where to sell hemp for cbd oil

Hemp Marketplace: How to Sell Your Hemp Products, Where and to Who

The U.S. CBD market is projected to reach $20 billion by 2022: That means new businesses are popping up everywhere to capitalize on the demand. With segments that range from Hemp biomass, to smokable flower, to hemp-derived CBD extracts, isolates and distillates—the CBD market offers diverse set of products to market and sell. The growth potential is uncapped, but it’s not without a few challenges.

Industrial hemp is now legal, but it’s strictly regulated as of the USDAs recent hemp interim rules. Moreover, industrial hemp’s legal status does not necessarily apply to hemp-derived CBD (More on that later). That said, the opportunities are still likely worth the risk. If you’re part of the budding hemp and CBD industry or are considering launching a business, you’ll want to understand the challenges as well as the best practices to successfully sell your products at the highest price in today’s market.

In this post –

Hemp CBD Biomass

Following the passage of the 2018 Farm Bill, the hemp biomass market grew exponentially. Unfortunately supply outpaced the demand and that has led to the recent slump in prices you see today. But aside from market fluctuations, there are still immense opportunities to grow and sell your hemp biomass. Ultimately the success you achieve will depend on the quality and safety of your plants as well as the buyers you work with and the deals that you make.

How does quality affect biomass price?

In order to boost the value of your hemp CBD biomass, consider the following:

How much CBD does your hemp contain ? The more potent your harvest is, the more you can earn because pricing is directly dependent on the concentration of CBD per pound (measured on a dry weight basis).

How was it harvested? Harvesting method is another factor that may influence the quality and price of your product. According to Industrial Hemp Farms hand-harvested plants may produce up to 5% more CBD vs machine harvests, which can destroy precious CBD-filled buds.

How much moisture does it contain? When CBD biomass is not dry enough, it will result in a decreased wholesale price. Why? Hemp biomass price is determined by CBD content on a per pound basis and if a product contains too much moisture, it will be artificially heavier (and more expensive). Thus, the buyer will adjust the price to account for lower value of end product once it is cured.

Is it free of contaminants? If your biomass contains any harmful toxins like mold or residual pesticides it may severely drop in value if it’s sellable at all. Your buyers may want proof that your biomass is 100% safe. That’s why it’s important to test with an accredited lab like ACS.

How do I sell hemp biomass?

The buyer model

As a CBD biomass producer you have a few markets to sell to including hemp farming companies like Phase 2 Extraction , that grow their own hemp, process it and sell it. You may also work with a CBD processing and extraction company whose sole job is to extract CBD and other cannabinoids to make refined oils and distillates. Finally, you might work with a broker , whose job it is to connect farmers to buyers.

Selling directly to buyers will ensure that you get the price you deserve from a partner whose quality you trust. Brokers can also be a great resource–especially if you’re new to the market– but working with a broker means that you’ll need to forfeit some of your profits to pay their commission. Moreover, you may find yourself working with a broker who can’t deliver the terms they promise. Alternatively, if you find a buyer to work with directly, you can negotiate terms such as price, lead time, and volume. Whoever you decide to sell to, the best idea is to secure payment up front so that there are no surprises later.

Production contracts

Another method to secure sale of your hemp biomass is to engage in hemp futures contracts, which are agreements between hemp companies and a seller to lock down pricing before the plants are harvested. This can be a beneficial business model to reduce your risk of producing plants without a buyer, which will allow you to forecast profits.

On the downside, when you sign a futures contract you lock in pricing, regardless of how the market changes. That means you may need to sell your hemp for less than its ultimate value. While contracts may seem secure, they still rely on the people who signed them. Therefore, if you’re a small to mid-sized operation, you’ll want to vet the company on the other side of the paperwork first.

Questions to consider:

– Does your contract prevent the company from backing out of the deal if they find a better one somewhere else?

– What happens to the contract terms if your crop tests for less than the expected CBD content?

– Do you have a legal team in place to litigate on your behalf if needed?

Hemp Field Profit Sharing

Hemp farm profit sharing is another potential source of income if you’re a biomass producer with limited cash flow. Industrial hemp seeds and clones can be extremely costly and prohibitive to your ability to expand production. Through profit sharing, you can find a buyer to supply funds for the materials and cultivation process. That buyer will then sell the harvest and split the percentage of profits with you. This helps eliminate the high barrier to entry and may be a great option, but you must also ensure that your business partner is trustworthy and can provide the final profits your business needs to thrive.

