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hemp plants growing in a field Austin Keating
GROWING HEMP: The HempTrain “mini factory” processes hemp grown for fiber and CBD. It’s built to process broad-acre harvests.

How the U.S. can grow a high-margin hemp market

Test the waters of growing hemp for a high-margin product without the upfront investment of a decorticator.

Canada’s hemp industry is composed of mostly row crop farms that test below the 0.3% THC, or tetrahydrocannabinol, limit on crops by growing at a high density across a large number of acres.

America is a step behind Canada, with most farms producing hemp at a low density and higher quantity of CBD, or cannabidiol, in 2019.

Prices on wholesale CBD biomass have dropped by more than half from where they were in 2018, when the U.S. legalized growing hemp industrially, leaving newly minted hemp farmers in the Midwest with unplanned cost overruns. Canadian farmers, on the other hand, didn’t sustain that large of a loss because they tap hemp markets other than CBD, and they spend less on inputs — especially labor.

The horticultural, CBD-focused method of farming hemp that results in high CBD yields and barn-busting harvests in the U.S. isn’t paying the bills, claim sources at Canadian Greenfield Technologies.

The HempTrain

Canadian Greenfield Technologies says its HempTrain “mini factory,” a stalk-stripping decorticator, turns hemp biomass into higher-margin feedstocks, from long fiber for fiberglass manufacturers to concentrated CBD flower for oil extractors. A decorticator is a machine for stripping fiber from a crop and separating out microfibers for further processing. The company wants to build market share in North America and is allowing prospective buyers to try before they buy.

“A lot of producers are going to broad-acre production anyway, because mass-producing on more than just a handful of acres is leading to better margins,” says Stephen Christensen, vice president of Canadian Greenfield Technologies.

“To develop high-margin markets in North America, we’re offering to toll process a portion of a company’s hemp,” he says, adding the toll pricing varies. The HempTrain costs $1,550,000 after installation. It can process up to 5,000 acres a year.

“Toll processing” is when one company with specialized equipment processes material for another company.

Only one farm in the U.S. has bought a HempTrain so far: Wyndrige Farm in Pennsylvania. Toll prices are 15 to 17 cents a pound, depending on when a customer is planning to buy the HempTrain and other factors.

The 1,000-square-foot piece of processing equipment innovates the decorticator technology used for processing hemp grown for fiber. It can take in broad-acre hemp that’s been grown for cannabinoid production as well, processing the biomass into three separate streams: green microfiber, long fiber and woody fiber, or hurd.

While conventional decorticators destroy some of the hemp feedstock with a mill, the HempTrain is specialized in preserving biomass and separating it into fractions without creating dust. Dustless hurd is good for high-margin uses such as cat litter or food preservation. The HempTrain can also process hemp fiber into strands of bast fiber from 6 inches to 3 feet long that are left structurally intact and clean.

The markets for these products have a higher barrier to entry than CBD biomass, a market that left many small-scale hemp producers in the U.S. in the red or with unsold harvests in 2019.

Christensen hopes those who choose to toll process with them will “cut out the middleman” and buy the HempTrain, after first developing customers for the products they want to sell. He notes the HempTrain produces long strands of fiber useful in producing an alternative to fiberglass and building materials.

Using hemp’s strengths

“Hemp is the strongest natural fiber,” Christensen says. “You want to keep the properties of hemp as you process, as opposed to hammering hemp into a different material that it’s not really suited for.”

While a company like Patagonia has the margins to support using hemp as an alternative feedstock to other textiles, a company like Walmart doesn’t. Chasing the textile market isn’t worth it when there’s more consistent, higher-margin options that leverage the strengths of hemp, Christensen says.

Building materials is a fast-growing market for hemp due to the crop’s natural strength. Hempcrete produced from hurd is increasingly being used in home foundations and more. Christensen says that because HempTrain relies on turning rather than milling fiber, the hurd it produces is less dusty than what’s produced by conventional decorticators.

“Some hempcrete companies are interested in HempTrain because the hurd it produces isn’t dusty,” Christensen says. “That means you have better adhesion between the lime-based matrix and the hempcrete. It’s similar to how construction companies require washed aggregate for concrete or asphalt so that it can stick better.”

When hemp is grown for fiber, it tends to be leafy. The leaves are separated into the green microfiber stream, which can then be sold to manufacturers. Some buyers make beverages, protein powder and other consumables out of the high-fiber and high-protein product.

Hemp crops specialized in CBD production, often harvested on broad acreage by chopping the top of the plant where flower is most concentrated, can also be processed by the HempTrain. Flowers are separated from stems into a concentrated pile by the machine. The flowers can then be dried and shipped to an extractor.

Wet harvests

While the HempTrain is mostly used to process fiber-specialized hemp crops that have been dried after being cut in the field, it can still take CBD-concentrated, wet harvests.

To prevent spoilage, Christensen says wet harvests should be processed by the HempTrain almost immediately. Since the machine separates flower from straw, which he compares to a sponge, the material can dry much more quickly after being processed. That’s good news for broad-acre hemp farms that also rely on bulk drying. With prolonged exposure to heat, hemp flower will experience damage to trichomes and ultimately take a yield hit.

“You’re mitigating your trichome loss by not having to dry it as long. And with what you send to the extractor, they don’t have to put as many hours into extraction,” Christensen says.

He concludes that the horticultural method of growing hemp ultimately could start losing out to more automated broad-acre farming, in part because of the high cost of labor from harvesting and drying with the horticultural method.

“You can still get a high CBD yield when you go broad-acre farming with hemp. And you don’t have to have as high a cost on your drying,” he says.

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