Vermont Hemp farmers say the state failed to support them
'Fool's errand for most': Why Vermont hemp farmers label state program 'complete failure'.
HARDWICK ― Once upon a time − in 2018 - hemp was going to save Vermont dairy farmers from the vagaries of supply and demand for milk, and the resulting hardship and economic depravation, by providing a lucrative cash crop that could be processed into CBD oil. Tinctures, pills and gummies containing CBD have a loyal following among Americans seeking relief from pain and anxiety, and as sleep aids.
Things didn't work out that way.
In 2018 a pound of hemp biomass was selling for about $40, generating profits well above other common crops, such as soybeans, according to Reuters report. Growers rushed in, including in Vermont, and by the end of 2019, the boom went bust. The price of a pound of hemp dropped to $18-$25.
Not only that, Vermont farmers learned there really was no market for raw, unprocessed hemp, according to Jared Rolston, co-owner of Bordertown Farm in Brattleboro, a hemp and cannabis operation. Rolston and his partner Hillary Famolare, process their hemp into organic CBD products they sell both wholesale and retail online.
"I blame that on naivete," Rolston said. "People did not realize you can't just grow hemp. No one is going to buy your hemp on the vine, standing in the field. You have to harvest it, hang it, dry it, and process it into a manageable product. If you're not completely vertically integrated, like we are, there's no market."
The Vermont Agency of Agriculture, which had just finalized its rules for growing hemp, received more than 986 hemp grower registrations on 9,100 acres in 2019, and 292 processor registrations, according to the Associated Press.
The next year, in 2020, the agency issued just 347 combined hemp grower and processor registrations, for a total of 1,115 acres for the growing season − an 88% drop in hemp acreage from 2019 to 2020.
"It was a fool's errand for most people," said Alejandro Bergad, co-founder of Sunsoil, a vertically integrated hemp and CBD operation in Hardwick. "It hurt farmers more than it helped them."
Vermont Agency of Agriculture bails on hemp program
Vermont Agriculture Secretary Anson Tebbetts pulled the plug on the state's hemp program on July 1, 2022.
In a letter to the chief of the U.S. Domestic Hemp Production Program at the U.S. Department of Agriculture, Tebbetts said his agency was withdrawing its Vermont Hemp Production Plan, which was approved by the USDA just a year earlier, on Dec. 22, 2021.
"(Vermont Agency of Agriculture) appreciated the opportunity to operate a state hemp production program," Tebbets wrote. "It will continue to provide business support to producers and processors as it is able, and hopes the hemp grain, fiber and cannabinoid markets in the state continue to grow."
In fact, said John Rodgers, owner of the Vermont Farmers Hemp Company in West Glover, the Vermont Agency of Agriculture had just abandoned the state's hemp farmers. Rodgers is a former Vermont legislator who served eight years in the House of Representatives and eight years in the Senate, where he was involved in "every piece of hemp legislation that's been written in this state," he said.
"The Agency of Agriculture is a complete failure for the hemp farmers," Rodgers said. "I was in the Senate at that point and worked with the agency. We built one of the best hemp programs in the country from my view. Several things happened. Everybody thought it was a panacea. Too many people jumped in. Vermont couldn't compete with states putting in thousands of acres and doing it mechanically. There was a horrible price drop."
Rodgers, a former dairy farmer, is now primarily a stone mason, but he also has a 500-acre farm where he owns and operates his hemp business. Rodgers is vertically integrated like Rolston at Bordertown Farm, processing the hemp he grows into CBD-infused oil, salve and gummies.
Rodgers said he recently was offered $1.40 per pound for his hemp biomass − the raw product that has not yet been processed into the CBD oil that can be turned into products for sale online. At $15 to $20 per pound, Rodgers said, you can make a go of it selling hemp biomass. Anything less and you're losing money.
Vermont had a good hemp program, agrees Stephanie Smith, who headed the program at the Agency of Agriculture before it was dropped, and is currently assistant director of the public health and agricultural resource management division for the agency. But, she said, the situation changed when the USDA established federal rules for hemp production in January 2021, driving the decision to end Vermont's hemp program.
Vermont required total THC levels in hemp of 1% or less, operating under a 2014 pilot project authorized by the federal Farm Bill, Smith said. When the federal final rules on hemp went into effect, they reduced total THC concentration allowed to 0.3% or less. THC is one of the psychoactive components of cannabis. Hemp is cannabis.
Two additional federal requirements are to run criminal background checks every three years on applicants who want to cultivate hemp, and to sample hemp crops using certified sampling agents to make sure the crop meets the THC level required by the federal rules.
"The pressure was on us for being able to provide the services hemp growers needed," Smith said. "It was a challenge for the agency to find certified sampling agents to support the hemp industry."
Cary Giguere, compliance director for Vermont's Cannabis Control Board, added the USDA is entirely concerned with ensuring that hemp farmers don't exceed the THC limit of 0.3% − making sure you aren't a criminal in the federal government's eyes by growing the form of cannabis that gets people high.
The federal agency did not concern itself with a key component of Vermont's hemp program − consumer protection − so Vermont retained control of that part of its hemp program under the supervision of the Cannabis Control Board.
"The Vermont hemp rule makes sure (hemp grown in Vermont) is free of pesticides, heavy metals, pathogens and micro toxins, and checks for residual solvents to make sure there's no extra ethanol," Giguere said. "All that testing and consumer protection stayed in the state. USDA's authority stops at the farm gate."
Ethanol is used by some hemp growers in the process to extract CBD oil from the dried plant.
