Allen Wagner inspects the root system of some of more than a quarter-million hemp seedlings he is planting at this greenhouse this season. Mirror photo by Gary M. Baranec

A local greenhouse has taken a risk and transitioned entirely to hemp.

There’s perhaps potential for dairy farmers who struggle with the low price of milk to branch out as well, some say.

Statewide, hemp growing permits are flying and hopes for income are high.

The heat was stifling in Wagner’s Greenhouse on Monday, where Allen Wagner stood among 200,000 plants grown from certified hemp seeds purchased from Colorado.

Wagner said people need to know hemp is cannabis, but it’s not marijuana.

Wagner has been in the gardening business for 45 years and knows the heat causes growth, although since last month, he no longer grows flowers or vegetable plants.

Competing with national chain retailers to sell flowers has all but suffocated the business at North Fifth Street, Altoona.

“I needed a crop to keep the place going,” he said.

Wagner secured his hemp growing license through the Pennsylvania Agricultural Department in March. The window to pay the $600 fee and apply for growing permit opened in January and closes May 1.

Department spokeswoman Shannon Powers said that as of Wednesday, the department had 140 hemp grower permits finalized and 215 permits in process. So far, there is one in Blair County, growing in three locations. In Cambria County, there are two permits, each growing in one location. There are none in Clearfield or Huntingdon counties.

“It’s grown lightning fast,” she said.

Once common crop

Hemp was grown in Pennsylvania for over 260 years. Its strong fibers were used for Conestoga wagon covers and clothing. However, in 1938, hemp was banned in the United States.

Hemp’s resurgence started with the 2014 federal farm bill that established a pilot growing program, which lead to the legalization of hemp in the 2018 farm bill signed by President Donald Trump in December.

When the pilot phase began, “no one wanted anything to do with hemp,” Wagner said, stressing its old uses.

But as the pilot program continued, products appeared on retail shelves made with cannabidiol or CBD oils from hemp. CBD oil is made into a variety of products for anti-inflammatory, antioxidant and neuroprotective properties.

“CBD started being used, and now it’s in extremely high demand,” Wagner said. “It’s on shelves everywhere.”

New Frontier Data’s Hemp Business Journal estimates that, in leading all hemp product categories, the hemp-derived CBD market will triple from a $390 million in 2018 to a $1.3 billion by 2022.

However, Powers said the state Department of Agriculture has no state revenue projections for the crop.

“Projecting revenue is not a simple task, since the crop has not been grown commercially for 80 years. That is one of the challenges faced by insurers and investors,” she said.

Blair County Conservation District ombudsman Beth Futrick is in charge of agriculture public education and outreach.

“The hope is it (hemp) generates income for our farmers,” she said.

“Farmers in our area, particularly in Blair, are primarily dairy,” Futrick said. “Some dairy farms are going out of business because the milk price is so low they cannot sustain themselves.”

However, she said she could not give an educated answer about whether dairy farms would become hemp farms.

The industry is so new that it’s hard to tell who is in it, Wagner said, though he added that he has some customers in Lancaster County and possibly in Blair.

Hemp not marijuana

The 2018 farm bill removes industrial hemp from the definition of “marijuana” in the Controlled Substance Act. Industrial hemp is defined as Cannabis sativa L, or plants containing less than three-tenths of a percent of tetrahydrocannabinol.

This low concentration of THC makes hemp unsuitable for marijuana production. Marijuana is federally illegal, although it has been legalized by some states.

While Pennsylvania’s medical marijuana program has been limited to about 20 licensed growers since the state’s medical marijuana law passed in 2016, there is no limit on the number of hemp growing licenses that can be applied for, Powers said.

CBD oil can be produced from marijuana or hemp. The difference is CBD oil from hemp comes without the psychotropic affects of THC found in marijuana.

So although medical marijuana is administered through the state’s medical marijuana program, hemp oil products are found in retail stores.

Local products created

The Shed of Plenty in Greenwood is one of several retail stores in the area that sell CBD products made from hemp extract.