Legal considerations

As of the 2018 Farm Bill it is legal to buy and sell hemp biomass across the country as long as it does not exceed the threshold of THC. According to the USDA’s recent rules , hemp must contain less than 0.3% total THC on a dry weight basis, which is defined by the following equation: TOTAL THC= (%THCA*.877) + %Delta9. The USDA requires that you test at least 15 days prior to harvest. If your crop is non-compliant, it is not eligible for sale and must be destroyed.

Bottom line

In order to legally sell your hemp CBD biomass and get the best price, you’ll need to provide proof of its potency and quality through accredited laboratory tests. ACS Laboratory is ISO17025 accredited and DEA certified with award winning accuracy. Contact us today to test your hemp biomass.

Smokable Hemp CBD Flower

Smokable hemp flower is only about 2% the CBD industry today, but according to Market Insider, it is also one of the fastest-growing segments with an explosive growth projection. As states are loosening restrictions on smokable flower, hemp dispensaries are popping everywhere across the nation. Companies are also selling smokaable flower directly to consumers online. There is a massive opportunity to join a fast-growing segment of the CBD market, but you must also understand the risks. Let’s review the best practices and legal landscape for selling smokable CBD Flower.

How do I sell smokable flower?

The dispensary model:

If you have a shelf ready smokable hemp product you may choose to sell to dispensaries via buyers or through distributors. Dispensaries can be an invaluable sales channel because when your products are on shelves at trusted dispensaries, the customers who visit the stores are more likely to trust your product as well. Every customer who visits the store can see, touch and learn more about your brand. This is also a great method to guarantee large volume orders, especially when you sell to dispensaries with several locations. When you work directly with dispensary buyers or distributors, you have the opportunity to negotiate contracts with minimum order requirements and request the price that your product warrants based on its quality.

The ecommerce model

You may also sell directly to consumers via online platforms or your own ecommerce website. This is a great option if you have the infrastructure in place, including the funds to hire a team to market your brand. Through online sales, you have the power to dictate the price point of your products. You also get to own your own customers and remarket to them to inspire future sales. When you sell online, you have unlimited growth potential, but you’re also competing in a vast landscape of hemp companies fighting for market share.

What are the challenges?

Online marketing for hemp CBD is perhaps the biggest challenge to the ecommerce model because giants like Google, Amazon and eBay do not allow advertising. Sales may also be a challenge, as you may not be able to process payments. So, if hemp is legal, why can’t you advertise and sell your smokable hemp CBD online?

Despite state level acceptance, on a federal level, the FDA has not investigated smokable hemp for use in consumer facing products.. That means smokable hemp sales is in seriously murky legal territory.

What can I do about it?

One method to help minimize risk is to understand and comply with your state’s rules and regulations for smokable hemp sales. You will want to ensure that you are only selling to customers within your state. Once you cross state lines, you may be at greater risk for product recalls or punitive actions. With regards to your digital marketing strategy, you may want to highlight the importance of terpenes and cannabinoids with less emphasis on the word “CBD.” This will ensure that you remain search engine friendly.

Hemp CBD Extracts (Oils, Isolates and Distillates)

When crude hemp oil undergoes distillation, it becomes refined hemp oil. Refined hemp oil breaks down into three categories of extracts: CBD full spectrum oil, CBD broad spectrum oil, and THC-free distillate. Extracts can be used for products ranging from sublingual tinctures to edibles, topicals and vape concentrates. When refined hemp oil is even further purified, it becomes a CBD isolate which contains 0% THC and up to 99.99% CBD.

As a whole, CBD extracts and their related products command the highest price point in the hemp market. Due to their purity and potency, CBD isolates will generally warrant the highest of all products, followed by THC-free distillates, broad spectrum, and finally full spectrum oils. But pricing is not necessarily a linear equation. If you successfully market your brand with beautiful packaging, known for quality products, you have more power to set a higher price point.

How do I sell my hemp CBD oils, extracts or isolates?

Like smokable flower, you may choose to sell CBD extracts in brick and mortar dispensaries(anchor text to above content) or via ecommerce platforms(anchor text to above content). But unlike smokable flower, you also have the opportunity to sell CBD extracts to local, regional and potentially national retail chains. From coffee shops, to yoga studios, gas stations, and health food stores, the opportunity to grow your brand is immense. For example, earlier this year CVS and Walgreens announced plans to carry products CBD products.

So, what are the challenges?

