When Matt Cyrus grew about 30 acres of hemp on his central Oregon hay and cattle farm four years ago, the cannabis plants — rich in cannabidiol, or CBD, a trendy wellness product — sold for about $40 a pound. That earned him a tidy profit. He planted 90 acres in 2019, hoping to make even more money.

Thousands of conventional farmers, marijuana growers and rookie entrepreneurs likewise rushed to plant hemp that year, eager to cash in on a newly legal crop. But rather than making a fortune, many lost one as their crops failed and the skyrocketing hemp supply depressed prices.

Cyrus now has hundreds of thousands of pounds of hemp bagged up in his barn that he can’t sell for a break-even price. He’s not planting hemp this year, and he’s not alone.

“There’s a lot of guys that just plain aren’t raising it this year,” said Cyrus, president of the Deschutes County Farm Bureau. “And whether they go back to it or not — who knows.”

The industry is rebalancing, and farmers are resetting their expectations. Agriculture experts caution that it could take years for the U.S. hemp market to mature and stabilize. They say hemp likely will remain a specialty crop, like cherries or tulips, rather than competing with major commodities such as corn and soybeans.

“I think that’s the point that a lot of people miss,” said Tyler Mark, an assistant professor of production economics at the University of Kentucky. “In the grand scheme of things, this is a very small crop that has a long way to go to get to where it’s really relevant and competitive.”

Hemp can be turned into a huge variety of products, from rope to floorboards to granola and dog treats. Most growers in the United States have in recent years aimed to grow and sell plants for their CBD, although some farmers grow hemp for its grain or fiber.

It’s hard to find complete national data, but industry analysts say hemp production appears to have shrunk dramatically since the heady days of 2019.

About 107,000 outdoor acres were licensed this year, according to Hemp Benchmarks, a Stamford, Connecticut-based hemp industry data provider. That’s down from 580,000 licensed acres Hemp Benchmarks identified in 2019, a more than 80% drop.

Indoor space licensed for hemp production has grown, hitting more than 168 million square feet this year, Hemp Benchmarks found. But that’s equivalent to about 3,800 acres, hardly a big dent in the decline.

Some hemp advocates say the U.S. Food and Drug Administration has stifled the industry. The agency won’t allow the sale of CBD as a food product or dietary supplement, because the compound is an approved ingredient in a prescription drug used to treat childhood epilepsy.

That policy has prevented many national brands from selling CBD products, said Jonathan Miller, general counsel of the US Hemp Roundtable, an industry group. “I blame the production decline and the pricing decline entirely on the FDA,” he said.

Policymakers in some states have tried to help farmers find new markets for hemp. Colorado allows hemp CBD to be added to food, for instance. Montana allows hemp to be added to animal feed. Illinois lets licensed marijuana businesses buy or process certain hemp products, including CBD oils.

Yet state policymakers also are cracking down on the latest trendy hemp product: delta-8 THC. It’s a version of delta-9 tetrahydrocannabinol, the marijuana compound that gets people high, that can be made from CBD oil.

“States are banning this stuff left and right,” said Griffen Thorne, a Los Angeles-based attorney for law firm Harris Bricken and a member of its corporate cannabis team. At least 12 states ban the substance, according to Hemp Industry Daily, a trade publication.

Back in 2018, Kansas Farmers Union President Donn Teske organized some information sessions on growing hemp and invited a Canadian hemp farmer he knew to participate. The sessions emphasized that it took time for Canadian hemp markets to develop, Teske said, and advised Kansans to secure buyers before planting a hemp crop.

Attendees weren’t always receptive to that advice, Teske said. After years of low commodity prices, many farmers were desperate to believe hemp was a guaranteed moneymaker. “It was just a frenzy out there,” he said.

Hemp is a tricky, labor-intensive crop, however. Many growers in 2019 lost plants to pests and bad weather. They had to destroy plants that grew “hot,” meaning the THC levels exceeded the legal limit of 0.3%. They faced high harvest costs and a shortage of drying space. And many couldn’t find buyers or failed to sell their hemp for a profit.

“When it came to harvest time, there wasn’t the demand that everyone had expected at the beginning of the year,” said Miller of the Hemp Roundtable. “And as a result, prices crashed. We saw a lot of bankruptcies. And then COVID hit.”

Teske said the boom and bust reminds him of a scam during the 1980s farm crisis. “I lived through another one of those frenzies 30 years ago, farming,” he said. “Jerusalem artichokes: the exact same frenzy.”

Mountains of hemp grown over the past two years are now bagged and in storage, awaiting better prices. Cyrus said that anecdotally, he knows of at least a million pounds of hemp plants and thousands of kilos of hemp oil sitting in storage in his area.

Kentucky issues special licenses to growers who are storing past hemp crops rather than planting new ones. In May, about a third of the 445 growers in the state had storage-only licenses, said Sean Southard, a spokesperson for the Kentucky Department of Agriculture.

