2.5 Years Into Hemp, What Have I Learned? Fortunes Made, Lives Ruined, Families Bonding In Pursuit Of American Dream

The last two and a half years of my life have been pretty extraordinary. Having transitioned from growing medical cannabis into the extremely competitive (and now corporate) world of cannabis as a commodity has given me an incredibly unique perspective for which I am very thankful. Many of the people reading this will probably have shared a similar perspective coming from medical cannabis or recreational cannabis to industrial hemp, but no two people will ever have had the same experiences, so hear my story.

I get asked A LOT about what I've seen the market do in the last couple of years. People tend to listen when I speak about it because I am no bullshit on this subject. There is no reason to add any BS to the mounds of it we face everyday as participants in the industrial hemp industry. I'm very happy to share my experience with people, and I thought it to be an appropriate time to share it with anyone else who might want to listen.

What makes me qualified to chime in? I don't know really. You get to make that decision in the end. What I will do is share a few of my qualifications and achievements really quickly. If you so choose to read on, I promise I'll make it as interesting as I can!

Over the last two and a half years Amota Group successfully brokered and sold a few hundred thousand pounds of quality CBD material to processors from California to Colorado. Not a huge amount by any means, but the margins we made were nice!

We grew 8 acres in 2018, took all of it to isolate, and sold it while the prices were still fairly high... by 2017-2018 standards at least. Full disclosure, what got my partners into all of this in the first place was one of the biggest bullshitters we ever met. Yes it was about isolate, and yes the numbers were astounding. The numbers made sense, his capabilities and scale is what didn't. Luckily, we figured it out quick and sifted through everything to find the real players.

We stayed out of the flower market for the most part until this year, when we successfully dried over 1 million wet pounds through our drying, processing, and packaging facility in Winston, Oregon (come visit). Currently, we have over 200,000 dry lbs being bucked and trimmed to order. Our distribution is about 1,000 lbs per week and steadily increasing. At what price you ask? $100 - $250 is where your flower will move quickly in the marketplace right now, I know that is hard to hear but it is the truth. YES, people are absolutely selling it for $250 - $500. More if it is hand trimmed, BUT if you want it to fly out the door then I give you the "saturation" prices of October and November. Feel free to kill the messenger and tell me I'm wrong. I understand.

We created www.hempexchange.com in early 2019 (you can see flower, biomass, and extraction market prices on the site) and have accumulated well over $10 million dollars in listings. Sales are steady, the digital marketplace model is still on the up and up. There is a lot to tackle in this space and we've had a blast doing it. We will be at MJBizCon in December so come check out our booth and have a chat.

OK! If you stuck with me through that then let me get down to it. This market is a rollercoaster ride. There's a few things I want to say that will help those of you just getting in to make the right decisions, and those of you who are deep into it, gain some perspective from a fellow professional navigating the waters.

Relationships

I want to start with relationships in this industry. The right relationships are absolutely crucial. They literally can mean life and death. I say literally because a friend of mine had his partner take his own life this year. Yes, it was the story you heard about the farmer(s) in Southern Oregon being ruined because they wet baled, and yes it did happen to at least 1 farmer. Right down the road, less than 20 minutes from my home. My friend now has no partner and a mountain of problems due to their decision to wet bale close to 400 acres without a proper industrial scale drying solution.

I am incredibly thankful for my two partners who have worked tirelessly during our time in this space. One running another business of his own, and the other being management at another job. Together, we have pivoted at all the right times to what we believed to be the next evolving sector of this industry. First growing, then brokering, now drying, flower, and co-packing/distribution.

Picking the right companies and people to go to war with in this space will ultimately be an enormous part of your success. As Paul Murdoch from Horn Creek Hemp once told me as I sat in his office trading stories... "Why can't we all just make it easy?" Wise words, if you can "make it easy" for yourself and those around you, it will lead to your success. The farmers, processors, dryers, retailers, distributors, and brokers really all want the same thing in the end. A less complicated path to profitability. Which brings me to....

Brokers

Such a touchy subject right? Listen, I'll make something very clear. I am a broker for life. I'll broker any deal to make some money, it is the American way. If you really believe brokers aren't necessary in this world then you don't really know how the system in this country works. You think that those bananas you buy at the grocery store are being dropped off in a box by Chiquita herself? There are layers and layers of brokering going on all around us everyday.

The real issue it that brokers in this industry have the tendency to make things... complicated. That I agree with, but I still believe and know that good brokers are essential. Without diving super deep into this hole let me say this.

