March 2020 is seen as one of the unluckiest times to have launched a business as the COVID-19 pandemic crippled entire industries practically overnight.

But that’s when a group of Texas oil and gas businessmen launched its hemp business, Delta AG.

Hemp is a cannabis sativa plant containing 0.3% or less THC, the compound that produces a high in marijuana. It’s legal in all 50 states and is found in products as wide-ranging as cosmetics, clothing and electric vehicles.

Delta AG planted its first crop of over 5,000 acres of hemp across Colorado, Kentucky and West Texas in May 2020 and just harvested its second crop of over 10,000 acres in October.

In less than two years, the business has reached profitability. It did $16 million in revenue in 2021 and is projecting $100 million in revenue for 2022, and Delta’s founders say they hope to be a multibillion-dollar company by 2025.

“We have not scratched the surface yet,” said John Paul Merritt, chairman of Delta AG.

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The founders – Merritt, chief operating officer Nick Strawn and CEO George Overbey – met working at Dallas-based independent mineral investment company Pony Oil, which was founded by Merritt and generates over $100 million a year in revenue. They noticed similarities between the hemp industry and the oil and gas business in the early 2000s, Merritt said.

“The land-based production of it. The yield is on a per-unit basis, like crude oil. And it had a bunch of revenue streams that could be pulled off of it,” Strawn said. He previously incubated two cannabis companies with the support of Pony Oil.

2019 brought a particular overzealous hemp season. From 2018 to 2019, total acreage of hemp planted nationwide jumped from about 32,000 acres to more than 146,000 acres, according to the U.S. Department of Agriculture. Hemp biomass prices plunged from $40 per pound to $10 per pound, according to Bloomberg.

“We knew that with the price of hemp crashing and our farming practices, we could be the lowest-cost provider of hemp and take market share,” Merritt said.

The company has 10 employees at its headquarters in Dallas, as well as some employees working on the lobbying side at an office in Washington, D.C. It has about 20 workers at any given time at its processing facilities in Colorado, Kentucky and West Texas. Each facility also works with 10 to 12 farming partners or producers to grow the crops.

Delta AG is unique because it’s the largest full-service producer and processor of hemp in the U.S. The company controls every part of the process, from the farming of the hemp to the manufacturing to get it to a marketable state and, finally, to bagging and shipping orders. This allows it to cut down on costs and provide a consistent supply, the team said.

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“We saw in some of the economic variables that came with COVID that there was an opportunity for us to grow a business when many were looking for a way out,” Strawn said.

“It gave us the opportunity to accelerate the business model and grab a foothold,” he said.

While most hemp companies choose to focus on either hemp grain, hemp fiber or hemp flower, Delta chose to plant tri-crop varieties so it can do all three. It harvests hemp flower for CBD, body care and pharmaceutical products; hemp grain for animal feed, supplements and cosmetics; and hemp fiber for textiles, paper and insulation.

“We focused on a part of the supply chain that no one else really has,” said Overbey, who’s a former co-founder and chief operating officer of Pony Oil, where he led the deployment of over $1 billion of capital into the energy industry.

The global industrial hemp market size was valued at about $5 billion in 2019 and is expected to reach $18.6 billion by 2027, according to Allied Market Research.

Besides the opportunity to scale a business similar to what they did with Pony Oil, the Delta AG team said they like that an acre of hemp sequesters, or absorbs, about 11,000 pounds of CO2. Delta AG hopes to be one of the largest C02 sequestration companies in the U.S. in the next two years and one of the largest carbon credit producers in the world. They hope companies like American Airlines will want to partner with them to reach their goals for offsetting their emissions.

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To sum up what they bring to the industry, the men say they saw an opportunity to bring their expertise in management to an industry that is still “green.”

“It’s mainly a Wild, Wild West atmosphere,” Overbey said. ”It’s largely run by brokers focused on the CBD green rush of 2017, which led to the oversupply in the market.”

Delta AG thinks it can avoid this by controlling every aspect of the supply chain. The team found its farming partners by going from barn to barn explaining that it wanted to build out the whole supply chain, not just one part. Now the company believes it has the scale to talk with large companies like Pepsi and Coke to provide them with raw goods, Overbey said.

“There was a cloud hanging over the industry – some of that was from green rush farmers who didn’t get paid. They didn’t have the right management practices in place. We want to bring a corporate environment to the industry,” he said.

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