Hemp farming still hasn’t taken root in Arkansas, six years after its cultivation was made legal under federal law.
In 2019, the first year after the U.S. Farm Bill Act of 2018 legalized hemp farming, the state issued 125 licenses to prospective hemp farmers; earlier this month, the number of licensed hemp farmers in the state stood at 13.
The number of licensed processors, who turn hemp flowers into cannabidiol (CBD) oil or hemp stalks and seeds into industrial-use fiber and feed, dropped from 35 in 2019 to four this year.
“I hope it gets sorted out,” said Brian Maudlin, a licensed grower and processor in Faulkner County near Quitman. “I’m going to stick with it. I hope something will bust loose. There is a lot of potential for hemp.”
Maudlin, who owns Natures Phamily Pharms LLC, grows hemp on 1 acre of land on his farm; he is licensed to grow on 3 acres. His processor setup turns his hemp flowers into CBD oil to be used in medicinal products such as tinctures, salves and lotions.
One of the main problems facing the Arkansas hemp market is a simple case of coming late to the party. Caleb Allen, who is hemp program manager for the Arkansas Department of Agriculture, said in 2022 that Arkansans started farming hemp several years late, and Arkansas farmers were chasing a bloated, “overhyped” market.
One of those initial farmers in 2019 was Jody Hardin, who farms 11 acres of hemp in west Fayetteville through his Arkansas Hemp Genetics LLC subsidiary. Hardin, a fifth-generation farmer, knew that hemp farming wasn’t going to be easy and took a break from the sector after the struggles of the early years wiped out many “newbies.”
“It was a glut. Everybody got in,” Hardin said. “Just about every state legalized it all at once, and tons of people got excited about it, but no one thought about ‘Well, there was no market for it yet.’ It disrupted the market for three or four years and the CBD market has never recovered.”
Supply & Demand
The popularity of CBD during the past decade led many to believe that hemp farming would be a surefire moneymaker.
CBD oil, which is praised for its curative properties, can be extracted from hemp flowers. Hemp does not contain the psychoactive tetrahydrocannabinol (THC) levels of its cousin, marijuana.
The U.S. Department of Agriculture said in its annual hemp report in April that more than 8 million pounds of hemp flowers were grown in 2023, up 18% from 2022. The value of the floral hemp was $241 million, up 35%.
The overall hemp market was worth $291 million, also up 18% from 2022.
Hemp is legal to grow as long as its flowers do not contain more than 0.3% of THC. But one problem faced by hemp farmers was their hemp growing “hot,” meaning with THC levels above 0.3%. That required destruction of the entire crop.
In addition, the rush into the seemingly lucrative CBD market resulted in a significant drop in the price of CBD oil, with supply outstripping demand. One Arkansas farmer said that, in his experience, the price of a liter of CBD oil dropped from $3,000 to $300.
“When we started in 2019 the price dropped by tenfold-plus,” said Vic Ford, who retired earlier this year as the associate vice president of agriculture and natural resources at the University of Arkansas Division of Agriculture. “If something sounds too good to be true, it probably is.”
Ford, who still works as a consultant, said much of the farming he has seen consists of smaller operations grown inside in greenhouses. Those plots are often associated with a medical marijuana operation.
Ford and farmers said Arkansas is a good location for growing hemp. But the processing and selling of the hemp products have become a major obstacle.
Farmers who grow hemp flowers — different varieties of hemp can also be grown for fiber and seeds — are not allowed to sell unprocessed flowers on the open market. They can only sell to licensed growers or processors.
“I would say it is stagnant,” Maudlin said of the market. “It is hard to get rid of the raw flower. I started processing so I could get to move my product. I make my product and then I put the products out to sell.
“I’m sure a lot of people were planning to sell the raw flower. We could only sell to another grower and other growers don’t need any flower. That’s the main [obstacle], getting rid of the raw flower.”
Not Just CBD
Many people associate hemp farming with CBD oil, but there are other uses for hemp.
Hemp can be used to make clothes, rope, industrial textiles, insulation and bioplastics, and hemp seeds can be used as livestock feed.
“We are going to be wearing hemp Levi’s eventually,” said Bill Morgan, who grew hemp in Fayetteville.
Processing is a challenge for non-CBD hemp, as is scale. There are no processing facilities in Arkansas to turn hemp stalks or seeds into bioplastics or chicken feed.
There are such facilities in the United States, but the logistics and cost of shipping hemp to them would require a massive increase in production to make an enterprise economically feasible. Small-acreage farms just don’t produce enough hemp to make it worthwhile.
“There are no processors who will buy for hemp plastics or byproducts,” Maudlin said. “There are no buyers. Somebody out of state wants hundreds of thousands of pounds. They want a very large load.
“It’s tough on the little guys. There are just a handful of active growers this year.”
The potential is there, though, if the infrastructure ever catches up to the idea. Ford, the UA consultant, said the nearest hemp processing for such uses is in Kentucky.
“It is being able to process it,” Ford said. “The farmer growing an acre and processing it himself is probably the best model. He has his market and how much he has to grow.”
Both Maudlin and Hardin said Arkansas needs an in-state processor for hemp fiber production. That would require a significant investment, but could open up hemp farming from its current status of small plots for CBD production.
“This is the kind of hemp Arkansas needs. It’s not the CBD,” said Hardin, who is growing a half-acre of hemp for fiber on his farm.
Bold Moves
Earlier this month, the Association of American Feed Control Officials tentatively approved the use of hemp seed in feed for egg-laying chickens.
If the approval leads to the use of hemp seeds in poultry feed, then a lucrative market would open for hemp farmers, especially in Arkansas where poultry production is a major industry. Ford said such a market would be “groundbreaking,” and Hardin said a poultry company had already contacted him about seed production on his farm.
“It’s going to be a big deal,” Hardin said. “The regulations on CBD are ridiculous. It’s hard to produce a crop that is not hot, and there is just no market for it.”
Morgan said he isn’t growing hemp this year because the market is tight and he has enough distillate for his products, which he sells through his Ozark Mountain Medicine brand. CBD oil, once extracted from hemp flowers, can be stored for a long time without losing its potency.
Growing more hemp would just add more to his cost and his storage.
Hardin hopes to take advantage of his patience and new potential markets such as poultry feed. He said when he entered the hemp field in 2019 he knew it wouldn’t be a sprint to success.
“We know it takes endurance and financial strength,” Hardin said. “We knew it was a long haul. We’re still in it. That was my plan five years ago, wait for all these people to fall out.”
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