The industrial hemp industry is booming, especially as cannabis legalization continues to add new vistas of opportunity in a growing number of U.S. states. The share of agricultural land devoted to hemp quadrupled from 2018 to 2019, growing from 27,424 acres to whopping 128,320 acres according to a recent LandHub article titled Hemp: The Benefits Of The New Mega Crop. Finding just the right land on which to grow these crops, however, can prove challenging for farmers, real estate professionals, and investors. Let's examine some of the most important points you must consider if you're thinking about taking this potentially rewarding (but also potentially risky) step.
Deciding Which Industrial Hemp Products to Produce
One of the first considerations you'll have to make when working out your long-term strategy is deciding what varieties of the crop you need to plant and raise to meet your goals and demand. Hemp and marijuana are derived from the same plant family, Cannabis Sativa, and are bred and used for different purposes. The primary difference between the two is the content of THC, the psychoactive cannabinoid produced by the plant, with hemp being defined as cannabis with 0.3% THC content or less. Your options may include:
- Industrial hemp - A straightforward hemp crop can provide the raw materials for use in paper, plastic substitutes, fiberboard, rope, fabrics, and even protein substitutes for vegan and vegetarian foods.
- CBD oil - Oils containing CBD (cannabidiol) are derived from marijuana plants; they may also include hemp-derived carrier oils. CBD oil has become increasingly popular for treating issues ranging from depression and chronic musculoskeletal pain to neurological disorders, cancer symptoms, and even acne.
- Medical marijuana - Medical marijuana has been prescribed for the treatment of conditions such as glaucoma, nausea, epilepsy, Crohn's disease, and PTSD.
- Recreational cannabis - States that have legalized recreational cannabis may see substantial profits from taxing this cash crop, just as growers can make considerable money from providing it.
Obviously, you must understand your state's laws on the growth and sale of cannabis before you can make any informed plans about what and how much of it you can and can't grow. Passage of the 2018 Farm Bill defined hemp as separate from marijuana and allows production in all states. However, states may opt out of allowing hemp production and several still prohibit growing, so it is critical to be aware of your state’s status. In all instances, this is a highly regulated plant requiring careful attention to permitting, testing, transportation, and processing. The compliance requirements are paramount and can be challenging and expensive. In states that don't permit the use or sale of recreational or medical marijuana, for instance, your options are limited to hemp. If you intend to buy land in a state like Colorado (which spearheaded the trend toward statewide legalization beginning in 2012), you may face no such limits, though local county and municipal laws do pose restrictions, so it’s still always important to check.
Who Is The Target Market For Your Industrial Hemp?
In any business, you must know your target market before you can stand any chance of success. Before you buy land for your future "hempire," do your research to ascertain which consumer or industrial segments might have a genuine need for your crop. Once you've located your prospective buyers, you can market to them directly and effectively.
Another important aspect of pre-planning is estimating the size of your target market and the volume of its demand for your crop. Many hemp producers find themselves stuck with a massive overproduction problem because they misunderstood how much hemp their buyers actually wanted or needed. Market research is a must if you want to avoid this disastrous scenario.
Soil, Environment And Other Potential Problems When Buying Land For Growing Industrial Hemp
Hemp may be a remarkably versatile crop, but it isn't the easiest plant in the world to grow. For one thing, it's highly susceptible to mold, which can been known to infiltrate and destroy nearly half of many hemp crops. Even trickier is the issue of making sure that the hemp your land supports has a THC content of less than 0.3 percent. Any deviation above this level makes the plant illegal to sell in states that haven't legalized psychoactive marijuana products for medical or recreational use, and usually results in having to destroy the crop.
Make sure that your land offers a prime environment for hemp growing. Seek out land that offers good drainage, a non-acidic pH level, and mild temperatures. and a generally humid climate. Arid regions reduce the potential for mold issues compared to humid climates, but will be more likely to require irrigation of the crop. In general, hemp will use approximately 1/3 less input of water, nutrients, and pesticides than a typical corn crop. 15 inches of annual rainfall or supplemented irrigation is a minimum requirement for full production potential.
Even the most welcoming soil and climate can lead to nothing if your land is spoiled by environmental toxins. The cannabis plant is a bio-accumulator that draws elements from the soil, so much that is has uses in phytoremediation, the cleanup of toxic elements by plants. Many hemp products, particularly oils, are processed as concentrates of the plant’s compounds, thus any contaminant or unwanted element is concentrated also, and could rise above allowable limits. That’s why, in addition to checking the nutrient levels in the soil, you'll also want to have the soil and groundwater tested for lead and other dangerous contaminants before you commit to a purchase.
The Bottom Line: You Need a Land Expert
As you can see, selecting and buying land for hemp farming forces you to think about a number of factors, any of which could make all the difference between boom and bust. Make the process easier for yourself by both doing your own research to learn about hemp as well as consulting the proper experts, including an experienced land expert, ideally an Accredited Land consultant (ALC) who knows how to advise you every step of the way. Fortunately, RLI makes this step the easiest one of all -- just head over to our Find a Land Consultant page!
Contributing Author: Kirk Goble, ALC, has been a Colorado licensed real estate broker since 1988 and founded The Bell 5 Land Company in 2000. He specializes in farm, ranch, land, and water brokerage. He is a member of the National Association of REALTORS®, The Greeley Area REALTOR® Association, and the REALTORS® Land Institute. Goble was awarded the Land REALTOR® of America by the REALTORS® Land Institute in 2013 and is a LANDU instructor for RLI.