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Hemp Hubris Meets Harsh Reality

Imperial Valley Growers, County Officials Fell Victim to Market Forces, Mother Nature, and Timing.

Imperial Valley grower Jack Vessey’s 19 acres of hemp now being grown for canna-bidiol, or CBD, on 19 acres in the Holtville area makes up the backdrop of this photo collage, which includes an Imperial Valley College intern working an experimental plot of hemp in 2019 (upper left), John Currier of Imperial CBD Extraction showing the “brains” of his automated CBD press now operating in Imperial (right), and a room full of potential investors and growers listening to speakers at the first and only two-day Imperial Valley Hemp Summit at the I.V. Fairgrounds in September 2019. | FILE AND COURTESY PHOTO ILLUSTRATION
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Hearing Imperial County officials talk about it, hemp was a miracle crop that would turbo-charge the Valley’s economy and create much-needed jobs.

Valley farmers successfully grew hemp for fiber until its cultivation was banned in 1937. Fast-forward about seven decades, and not only was it legal again to grow hemp, but the market was hot, hot, hot.

A closeup shot of a hemp plant flowering on an experimental Imperial County farm circa 2018-2109. | COURTESY FILE PHOTO

Growers in other states were rushing to plant hemp. Processors were extracting cannabidiol and infusing it into a multitude of over-the-counter medications, beauty products, and food and beverages items, and CBD-enriched products were flying off the shelves.

And Imperial Valley growers and officials were dreaming big.

They had wide tracts of prime agricultural land, access to all the water they needed, plenty of sunshine and generations of know-how in making the desert bloom. They envisioned vertically integrated projects with which they could control every step of the process, from seed to market, from cultivation to processing to packaging.

Then came the reality check.

Hubris, bad timing, and glacial bureaucracy meant just one of the projects would eventually get off the ground. The market crashed, crops were left rotting in the fields, and the most ambitious of the projects was torn apart by litigation, bankruptcy, and the sale of assets for pennies on the dollar.

“My deal was over half a million dollars. Some growers lost millions of dollars. It’s one of those life lessons. Even my wife said, ‘You knew better, why’d you do it?’ But my friends were going to do it, and I didn’t want to miss out,” Brawley-area farmer Alex Jack said in a recent interview.

“It was a decision like a 12-year-old would make,” Jack added.

Two years after hemp seeds went into the ground, nearly every party growing or processing hemp in Imperial County had lost large amounts of money and had reconsidered their approach to the crop.

Jack Vessey is custom growing about 19 acres of hemp for a customer from out of town on a plot near Holtville. The crop will be used to harvest CBD from the plants’ flowers. | PHOTO COURTESY OF JACK VESSEY

“The hemp that we grew was for CBD oil,” said John Currier, a hemp grower and part-owner of the Valley’s sole operational press, Imperial CBD Extraction.

“There is a different type of hemp for fiber. That’s going to be huge,” he said.

If there is a future for the crop in the Imperial Valley, it looks to be on the back on the biomass it produces, which can be used in building materials, fiber, and other longer-term goods.

What isn’t as certain is the future of the formerly explosive profit-heavy CBD market, whose ship appears to have sailed to some degree. But that doesn’t mean men like the Currier brothers won’t find their sea legs among the choppy waters.

Will anyone else?

A Slow Burn

California took some baby steps toward industrial hemp cultivation in 2013 with the passage of Senate Bill 566, which redefined marijuana to exclude industrial hemp, and regulated the production of hemp by established agricultural research institutions and commercial growers.

But there was one major issue: The latter section was not immediately effective and was subject to federal approval.

The passage of the 2014 Farm Bill defined hemp as distinct from marijuana, and authorized universities and state departments of agriculture in states that legalized hemp cultivation to regulate and conduct research programs.

However, then-California Attorney General Kamala Harris issued an opinion noting that certain provisions of SB 566 were “inoperative to the extent that they apply or pertain to any form of industrial hemp cultivation not authorized by federal law.”

Commercial cultivation was still not legal.

An Imperial Valley College student intern examines a hemp field as part of one of the college’s agreements with a local grower in 2019 to tie the ability to grow hemp in Imperial County and use Imperial Irrigation District water to experimental programs with educational/research institutions. | PHOTO COURTESY OF IMPERIAL VALLEY COLLEGE

The approval of Proposition 64 in 2016 removed the last major hurdle to industrial hemp production in California. Prop. 64 amended the California Food & Agriculture Code to make those relevant hemp provisions go into effect on Jan. 1, 2017.

But California was late to the party.

Farmers in 15 other states were already growing hemp on a combined 9,649 acres, according to Vote Hemp, a hemp farming advocacy group based in Washington, D.C. Colorado’s growers were cultivating the lion’s share of the crop, with 5,921 acres, followed by Kentucky, with 2,525 acres.

In April 2017, the state Department of Food and Agriculture tasked each of California’s 58 county agricultural commissioners with hemp registration in their respective areas.