Store owner Chrystal Miller also has her own CBD product line including edible and topical oils, gummies and even pet products. Since the federal hemp pilot program in 2014, she’s been selling CBD products and designing her own with out-of-state hemp ingredients.

Miller anticipates a boom in hemp product availability because of new Pennsylvania growers.

“The market will now be flooded with hemp,” she said.

In Wagner’s Greenhouse, the hemp plants range from a few days to 20 days. They are almost ready for packaging and shipment to farmers who also have industrial hemp growing permits. While anyone can buy hemp products, not just anyone can buy hemp plants. Wagner is focusing on a niche market of farmers who have permits like himself.

“I’ve been battling big stores for years selling annuals,” he said. “Retail was going down hill; customers passed away or are now living in apartments for elderly. And there are not as many gardening now.”

Last fall, Wagner shared his business struggles with an official from the state Agriculture Department, who said there may be a niche for starting hemp seedlings and supplying farmers with those because the pilot program proved many fields didn’t grow seeds well.

Instead of losing seed, which can be expensive, farmers could buy seedlings from greenhouses and plant them in large fields with machines similar to planting tomato plants.

Wagner said if his current crop goes well, he’ll double or triple his crop next year.

He plans to sell the seedlings at less than a dollar per plant when they reach about 6 inches. However, he’ll lose half of the plants after the male plants are identified and discarded. They must be destroyed, otherwise they’ll pollinate with the females and ruin their valuable CBD content, he said.

He anticipates total revenue of $67,000.

When his plants are ready, he’ll transport them.

Unlike marijuana, which remains federally illegal, interstate transport of hemp is allowed with correct documentation, Wagner said. Some people are getting stopped an arrested for marijuana even though it’s hemp, he said.

Harvest in September

Harvest time, September, is only six months away, said Jeff Graybill, a Penn State Extension agronomy educator in Lancaster.

Graybill knows of hemp growers working with investor groups who say they are going to be building processing capacity in Pennsylvania to extract the oil, but he doesn’t know if that has come to fruition yet.

Farmers may have potential to make a lot of money, but Graybill said he thinks the market is dubious.

“An investor here in Lancaster was selling plants at $6 a piece to farmers to plant 1,600 to an acre, and they are telling farmers they’d buy the fully grown plants back for $50 each,” he said. That’s a profit to the farmer of more than $70,000 for an acre.

In Lancaster, farmers grow a lot of tobacco. Hemp grown for CBD is going to be grown in a similar manner.

Hemp grown for CBD is a much higher value crop than hemp grown for fiber and grain, Graybill said.

“The market for hemp is unknown right now,” he said. “It will be an interesting year to see what will happen. I wouldn’t discourage growing it, but I would say don’t get rid of a tried and true crop,” he said. “Maybe try an acre or so of hemp. Don’t put at risk a huge portion of your land. There will be winners and losers. Some may find a market early. Like any new thing, it’s a risk.”

Hemp grown for fiber or grain can, in theory, be used to make concrete and materials for cars lighter and stronger as well as hemp cooking oil or flour. But those products have established markets and competition.

‘Wild West’ market

On the other hand, CBD oil is more of a “Wild West” market, he said. It is a unique product with wide open opportunity, especially because it comes in many varieties for different desired effects, Graybill said.

Graybill has worked with farmers in Lancaster County who grew hemp on trial basis. He’s seen it fail. The investor the farmers grew for wasn’t familiar with the crop, so the farmers did all the work and sent it to a lab for extraction and the CBD content was low. Farmers got nothing, he said.

Environment and harvest time can affect CBD content. And even if the product is high quality, it won’t go anywhere without processing and marketing, he said.

While there may be a surge in the CBD hemp market for the first two years, Graybill said he’d expect it to even out after that.

“This year if a farmer makes $40,000 to $50,000 an acre, that will be the last year (profits would be that high) because so many more people would take advantage of that,” he said. “It would encourage more people to get in it next year and the market would get lower because people see a good thing and jump into it.”

Mirror Staff Writer Russ O’Reilly is at 946-7435.