The FDA is still investigating(anchor text above) CBD to determine whether or not it may be safely sold and marketed as a food or dietary supplement product. . As such, hemp can only technically be sold for industrial purposes in applications like textiles, beauty creams and clothing for example. At the same time, the FDA is aware of the current consumer market and plans to publish rules related to its usage in the near future. But based on today’s lack of guidance, you must be extremely careful about how you market, label, and sell your smokable CBD product. You must also be aware of the risk for product recall if your hemp CBD extract does not comply with the future regulations.

Until the federal government provides greater guidance, you may need to get creative when labeling your product and be sure to follow the FDA’s established rules for food and supplements . To market your product online, consider an organic search strategy that utilizes keywords, which do not mention CBD specifically. You can also try paid advertising, but your account may get shut down. The process of marketing will require a bit of ingenuity and a lot of trial and error but may be well worth the effort.

Despite the legal challenges, the most important aspect of developing a successful hemp CBD brand is to create a high-quality product that will pass any scrutiny by regulators or consumers. If you want to stand out from the crowd, the key is to test your products with ISO Accredited, DEA Registered laboratories like ACS who can validate its safety and potency. You’ll want to be as transparent as possible so that your buyers understand the value of your product and customers trust its quality. Regardless of the hemp product you offer, you have channels to sell to and options to boost profits through a competitive quality edge.

At ACS Laboratory, we stay current with the entire spectrum of Hemp/CBD products from Soil to Oil as well as the compliant testing landscape so that we can better serve our customers. Contact us today to schedule a test.

How To Make Money Growing Hemp

The Illinois-based Hemp Foundry wrapped up its first year selling hemp clones specialized for CBD production and oil extraction in 2019 — helping many of the two dozen or so Illinois growers it works with earn a profit, while others in the industry are still looking for buyers.

While contracts between CBD, or cannabidiol, extractors and hemp growers are scarce in the budding industry, Hemp Foundry’s 50-50 pay-to-process agreement with growers who don’t buy its clones, and a 60-40 profit-split agreement benefiting those who do, resulted in harvests that went straight to its Monee, Ill., extraction facility.

From there, the oils are sold and labeled under brands such as Simple Soul to be stocked on shelves around the state. Companies from across the country come to Hemp Foundry to buy CBD as well. The profits are shared with the farmer.

“When you work directly with an extraction company rather than selling in bulk to a processor, you can get a much better return on your material versus the traditional way where you grow, get it ready, sell it all at once and get a check,” explains director of cultivation Tim Horras, who advises farmers working with Hemp Foundry.

“When you work with an extractor, that’s going to split the profits from the end product rather than just pay you a pittance for your biomass,” he adds.

Horras does some back-of-the-envelope math for an acre of hemp planted in 4-foot rows, which would yield 2,500 plants at about 1 pound of biomass each after large stems and leaves are removed. While a farmer could sell the biomass to a bulk processor at about $10 per pound at today’s prices, bringing in $25,000, the farmer could instead send the product to an extractor like Hemp Foundry and bring in around $105,000.

Horras explains that the extractor takes the 2,500 pounds of biomass to make 85 liters of so-called “crude oil,” which Hemp Foundry can process further into distillate, losing 30% of the oil in the process. Ultimately, a grower can fetch $175,000 off that 1 acre of hemp, and while 40% would go to the foundry, the grower would still get three times as much as going through a bulk processor — with $20,000-plus in net profit after factoring in labor and $4 clones on a 2,500-plant field.

How it works

Horras says Hemp Foundry prioritizes sales for its growers based on when their harvest was received. Whenever a company approaches the extractor for CBD oil, Hemp Foundry goes down the list and ask its partners, the farmers, if they’d sell at the price the buyer is asking.

While Hemp Foundry extracts all biomass immediately into crude oil to avoid mold issues with storing, it keeps the oil as winterized crude oil until it can fill an order. Sometimes the oil is turned into a full-spectrum oil that includes cannabinoids other than CBD; other times a 100% CBD isolate is produced.

“Say you’re No. 1 on the list and you’ve got 100 liters of crude sitting at our facility. We’ll get a phone call from someone looking for 15 kilograms of isolate and they’re willing to pay $20,000. That’s when we call you and say, ‘Hey, I’ve got an offer here.’ You can always decline, and then we go on to the next farmer on the list,” Horras says, adding that while there is a wait on the ultimate payday compared to selling biomass, there’s a steady demand for Hemp Foundry oil.

Since Hemp Foundry’s facility can handle 2,500 pounds of hemp a day, it processes product even for farmers who didn’t buy its clones. Horras says the foundry only sells clones because they believe that results in the best yields and highest-quality product for their farming partners, but they’ll take hemp grown from seed just the same.