No other farmers have to pay licensing fees
Rodgers faults the Agency of Agriculture not only for abandoning its hemp program but also for implementing licensing fees for hemp farmers to pay for the program. The fee was $500, not a lot, but $500 more than any other farmer paid, he said.
"There's no other agricultural program based on fees," Rodgers said. "The agency gets money out of the general fund. Dairy farmers don't pay fees to run dairy farming."
Rodgers insists that if hemp farming had been successful in Vermont, the state would have benefited directly from increased taxes, and indirectly from the economic effects of equipment sales.
"There was a huge boom of equipment sales until it went bust," Rodgers said.
The Agency of Agriculture offers various programs, grants and funding for dairy farmers and other farmers in Vermont, and has bailed out the dairy farmers numerous times over the years, he added.
"There's no bailout for hemp farmers," Rodgers said. "When the number of licenses dropped from around 1,000 to around 30, (the agency said) 'Oh, we're not making money on this, see ya.' A ton of farmers lost their shirts."
On the subject of fees, Smith points out that the USDA does not charge a fee for a license to grow hemp, issuing a license valid for three years.
The new hemp authority is stretched thin and under-staffed
Rodgers' main business is his masonry work, building walls and patios and restoring historic foundations. Vermont Farmers Hemp Company is a small, but steady business.
"We have several stores that sell our products, but most of our business is on our website," he said.
The story is similar for Jared Rolston's Bordertown Farm, which started about five years ago.
"We have an online business and we have very steady customers on a monthly basis, but yes, there is a lot of competition, and there's a lot of crap out there," Rolston said. "We're USDA-certified organic. Our products are clean. We only use our own hemp."
Rolston and his partner, Hillary Famolare, also have a Tier 2 license to grow up to 300 plants for adult-use cannabis, regulated by the Cannabis Control Board.
Ralston is concerned about the CCB's involvement in hemp, partly because of his experience with the board on getting a Tier 2 license for cannabis. Ralston said he didn't get his license until July last year, even though the CCB had a mandate to get all grow licenses out by May.
"They didn't understand you can't start in July," he said. "We did and we had a meager crop. Now they want the CCB to handle (hemp). It's going to be a nightmare. They're already a nightmare to work with. I agree with other growers that all they want to do is regulate. They never saw a product that didn't need regulation."
Having said that, Rolston added that the CCB inspector for southern Vermont, Chipper Sullivan, has been great to work with, and understands the needs of farmers.
Rodgers believes the problems with the board stem from the fact that it wasn't adequately funded or staffed by the Vermont Legislature.
"The CCB is stretched very thin," Rodgers said. "They're having trouble keeping up with demand. They started out behind the eight ball, mostly because the House dragged their feet and didn't get a bill passed in a timely fashion and get positions funded in a timely fashion."
Cary Giguere confirms Rodgers' assessment of the Cannabis Control Board's launch in July 2021. Giguere himself wasn't hired until June 29, 2022.
"There was a skeleton crew here," Giguere said. "The board couldn't start hiring staff until July 2022. The board was created a year before that with no employees. Three board members, an executive director and general counsel. That was it."
Giguere said given the situation, the CCB worked at "light speed if you're talking about the bureaucratic process."
"The fact that we were even issuing licenses last July was a major feat and a credit to the team that was here," he said.
Gummies are the future for CBD
Even one of the most well-funded hemp operations in the state − Sunsoil in Hardwick − is in somewhat of a holding pattern following the crash in the market and the pandemic. When the Burlington Free Press profiled the company in September 2019, co-founder Alejandro Bergard said it was the third largest CBD manufacturer in the country, and was preparing for a "hockey stick" of growth − straight up.
But a combination of the COVID-19 pandemic, which put many of the health food stores that carried Sunsoil's products out of business, and CBD's uncertain status with the U.S. Food and Drug Administration flattened that hockey stick, stagnating the market. The FDA has yet to sign off on CBD oil as a supplement.
Despite the setback, Sunsoil remains a profitable, employee-owned company, according to Chief Executive Officer Bharat Ayyar. Ayyar declined to share numbers for gross sales or profit. He did share that Sunsoil has just under 10,000 customers for its subscription service, which makes regular deliveries of CBD oil to people with chronic conditions.
In an effort to garner more customers, Sunsoil is currently formulating a CBD-infused gummy, the delivery method of choice for a younger demographic, as opposed to the Boomers who buy the pills, tinctures and salve, according to Bergad.
"Gummies have been a real interesting part of the CBD story," Bergad said. "It's the first inkling of being introduced to a new segment of the population."
Bergad is also still holding on to his dream of a $6 bottle of CBD pills on the shelf in Walgreens next to the Advil, once the FDA gives its stamp of approval to CBD. To that end, Sunsoil has been focused on lowering the prices of its products through more efficient production methods.
Ayyar said the company dropped its prices anywhere from 10% to 40%, depending on the product. But it's still prohibitively expensive. A 2-ounce bottle of Sunsoil CBD tincture is $55. A bottle of 30 Softgel CBD oil capsules is $30.
Jared Rolston believes FDA approval is a pipe dream.
"The pharmaceutical industry does not like having a natural product being sold as a pain reliever, because they sell drugs that do that," Rolston said. "There's never going to be a stamp of approval unless you do your own research."
Back at the Vermont Farmers Hemp Company in West Glover, John Rodgers takes his satisfaction from customer feedback − and doesn't concern himself with explosive growth.
"What keeps us in it is the feedback from customers who say it's helping them," Rodgers said. "We've gotten amazing stories from people. For me, that's very fulfilling, and therefore worthwhile staying in the business."
