American hemp processor sees opportunity for growth

INDIANAPOLIS, Ind. — The founder of a relatively new hemp-processing company is hoping the crop will take off in the United States, despite issues that plagued farmers who grew it this year.

Steve Groff, founder of Groff North America, said there is huge demand for products derived from hemp, but the supply chain is in its infancy, making it difficult to fill what he says are large needs.

“Some things are starting to open up, but it’s taken quite a while,” said Groff, speaking to members of the National Grain and Feed Association at the County Elevator Conference in Indianapolis.

“Our company thesis is that whole plant processing is key to unlocking the future of hemp. Things are happening rapidly and knowledge is being gained,” he said.

There has been some uptick in hemp seeding ever since cannabis was declassified from Schedule 1 of the Controlled Substances Act. Many farmers grew the crop hoping it could be profitable, especially at a time when soybeans have been difficult to market.

While trying out hemp, however, some growers in the United States faced steep challenges.

In some areas, it was too wet for it to dry down on its own, according to some reports, in which some farmers described it as moving a mountain.

As well, the hemp bubble for CBD oil, which is used to help treat pain and anxiety, may have burst as prices were shown to decrease in the latter half of 2019.

Farmers were largely growing hemp for CBD oil and some weren’t able to sell it because some buyers were unreliable.

Still, despite the negative indicators, Groff sees lots of opportunity, particularly with hemp fibre and hurd, which can be used to create construction blocks, paper, animal bedding and mulch as well as a few other products.

“From our perspective, producing CBD is helpful, but in our business model it makes sense using the whole plant,” he said.

Groff North America has purchased a machine called the HempTrain. It’s a decorticator that separates hemp, creating extraction-ready CBD fraction, bast fibre and hurd.

The company bought the machine in Calgary. Groff said it’s the only large industrial decorticating system in the United States.

“We have a unique opportunity,” he said, noting that other companies have since closed their doors.

“We don’t want to make the same mistakes,” Groff said. “We learned from them and some have joined our team. We come at this with a different team of management and it’s a different time.”

But getting farmers to grow hemp for biomass still presents challenges.

Some farmers said the price for hurd or fibre wasn’t what they were hoping. There are also few buyers of the product, but that could change if capacity within the supply chain grows.

Groff was asked why hemp hasn’t yet exploded in Canada. The crop was legalized there in 1998.

He indicated the technology wasn’t there at the time to efficiently process hemp and that the focus had largely been for food production.

“I’ve heard from some Canadian friends; they think the Americans are going to blow this up and destroy us (Canada) in a competitive way,” Groff said. “American know-how and drive will take it to where it should be.”

He did, however, credit Canadian company Manitoba Harvest for leading North America in food production of hemp products.

As well, he said European company HempFlax has been successful in producing biomass products, some of which are used to insulate doors in Mercedes Benz cars. HempFlax, however, has been working away at this for 25 to 30 years, he said.

During his presentation, Groff pointed to various challenges that should be addressed to help spur growth in the hemp processing industry.

He said gaining capital has been difficult, particularly from banks.

“It’s getting better but smart money has yet to jump in,” he said. “We are very excited that this is close to happening. People are realizing hemp is here to stay. It’s not just a marijuana stoner thing, it’s the opposite of that.”

There are also challenges within U.S. legislation, he said, adding more work needs to be done to improve the plant’s genetics.

“There are lots of unstable genetics and lots of bad experiences,” he said. “There has been some ugly stuff in this first year, but people are in it for the long haul.”

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