Some once-optimistic farmers don’t even have a harvest to store. Ajit Singh planted more than 400 acres of hemp in southern Oregon in 2019. He couldn’t sell any of it. Some of the plants were inadvertently fertilized, rendering them seedy and worthless. The rest were killed by frost.

Last year he planted 50 acres. He couldn’t sell that crop, either, so he sold his farm instead. “I’m not growing anything right now,” Singh said recently. “I’m done.”

Going big on hemp was a mistake, he said. “Greediness is a curse.”

These days, many hemp CBD growers are taking a more artisanal approach. “More people are getting interested in growing smaller amounts and trying to focus on quality over quantity,” said Phillip Alberti, a University of Illinois extension agent involved in a multi-state hemp data project.

Artisanship can pay off. High-quality hemp CBD flower sells for about $300 per pound, according to Hemp Benchmarks. CBD biomass — which includes leaves, buds and some stalks — sells for about $0.48 per percent CBD per pound.

The growth in indoor or greenhouse space licensed for hemp production shows the CBD market’s shift toward flower, as farmers aiming for that product tend to cultivate their plants indoors, said Ian Laird, chief financial officer and general counsel of Hemp Benchmarks.

Entrepreneurs also have found a controversial new use for CBD oil. The extract can be processed into delta-8 THC, an intoxicant. Delta-8 products are showing up in gas stations, convenience stores, natural food stores and CBD shops, where kids as well as adults can buy them.

Some hemp advocates and lawyers for the cannabis industry say delta-8 THC products are legal, as the 2018 farm bill legalized all hemp derivatives and isomers. But the U.S. Drug Enforcement Administration has classified the cannabinoid as a dangerous drug.

“Most state laws are either unclear about it or don’t expressly ban it,” Thorne said. But that’s changing, as more and more states crack down on the substance.

Kentucky entrepreneurs who manufacture, market or distribute delta-8 THC products could face prosecution, according to an April letter sent by the state agriculture department to hemp licensees. “Because there are no … exemptions for Delta-8 THC in the Kentucky Controlled Substances Act, those substances remain prohibited by state law,” wrote Joe Bilby, general counsel for the agency.

California legislators are considering a bill that would tighten the definition of “industrial hemp” by requiring hemp extracts on store shelves to have a THC concentration of no more than 0.3%. Thorne said it would effectively ban delta-8 THC extracts.

A bill recently passed by the Oregon legislature would ban retailers from selling delta-8 THC to minors, give state marijuana officials more authority to regulate artificial cannabinoids, and require state regulators to limit the THC concentration of hemp products.

It’s important for regulators to keep in mind that delta-8 THC isn’t the only novel cannabinoid out there, said Steven Crowley, hemp and processing technician for the Oregon Liquor Control Commission. “Delta-10 has started to make the rounds.”

Hemp is still so new that growers face a host of basic challenges. For instance, U.S. researchers are just starting to develop seeds that deliver a consistent crop. The lack of reliable seeds, planting calendars and tried-and-true growing techniques also may be holding markets for all kinds of hemp products back.

Some farmers are growing hemp for fiber or grain. But that share of the market has a long way to go, industry experts say. Processing facilities are scarce, supply chains have yet to develop and U.S. hemp farmers are competing with more established growers in places such as Canada and China.

State policymakers are trying to help more industrial hemp products catch on. Last year, for instance, the Colorado governor’s office, agriculture department, Colorado State University, local growers and outdoor clothing company Patagonia launched a hemp fiber pilot project that’ll continue this year.

The goal is to figure out whether Patagonia could source hemp from the United States, rather than China. “What we’re going to learn from this is going to be tremendous,” said Dion Oakes, a longtime hemp farmer in Colorado’s San Luis Valley who grew over 300 acres of hemp for Patagonia last year. His crop will eventually be made into Patagonia products, he said.

Colorado’s agriculture department also wants to buy two decortication machines — which prepare raw hemp to be made into yarn and other products — and set them up for farmers to use.

“Whether that particular project is successful or not, that’s what needs to happen, not only in Colorado but for the nation,” said Brian Koontz, who manages the state’s industrial hemp program.

Mark of the University of Kentucky said he thinks there’s a fairly bright future for hemp fiber and grain production. “It just takes a long time to develop those supply chains,” he said.

Right now, fiber yields in the United States are quite low, Mark said. With few textile mills in the U.S., making, say, fast-fashion hemp T-shirts, is unlikely to be profitable here. High-end clothing companies such as Patagonia could be a better fit, he said, although they operate on a smaller scale.

“Patagonia is not going to move enough product to bring in hundreds of thousands of acres [of hemp],” Mark said.

Farmers aren’t as gung-ho about hemp as they used to be, Oakes said, because so many have been burned by it. But farmers will get back in as the industry matures, he predicted, and as they become more able to find processors, sign reliable contracts and grow hemp to buyers’ specifications.

“That’s where we need to be at for the hemp industry,” he said. “It’s getting closer to that point.”

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