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Hemp farmers face $7.5b in losses

Andrew Stanbro of Delta Separations hemp Cockroft.jpg
Roger Cockroft, CEO of Delta Separations
Banks struggle to come to terms with fast-growing CBD market.

A dramatic rise in the acreage of hemp planted this year has been seen around the world, and particularly in the U.S., with 46 states having licensed farms since the farm bill was passed in December 2018. The potential for the U.S. market alone is astronomical, at $8.5 billion, but there isn't enough processing equipment installed to handle 90% of this year's harvest. The fear is that $7.5 billion of hemp will be left to rot in farm fields this fall, according to Delta Separations.

Cannabidiol (CBD) is one of the fastest-growing consumer product segments, and this is evident with the 128,000 acres of hemp (equivalent to 100,000 football fields) planted in 2019. That's a 300% increase from the previous year, and each acre of hemp can produce 165 lb. of CBD oil at a market value of roughly $66,000. That same acre of hemp used for fiber products garners only $850 -- a staggering value difference, Delta Separations noted.

Unfortunately, less than 10% of the equipment installed in the U.S. meets requirements to process hemp into CBD oil before it spoils. This is a major pinch point for hemp farmers to turn their crop into cash.

Banks are worried that the Federal Deposit Insurance Corp. will penalize them for supporting any clients with the word "cannabis" in their supply chain, and since hemp is a form of cannabis, banks won't make loans for processing equipment, the company said.

Roger Cockroft, chief executive officer of Delta Separations, said, "CBD derived from hemp is a huge new growth industry for the U.S., but this year, the industry's first fully legal year, is going to be a nightmare for many. Big banks ran scared and wouldn't support infrastructure investments because they heard the word 'cannabis,' even though hemp is completely federally legal.”

Cockroft added, “With such a small processing capacity in the U.S., up to 90% of what's in the ground will most likely rot in the field when 'crop-tober' rolls around. That could mean loss of up to $7.5 billion."

Delta Separations, founded in 2015 and based in Cotati, Cal., is a hardware manufacturer dedicated to developing equipment for the safe extraction of high-quality oil from plant based biomass, primarily for the cannabis and hemp industries. Its current product lineup includes centrifugal extractors, falling film evaporators, rolled film distillation systems and modular lab spaces. It is Delta Separations' goal to support its clients with best-in-class customer service and industry education.

TAGS: Policy
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