“If you buy clones, you have priority access to our extraction facility come fall, and a 60-40 profit-share agreement, as opposed to our pay-to-process arrangement that lands at about 50-50 when you do all the math,” he says. He notes Hemp Foundry weighs a farmer’s material once it comes in and keeps track of it with a unique number.

The company also thoroughly tests the product it receives for trace heavy metals and other contaminants, taking samples from the harvest themselves rather than relying on samples sent in by the farmer. Full testing costs $275 for everyone, no matter how large or small their harvest is.

“In 2019, we didn’t have to reject anybody’s stuff,” Horras says.

Of the organic-certified farms that supplied Hemp Foundry with product this year, he says there’s potential for higher-premium organic products. However, since CBD products could only be sold with a USDA certified organic label starting last year, the market hasn’t yet matured to where there’s a lot of buyers reaching out to Horras for organic products.

“There might be enough of a premium in organic that a farmer could just do the traditional ‘grow it, cut it, dry it, sell it’ and walk away. But for most farmers, really the only way to make good money doing this is by working with an extraction company,” he concludes.

Don’t forget to contact your trusted ProAg crop insurance agent for assistance in comparing the risk management options available to you and your unique industrial hemp operation. Grow with confidence today.

Budding Hemp Farmers Struggle To Find Success In The ‘Green Rush’

Farmer Elizabeth Melson dries hemp in a converted garage in Sperryville, Va.

Hemp farming exploded after the 2018 Farm Bill passed last December. The bill decriminalized the plant at the federal level, opening the door for many U.S. farmers to grow and sell hemp.

Over the past year, licensed hemp acreage increased more than 445%, according to the advocacy and research group Vote Hemp. More than 510,000 acres of hemp were licensed in 2019, versus about 112,000 acres in 2018.

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At the same time, products made with cannabidiol — a chemical compound found in hemp — are being sold everywhere from gas stations to CVS. CBD is promoted as a cure-all for anxiety, depression and post-traumatic stress disorder, even though the science isn’t there yet.

Farmers see an opportunity to get in on the “green rush.” But now, some are worried that their first harvest could leave them empty-handed.

The “green rush”

In Sperryville, Va., “there’s more cows than people,” Elizabeth Melson says. In the distance shadows lift off the Blue Ridge Mountains. Golden, crimson and scarlet ash and birch trees hiss in the wind, lining the Thornton River. Melson surveys a quarter-acre plot of hemp — the dense, Christmas-tree-looking plants shimmer in the morning light.

Melson started farming seven years ago. Now, she manages a small farm for Sperryville eatery Off The Grid. But this is the first time Melson has grown hemp.

“We’re all in the green rush, we wanna grow for CBD,” Melson says. “It’s the most amazing, you know, hyped-up, nutraceutical on the market right now, and [I] didn’t realize how labor-intensive it was.”

Melson shows off one of her hemp plants. She and her team harvested about 220 plants this season. Hannah Hagemann/NPR hide caption

Melson shows off one of her hemp plants. She and her team harvested about 220 plants this season.

Growing hemp for CBD is particularly grueling. Melson and her farmhand do everything by hand: cutting, picking and curing. They finished their harvest of 220 plants last week. To cure the hemp, the team hangs the plants from strips of neon-orange plastic safety fence on ceiling rafters and walls in a converted garage.

Still, Melson doesn’t have the space or the equipment to process the plant into CBD oil. There are companies that can process Melson’s hemp, but they’re maxed out. One company was supposed to come to the farm and pick up her harvest, cure it and broker it.

“And then they call back and they said, ‘We’re booked; we’re completely booked,’ ” Melson says.

Growing pains

Melson’s not alone. Hemp farmers across the U.S. are grappling with harvest challenges: erratic weather, a spike in hemp production and a dearth of processors and buyers.

“We really haven’t seen any type of production since the ’40s and ’50s in the U.S., so this crop is almost like starting brand new,” says Tyler Mark, a production economics professor at the University of Kentucky who researches hemp.

The young industry is going through growing pains. And it’s expanding quickly, Mark says.

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Mark estimates about 250,000 acres of hemp was planted this year — an increase of around 220% from last year. Up to 90% of this year’s harvest will be processed into CBD products, he says.

That much hemp makes for a competitive market.

“So since we don’t have enough people to process it all,” Mark says, “you’ve got a glut, you’ve got an oversupply of [hemp] biomass in the market right now.”

