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April 11, 2022

Struggling hemp farmers want inclusion in CT’s recreational cannabis market

HBJ PHOTO | STEVE LASCHEVER Brant Smith stands in his 70,000-square-foot greenhouse hemp facility in Cheshire.

The way Brant Smith sees it, his 70,000-square-foot greenhouse hemp operation in Cheshire is at least the fourth best cannabis growing facility in the state.

“I believe that I have the best facility in the state to grow recreational marijuana right now, besides potentially the medical marijuana people,” said Smith, owner of Hydroclonix LLC and its two subsidiaries, Hemp House Farms and Foxboro Farms CBD.

Smith, 68, has been a Connecticut farmer for 20 years and has grown hemp at his greenhouse facility at 35 Diana Court, since the state program began in 2019. He sells hemp wholesale, or uses it to make goods such as CBD oil, gummies and topicals.

Like many of his peers, Smith said he is interested in converting his hemp operation to adult-use cannabis production, but state law doesn’t give him direct access to that market.

The recreational marijuana law passed last year allows the state’s current medical cannabis growers to apply for a hybrid license so they can also serve the adult-use market; hemp farmers don’t have a similar option. There are also no license types that give hemp farmers priority to enter the recreational market.

That means out-of-state cultivators will likely continue to expand their operations in Connecticut while local farmers and growers get left on the sidelines, Smith said

“I’m frustrated because I’m basically being shut out of this process, at least at this point,” he added.

Smith and other hemp industry advocates are lobbying state lawmakers to give them better access to the adult-use market, and they have support from at least a few lawmakers.

Their efforts are gaining increased attention after New York, which also legalized recreational marijuana last year, recently established a new grow license for hemp farmers.

Hemp vs. cannabis

Hemp and marijuana are grown the same way, because they’re the same plant.

The key difference is the amount of tetrahydrocannabinol, or THC, allowed in the product. THC is the psychoactive compound in cannabis that causes a “high” for users. Recreational cannabis products can have higher THC levels.

“We’re called hemp farmers, but cannabis is cannabis,” said Rebecca Goetsch, owner of Running Brook Farms in Killingworth.

Connecticut’s hemp program began in 2019 but the industry is off to a rocky start, disrupted in significant ways by the pandemic.

By the end of 2021, Connecticut had licensed 98 hemp growers and 49 manufacturers creating cannabidiol (CBD) products like oils and tinctures, according to the state Department of Agriculture.

More than 328 acres have been harvested so far, but hemp production has declined since the program’s start: 74 acres of hemp were harvested in 2021 compared to 134 acres in 2020 and 120 acres in 2019.

The hemp industry was hit by supply chain problems during the pandemic and profit margins have shrunk with greater regional and national competition, Smith said.

Jeff Wentzel, founder of the CT Hemp Industry Association, said hemp farmers went online in May 2019 and had less than a year to network and make business connections before the pandemic hit.

It’s been a struggle to make up for that lost time, he said.

“Farmers don’t Zoom,” Wentzel said of the need for in-person networking events for his industry. “The hemp market is not healthy, it’s declining and it’s very hard to get distribution for it.”

Wentzel said most hemp farmers are interested in growing recreational cannabis. Some even entered the hemp industry to get their feet wet growing the plant.

“They wanted to get some experience while anticipating the recreational market,” Wentzel said.

Goetsch, 46, is one such grower. Through her brand Running Brook Hemp Co., she grows hemp and sells the flower with high levels of CBD to customers to smoke. She said she’ll be applying for a cannabis cultivator license for the state’s recreational program under a new entity.

“We don’t need to mince words, some of us are in it for farming CBD and hemp, and a lot of us got into it just to gain the expertise to grow marijuana,” Goetsch said.

Smith said his business primarily sells wholesale hemp flower to companies that resell it or extract CBD to use in other forms. Prices for these products have dropped recently, and Smith said expansion into legal recreational cannabis could help companies remain profitable.

“I’m a businessman: let’s say I can get $500 a pound for my hemp flower, I can get five times that for the marijuana flower and the costs are exactly the same,” Smith said.

Looking to other states

Wentzel said he wants Connecticut legislators to mirror what a few other states have done to help hemp growers. In February, New York Gov. Kathy Hochul signed a bill allowing provisional cannabis cultivator and processor licenses to go to existing hemp businesses.

Currently, Connecticut hemp farmers have no special access to the state’s adult-use market. They can apply for a micro-cultivation license but they will have to win a lottery and compete with the general public, unless they form a joint venture with a social equity partner.

In the first lottery round, only two general and two social equity licenses will be granted to micro-cultivators, which can have 2,000 to 10,000 square feet of grow space.

The state’s four current medical marijuana producers — all large out-of-state operators like Massachusetts-based Curaleaf and Verano Holdings Corp. of Chicago — can apply for a hybrid license to serve both markets. They are also able to significantly reduce their hybrid license fee by establishing social equity joint ventures — a part of the law that was created to help diversify the industry.

Smith said he predicts the major medical marijuana growers will produce almost all of the state’s recreational cannabis.

“The way we see it, 95% to 99% of the flower grown will be by out-of-state corporations, whether they’re teaming with a social equity partner or not,” Wentzel said.

With existing expertise in growing the product, farmers like Goetsch and Smith say they would be able to get up and running quickly. That would help fend off any potential product shortages when adult-use sales kick off, possibly by the end of this year.

“We’re really set up for this — we’re turnkey ready,” Goetsch said. “We are the state’s craft cannabis producers.”

Kaitlyn Krasselt, a spokeswoman for the Department of Consumer Protection, which regulates the cannabis industry, issued the following statement when asked about hemp growers’ concerns and desires.

“If lawmakers contemplate amending the law to allow licensed hemp growers to obtain cultivator licenses without going through the lottery process, they might want to consider whether such a policy shift would undermine social equity goals, the potential for market saturation and the issues that could arise as a result,” she said.

Legislator support

Hemp farmers have some support at the state Capitol.

State Sen. Cathy Osten (D-Norwich) said she’d like to see hemp farmers included in any discussion about growing recreational and medical cannabis in the state. She said she recently voted “no” on a General Law Committee bill that included a slew of suggested changes to the state’s adult-use cannabis law because it didn’t include language giving hemp farmers better access to the industry.

“My opinion is they’re not recognizing the value of the hemp industry as it relates to marijuana,” Osten said. “I pointed out that both New York and Massachusetts have passed inclusion bills to allow hemp to be considered and have them be a part of the recreational and medical marijuana worlds relative to growing, distribution and retail.”

Despite concerns from state agencies, Osten said the inclusion of hemp farmers hasn’t resulted in oversaturation in other markets.

“My understanding is that the Department of Consumer Protection says if they include the hemp industry there will be a flooding of the market, and I do not believe that is true,” said Osten.

State Sen. Christine Cohen (D-Branford) said Connecticut should follow New York’s lead.

“Providing them with the legal standing to grow, rather than shelling out 100% of the work to large, multistate operators, is the right thing to do to support our agricultural community, our economy and our environment,” Cohen said.

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