Seven months later, in November, the Imperial County Board of Supervisors passed its first policies legislating “Cannabis and Industrial Hemp” in a combined ordinance.

That set up the Agricultural Commissioner’s office as the “enforcement agency” over “industrial hemp activity,” according to the ordinance. Growers that wanted to cultivate hemp in the Imperial Valley for industrial purposes would need to register with the office of Agricultural Commissioner Carlos Ortiz. But other states were faster, and the market was heating up.

The number of states growing hemp increased from 15 in 2016 to 19 in 2017, and total acreage nearly tripled to 25,713.

Two Imperial Valley College interns document the growth of an experimental industrial hemp research plot grown by an Imperial County farmer under an agreement with the college in 2019. | PHOTO COURTESY OF IMPERIAL VALLEY COLLEGE

“Farmers around the country the previous three years made more money growing hemp than they made growing anything else,” Alex Jack said. “When the opportunity arrived here in Imperial Valley, people jumped on it.”

Collapse and Fail

People commonly think that agriculture entails planting seeds, irrigation and harvesting. They’re not wrong. But there is more.

Commercial growers depend on crops for their livelihoods, so their overriding concern is profitability. In short, every crop they plant needs to bring in more money than it costs to produce. It doesn’t make sense to plant or harvest a crop that does not have a buyer. This means that every crop they plant needs to have a “home,” as growers say.

For hemp, this necessitated local processing plants to buy the harvest from growers and extract the CBD oil for wholesalers and other buyers.

“We envisioned about 25,000 acres of hemp supporting half a dozen presses,” said Ryan Kelley, District 4 Imperial County supervisor, and a big advocate for the crop.

Ryan Kelley, Imperial County District 4 Supervisor

The county Board of Supervisors, with Kelley as its chairman at the time, was so bullish on the plant’s promise that it organized a hemp summit with the Imperial Valley Economic Development Corp. in September 2019, which drew hundreds of businesspeople, growers, marketers, and advocates.

But growers and investors had significant hurdles they needed to overcome if they expected to make good on the hype.

Banks were leery of lending money to growers to cultivate what once was a controlled substance.

The Imperial Irrigation District informed its growers in a letter that it would not deliver water to hemp fields because cannabis was listed a Schedule I controlled substance under the Federal Controlled Substances Act.

Interestingly, that letter, dated April 16, 2019, explained how farmers could get around this hurdle: Hemp cultivated for educational purposes or as part of a state pilot research project was eligible for water deliveries. This is how Imperial Valley College got involved.

Northend grower Sutton Morgan reached out IVC’s superintendent, Dr. Martha Garcia, about setting up a research partnership between the college and the Valley’s hemp growers.

The program was funded by a $96,059 grant from Imperial County’s Agricultural Benefit Program, which covered the fees of IVC staff overseeing the research outside college hours. Every participating grower at the time agreed to donate $20,000 to the IVC Foundation for the college’s tiny home student housing project that would be built down the road. The tiny homes project had a ribbon-cutting ceremony in early May.

An Imperial Valley College student intern examines clippings from an industrial hemp research plot grown by an Imperial County farmer under an agreement with the college in 2019. | PHOTO COURTESY OF IMPERIAL VALLEY COLLEGE

Several local businesspeople submitted proposals for CBD presses in Imperial County. Former NFL linebacker and El Centro native Glenn Cadrez and his partner, Kevin Weeks, received a conditional-use permit from the city of Imperial for a facility at 601 E. Barioni Blvd. but did not go forward with the project.

Orange County-based Naturcel Inc. told this newspaper in 2019 it had purchased a 20,000-square-foot warehouse at 920 S. Second St. in El Centro for $1 million to establish a press that never materialized.

And brothers and partners John and Andrew Currier invested about $5 million to build Imperial CBD Extraction on Aten Road in the city of Imperial’s business park. That facility has been the only one to make it to operation.

Sutton Morgan’s project was the most ambitious, the one where so many local growers bet on what seemed a sure thing. He partnered with Mark Samuels of Escondido to form Primordia LLC, which invested “millions of dollars” in a “vertically integrated” facility that was to process “biomass, dry, mill, grind, extract, and produce THC-free (CBD) distillate or water-soluble powder” on an “industrial scale” outside Brawley city limits, according to Samuels.

Their bold claims reflected the hemp fever sweeping the Valley.

“Primordia LLC announced its official launch into the rapidly growing industrial hemp and CBD market with over 10,000 acres of legacy farmland and infrastructure ideal for hemp cultivation in the Imperial Valley,” read a press release from August 2019.

“The Imperial Valley is the best place in the world to grow high-quality hemp. In short order our team has built a vertically integrated business with operations onsite including genetic development, seed propagation, cultivation, harvesting, drying, milling, testing and extraction at scale,” it continued.