Since May, the average price of harvested CBD flowers and leaves has gone down by around 50%, according to a report by Hemp Benchmarks, an industry publication. But at places such as CVS and gas stations, “we haven’t seen those CBD prices fall in those stores as much as we’ve seen the biomass price fall at the farm level,” Mark says.

Jane Kolodinsky, an applied economics professor at the University of Vermont, puts it more bluntly: “[Hemp farmers’] markets have bottomed out, and they don’t have buyers for their products.”

Many farmers who jumped into the industry after the farm bill passed are inexperienced, she says.

“It’s the farmers who just came in and decided, ‘Oh, there’s a CBD market — I’ll plant hemp,’ who really didn’t have a business plan,” Kolodinsky says. “They’re probably going to be hurt the most.”

What are the rules?

Even farmers who did have business plans are still learning the ropes of growing a new crop.

In lieu of federal hemp regulations, states have enacted their own rules. States such as Virginia and Wisconsin require farmers to produce hemp with no more than 0.3% total THC, the psychoactive compound that gets people high. If interim rules the USDA released last month are written into law, all 50 states will have to comply with the 0.3% total THC limit.

For farmers trying to grow high-quality CBD flowers, getting a crop within the 0.3% THC window can be challenging. The two cannabinoids “move together,” Mark says, so when CBD concentration goes up, so does THC.

Unlike soybeans and canola, it’s possible that hemp can go “from one day being a legal crop to the next day being an illegal crop, in terms of THC content,” Mark says.

Some of farmer Glenn Rodes’ hemp bales stand out against the Blue Ridge Mountains. Rodes is an eighth-generation Virginia farmer who started experimenting with hemp in 2016. Hannah Hagemann/NPR hide caption

Some of farmer Glenn Rodes’ hemp bales stand out against the Blue Ridge Mountains. Rodes is an eighth-generation Virginia farmer who started experimenting with hemp in 2016.

How old the hemp is can also impact THC concentration, as can weather changes.

Wisconsin hemp farmer Phillip Scott struggled to find a balance with his crop this season. Scott switched to being a full-time farmer in 2018. The former UPS worker started farming after he was injured on the job. Nerve damage left him with a limp, and Scott found relief for his pain using high-potency CBD tincture.

“It was that or opioids,” he says.

Scott grew 37 acres of hemp this season, which he is processing into tinctures. But Scott had to burn 10 of those acres to the ground: They tested 0.1% over the acceptable limit for THC.

“Even if I lose one plant it’s a big deal,” Scott says. “It’s frustrating that we have to destroy any of those crops, but we have to comply.”

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He estimates burning those 10 acres means a loss of between $150,000 and $1 million.

Farmer Tom Lauerman is hopeful. Lauerman has been farming cannabis for about 20 years and got into growing CBD-bearing hemp this year. He is creating tinctures, salves and lip balms on site.

“I think that’s a way that small farmers can actually do well in this industry,” Lauerman says, “make their own products, tell their story.”

The hemp side hustle

Some farmers are staying out of the CBD green rush altogether, opting for the long game by growing hemp grain and fiber.

Glenn Rodes is an eighth-generation Virginia farmer who raises turkeys and beef cattle and grows corn, soybeans and canola. He started experimenting with hemp in 2016, but this is the first season he could see some profits.

“For now it’s a very, very high risk, high reward on the CBD side,” Rodes says. “It would be lower risk, lower reward on the grain and fiber side. But we still think rewards nonetheless.”

Unlike most farmers, Rodes isn’t growing female hemp plants — those that yield CBD flowers and oil. He harvested 10 acres of male hemp bark, seeds and stalk this season. Those parts of the plants can be transformed into cosmetics, fabric, fuel, food, building materials and even plastic replacements.

Rodes admires one of the hemp flowers on his family farm in Port Republic, Va. Hannah Hagemann /NPR hide caption

Rodes admires one of the hemp flowers on his family farm in Port Republic, Va.

Hannah Hagemann /NPR

Still, “It’s difficult to compete with things like petroleum when you can pump it out of the ground and manufacture,” Rodes says.

Rodes planted 10 acres of hemp. He even has the equipment to turn hemp seed into oil. But his shop isn’t up to food-grade standards, so he can’t sell the hemp he processes on site.

Rodes is currently in talks with hemp processors and buyers. He hopes to sell 35 bales of fiber, and 3,000 pounds of seed.

At this point though, hemp is still a side hustle.

“I’ve actually gotten that phone call from a dairy farmer wondering if he could save his farm,” Rodes says. “And I just had to say, well, it’s just too early. We don’t have the infrastructure. We don’t have the market right now.”