When dealing with a broker they need to has an actual company incorporated and have a license to handle or work in hemp. They should have solid SOPs, be well educated about the market, have VERY solid paperwork/contracts to introduce you to, and not have BBQ sauce stains on their shirt.

Brokers CAN be a huge asset to your business. It is just imperative you do your homework and get some references before you potential get your time wasted in a big way. We've all been there. I admit it, I chased a 10,000 kilo per month order once or twice in my life. Shit, I'm glad that I did, taught me some things. Maybe some of you are reading this and saying "This guys never done a 10,000 kilo order!? What a rookie!" Well my friend, good for you, I truly truly mean it, that is some shit you pulled off and you should be proud as hell.

CBG, Industrial Drying, Extraction... Where is the future of this industry going?

Most people reading this by now are probably as disappointed with the USDA Interim rules as the rest of us. It isn't an ideal release, but have faith. If there is something that farmers, extractors, and processors in this industry don't lack, it's resilience. My opinion is that the rules will change, either after public comment or after nobody follows them. Then again maybe they don't change and the massive shift to CBG genetics will continue. Either way you should take the time to make your opinion heard by commenting on the USDA's website.

The CBG shift is real. Several of our drying clients this year have already had conversations with us about their intentions to pursue CBG next year because of these unfavorable rulings by the USDA. Farmers just getting in are also visiting and inquiring about our space for their 2020 CBG crop. Survey says that farmers will continue growing the worth out of every cannabinoid they can get genetics for and the cycle will continue. Lucky for us there are 100s of them!

Drying is going to become industrialized and at a MASSIVE scale. I'm talking millions of wet pounds dried per day scale. It is inevitable. This is already being built out in anticipation for the FDA and USDA allowing cannabinoids in food & beverage. When that domino falls the whales will enter the market and their appetite will be insatiable. Think Coca Cola, Proctor & Gamble, Johnson & Johnson, Nestle, and L'Oreal. These guys and gals are the ones everyone is waiting for to crash the party and spike the punch bowl, sending us all into a ravenous frenzy! Sorry... but their entry excites me. Extraction will need to follow suit at scale to coincide with the drying, but wait, what about extracting the plant wet? Yes, that is a reality but there is nothing I've seen to lead me to believe it is something we will be doing soon (at scale at least). I could be wrong, I haven't SEEN EVERYTHING, but I do try to stay in touch.

Conclusion

Whichever niche you've chosen in this market my words of advice are stay nimble. I know there are a lot of extractors out there, gasping for air as they drown in debt from massive investments they took for incredibly expensive machines. Stay the course.

I know there are farmers that left 100s of acres in the field this year because there was not enough drying infrastructure. Plan better for next year, and stay the course.

I know there are brokers chasing the unicorn deals and trying to make a dollar here, there, wherever. Button yourself up, be as professional as can be, and stay the course. Survival and resilience is the name of the game.

I know there are farmers out there that are holding out for that target price that they so stubbornly won't come off of. Let me say this, you SHOULD have all your numbers figured out. All your costs for every single thing you did as a farmer should be logged and organized in data sets. Don't hold on for too long, I offered $35/lb for 10% - 12% material all summer last year and was turned away A LOT. I also had farmer accept it only to get phone calls in August, September, and October from the rejectors... For $25/lb or less. I didn't need it anymore.

Lastly I know that all of your cherish the flower you worked so damn hard to grow, harvest, cure, and dry this year. There is A LOT of flower out there this year, in fact more than the world has ever seen in its history. Don't be stubborn, we feel very strongly that teaming with a co-op or centralizing your material at a distribution center (like ours, yes this is self promotion) will give you the best chance to sell your product. It is a fact, think grain elevators for commodities (which this now is). Don't keep it hidden away in your barn or shop, it isn't getting the exposure it deserves. To you retailers out there as well, we know you are selling your grams for $5 - $7, and we know how to do math. You stop being so stubborn too!

I'd like to end this post by saying how incredibly refreshing it has been to see the joy, sense of community, and innovation that has ballooned around this wonderful cannabis plant. I've visited A LOT of farms, extraction facilities, and ancillary businesses. To see the opportunity being brought to the American people by this plant brings happiness to me that is indescribable. Especially on the side of seeing families pursue their dreams of being a successful family business and tackling problems as a unit. It's beautiful. Keep it up America, and write to the USDA!