity back to farming. More than 200 people are on a waiting list to become a member of her co-op, but she says it doesn’t currently have the resources to accommodate them.