Local growers planted slightly more than 13,983 acres of hemp on 242 plots, according to the county Ag Commissioner’s office. Some 12,509 of those acres on 194 plots had the research exemption — more than 89 percent.

Thirteen IVC students participated in the research program, according to IVC Dean of Economics and Workforce Development Efrain Silva.

That program then ended after the IID informed growers in a letter dated April 26, 2020, that they could now order raw water for hemp cultivation, thus ending the need to be tied to an educational institution.

Vendors hawking the latest in CBD products, industrial hemp seeds, and all manner of hemp-related products draw in interested passersby and potential investors during the two-day inaugural and only Imperial Valley Hemp Summit at the Imperial Valley Fairgrounds in September 2019 organized by the county of Imperial and the Imperial Valley Economic Development Corp. | CALEXICO CHRONICLE FILE PHOTO

But try as they might, Imperial Valley’s growers were too late to the game.

“It seemed like we could have gotten in on the ground floor,” Supervisor Kelley said in a recent interview. “The hemp conference made money, as predicted. What happened after the hemp conference; the cost of distillate and isolate tanked.”

Growers working with Primordia LLC were left in the cold.

“There was a local family that was going to put in a processing plant. They just never followed through with the plant that they were going to build,” said Alex Jack, who was a member of a hemp collective working with Primordia LLC.

Jack was referring to Primordia, of course. He planted 152 acres of hemp with the understanding that Primordia would buy and process it all. If that plant was not ready, Primordia would find another home for the hemp.

Jack faced other issues. The CBD oil concentration in his crop was too low and the cost to extract that oil was too high, he said.

One of many panels of industrial hemp industry experts speak during the first day of the two-day Imperial Valley Hemp Summit at the Imperial Valley Fairgrounds in September 2019 organized by the county of Imperial and the Imperial Valley Economic Development Corp. | CALEXICO CHRONICLE FILE PHOTO

Brawley farmer Steve Benson said he planted several hemp test plots on about 50 acres. The results were not encouraging.

The Imperial Valley’s long, hot summers and autumn daylight hours worked against the crop, which was better suited for places like Colorado.

“It’s very photo-sensitive,” Benson said. “For us, the summer was too hot to grow. If you plant in fall, it grows too small. When it gets under 12 hours a day, it affects the flowering mechanism of the plant.”

As well, hemp seeds were significantly more expensive, costing as much as $1 per seed, whereas an entire pound of alfalfa seeds cost $2, Benson said.

Holtville grower Jack Vessey worked with Primordia. He declined to say how many acres of hemp he planted, how much money he lost in the venture, or what, exactly, happened with Primordia.

“I was part of the collective as a grower. They were to market our product. It didn’t work out,” he said. “For me personally, when I went into growing hemp, I didn’t look it as a major windfall. I looked at it as another spring crop option. I was prepared to take a loss if it didn’t work out.”

When Primordia LLC collapsed and filed for bankruptcy, its assets were acquired by California-based Green Hygienics Holdings, and individuals involved in Primordia are currently being sued by a vendor that did not get paid, according to several people familiar with the issue. Multiple calls to its founders were not answered.

A More Measured Future

Imperial CBD Extraction’s John Currier also struggled with his 250 acres of hemp at his growing operation, Badland Provisions.

Imperial CBD Extraction co-owner and founder John Currier shows off the “brains” of his operation, the computer system that monitors and controls all the other equipment in the cryo-ethanol cannabidiol extraction process, during a May tour of his facility in the city of Imperial. | CAMILO GARCIA JR. PHOTO

“The traditional growing time is over the summer, but that turned out to be a bust. It was too hot,” Currier said. “We had some success in the fall. We’re going to give it another shot next fall.”

And despite his experiences with Primordia, Jack Vessey is another local grower who hasn’t given up on hemp. He is presently growing hemp for CBD on a modest 19 acres in the Holtville area.

“I think there’s still a future in hemp as a crop option. I was just hoping to have another crop to make money,” he said. “The gentleman we’re growing for right now is out of town. We’re custom farming it for a guy out of town.”

The true success story in all of this is at the Currier brothers’ cryo-ethanol CBD processing facility, which seems to be doing well. This past week, the Imperial County Young Farmers and Ranchers toured the facility.

Imperial CBD Extraction opened in June 2020 and recently acquired Good Manufacturing Practices certification, which is recognized by the U.S. Food and Drug Administration as high-quality processes used in the ingestible supplement market.

Early on, the business was well-placed to produce hand sanitizer when there was a local shortage at the start of the pandemic. The plant processed all of the hemp that Badlands grew as well as that of other growers in the state.

Imperial CBD Extraction has 18 full-time employees running two shifts and sells wholesale distillates and isolates to various brands, researchers and doctors in Europe, Currier said.

The money wasn’t so much in the cultivation, he said. It has been in the processing, marketing, and distribution.

“As a farmer, it seems like we make the least amount of money on CBD,” he said. “Brokers and grocery stores, they make more money on CBD than the farmers.”