Going to Where the Puck Is: A Much Needed Paradigm Shift Toward a Whole Plant Approach

You’d never make it in the NHL if you were a defender who always followed the puck. It’s not about where the puck is now, but all about anticipating where the puck is going. The same is true for the people thinking about the hemp industry as the cannabinoid industry. It’s time to shift toward a supply chain perspective.

In no way do I mean to be the bearer of bad news, but the CBD market is saturated. How could there be an inundation of processing, brands, and supply, yet no one realizes it? Because right now, it’s not a traditional industry. It hasn’t been commoditized by mainstream players. Up until this point, the big companies that own mainstream global distribution, the Nestles and Krafts of the world, have only dabbled in the hemp industry. When they enter, they will structure it in such a way that buyers and sellers meet up and marry as they do in every other industry, with every other product.

I’d rather be the backbone for the industry from a supply chain perspective. And the supply chain starts with genetics. Right now, when people talk about hemp seed, they think in terms of grain, fiber or CBD varieties. I don’t see it that way — and neither does the Farm Bill. It’s a hemp crop.

If I plant 100 acres, I’m going to get more than enough fiber and grain. Those are your mashed potatoes. Delicious on their own. And from that one crop, I’m going to get more than enough CBD to make it worth my while to sell into the marketplace. So here’s the change of perspective: let CBD be the gravy on top of the potatoes. You don’t need it, but it sure is nice to have.

This is the paradigm shift we need in how we think about this industry.

The sooner we embrace a whole-plant approach, the faster this industry will start to take root and position hemp as a truly competitive industrial commodity.

Take extraction, for example. To date, players in the hemp industry have saved and scraped to pull together the capital for equipment and facilities. But when a Nestle or Kraft decides to go all in, likely after the FDA formalizes their ruling on hemp-derived extracts and compounds, what are the chances they’re going to use that supply chain?

They’re likely going to do it themselves, using their trusted partners. These multinational corporations can go out and buy the highest-quality equipment and facilities with a rounding error. In a few months, they’ll be producing more than anyone else in the country and already have the global distribution infrastructure that today’s extraction companies will struggle to compete with. It’s all about understanding where you fit in the supply chain.

Montana, a state with great farmland, a moderate climate, and experienced generational farmers, went from growing zero acres of hemp to 20,000 in less than two years. In 2018, Montana farmers entered into a contract with companies to produce hemp for CBD. They did, the crop was harvested, and when the time came nobody bought it. The contracts weren’t fulfilled. Why? There was no extraction or processing in Montana. Someone could have driven the crop to Northern Colorado, but they didn’t. To this day, huge bales of hemp sit untouched and biodegrading on Montana farmland. They’re called marshmallows.

The Montana growers feel burned, but the issue is that they’re grain farmers. They were eager to grow for CBD because they believed they’d make 20 times what they could for soy. But it wasn’t true.

The moral of the story? Do what you do best. If you’re a grain farmer, grow hemp for grain. You’ll get some biomass you can sell for CBD, but again, let that be the gravy.

I see a lot of people going to where the puck was three years ago. The whole plant approach is how we get hemp to become the competitive industrial commodity we all believe it can be. It’s all about anticipating where the puck is going next — and being there when it arrives. 

This originally appeared on Hoban.law.