South Dakota’s hemp industry takes shape one year into legalization despite challenges
“There are so many things that we can do with this product. It’s unbelievable. Whether it’s in the CBD oil extraction or the fiber end of things, it’s unbelievable what you can do with hemp,” Oren Lesmeister said, noting there are more than 17,000 products that are made with hemp.
MITCHELL, S.D. — After the first year of hemp being legalized for South Dakota producers to grow and sell as a commodity crop, agriculture experts provided some useful tips Wednesday, Aug. 18, to help grow the industry.
Derrick Dohman, a hemp producer and sales manager of Horizon Hemp Seeds in Willow Lake, South Dakota, delved into the process of growing the crops, suggesting the best practice is to “plant it, and wave goodbye” until harvest. Dohman was one of four agriculture experts who hosted a discussion on the state's launching of the hemp industry during the second day of Dakotafest in Mitchell, South Dakota.
“We’ve seen tremendous success. Some fields look absolutely phenomenal in places that have had some more moisture than others,” Dohman said, noting his hemp plants received about 5 to 6 inches of rainfall this year, helping produce 11-foot tall plants. “Fertility is kind of hit and miss depending on what was planted there in previous years. There is nothing you can spray on this crop, and the plant itself is your weed control. The trial is in the harvest. So we are going to learn a lot this year.”
Dohman stressed to the crowd gathered around the panel at Dakotafest that cannabidiol, commonly known as CBD — which has become a popular pain relieving alternative — isn’t the only avenue to produce hemp and flip a profit.
CBD is one of many chemical properties found in cannabis and is derived from hemp. What differentiates CBD from cannabis, or marijuana, is that it lacks a certain level of tetrahydrocannabinol (THC) that’s found in marijuana, which is the main psychoactive compound in cannabis that produces the “high” effect. Under state and federal law, CBD that’s legally sold and distributed can’t have over 0.3% of THC.
“A lot of people ultimately think CBD right away. They don’t realize there is a grain and fiber industry, which has been around for a long time,” Dohman said. “Not saying one is better than the other, but do your homework on it before you plant. It’s still the wild west out there with some guys trying to sell bad genetics to make a quick buck, so make sure your seed is certified.”
In its first year of legalization, Derek Schiefelbein, the state’s Department of Agriculture and Natural Resources program manager, said the state issued 19 licenses for producers who are growing the crop. According to Schiefelbein, there were 2,240 acres of hemp that were planted in 2020.
“Some people bowed out with the hot, dry weather. But some folks put some acres in that did get some rain and germinated,” he said. “A little bit of that is for the CBD hemp, while the rest is grain and fiber hemp.”
In states where hemp production has been legal, Schiefelbein said producers were primarily growing the crop to be processed into CBD. However, South Dakota saw more producers cultivate the crop into fiber and grain that can be used in foods, clothing and a long list of other products.
Oren Lesmeister, a member of the South Dakota Farmers Union Board of Directors, has high hopes for the future of the state’s hemp industry, highlighting the wide variety of uses of the plant.
“There are so many things that we can do with this product. It’s unbelievable. Whether it’s in the CBD oil extraction or the fiber end of things, it’s unbelievable what you can do with hemp,” Lesmeister said, noting there are more than 17,000 products that are made with hemp. “This product has been around forever. It’s used in brake pads, clothing and so many other things.”
Challenges hampering launch of state’s hemp industry
For a successful hemp program to develop in the state, Dohman said more progress needs to be made on the banking and insurance side of things. As hemp went through years of legal grey areas, some banks have not jumped on board with the state’s recent legalization of the plant. That has complicated business for Dohman, as he’s had to work with a North Dakota bank to get his hemp operation running since he couldn’t find one in his area that would do business with him.
“We’ve tried to come into the state and we can't do business with them. I know multiple other states around us are welcoming hemp growers with open arms,” he said. “It surprises me that they would threaten customers who have been with them for 40 to 50 years. I think it will get there, but it comes back to education to clear up some of that grey matter otherwise it will never move forward.”
While growing hemp crops has its own set of challenges, processing the plant into the various ways to be used by consumers for producers to flip a profit can be just as difficult.
Ken Meyer, vice president of AH Meyers and Sons near Howard, has been growing and processing hemp primarily into CBD oil at his operation. On the processing side, Meyer, who was the first entity to receive a South Dakota hemp processing license, said he offers hemp producers to cash out by selling the hemp biomass, which includes the stalks, seeds and leaves of the plant once the flowers have been cultivated.
“We are able to provide extracting CBD oil for hemp producers. One thing that’s really different with hemp crops, is that most people have to go and sell their own product if they want to do better financially. Most people and farmers take their product all the way to a retail entity,” Meyer said.
While Meyer said the hemp market has been volatile at times in recent years, he’s optimistic for the future.
“In general, the market was really high three years ago. Prices were up for both biomass and oil, but they are down,” Meyer said. “The good news is indications are that it has bottomed out and is climbing up as the market sorts itself out and more become involved.”