Farmers Now Earn $50,000 Per Acre Instead of $1,000
The Trump government in the United States has now legalized hemp, which not only is a big economic move on its own but also signals that cannabis in general may not be far behind. A recent Forbes article (click on the link below) connects the recent firing of Jeff Sessions as US Attorney General, who was a strong voice against legalization, as part of the reason legalization is coming now.
Rick Weissman, co-founder of High Falls Agriculture with his wife Sheila Doyle in 2017, produced its first harvest of hemp in 2018, despite it being illegal federally. He said that this crop could bring in 100 times the revenue on a per-acre basis. For example, growing hay would earn him between $500 and $1,000 per acre. In 2019, he expects to make up to $50,000 per acre growing hemp including CBD extraction and selling products containing CBD oil.
“The one thing I like about this business is I don’t think it’s correlated with the rest of the world or stock market,” said Weissman. “It’s going up regardless. I think the applications for hemp-derived CBD could be extremely large, and exceed the $50 billion for the marijuana black market.”
Credit Cards Not a Problem Now
One of the biggest issues farmers faced before legalization was actually selling product. Credit card companies, who wanted to avoid any legal grey areas about a product that was illegal federally, refused to accept payments for cannabis-based products. That forced many to seek overseas credit card processors, opening them up to suspicion for fraud by banks and their own customers.
Heather Lambert, the co-founder of Arder Botanicals in Augusta, Georgia, said that her online business was decimated when her US-based credit card processor stopped accepting their transactions.
“Our credit card processor shut us down,” Lambert said. “There is a lot of uncertainty over legality and one day it decided it didn’t want to process CBD merchants any more. It’s very hard to find credit card processors that aren’t overseas.”
Third-party companies such as PayPal might make it easier – to a point.
“A lot of people we know used PayPal or Square,” she said. “But if they catch you they would usually hold funds that CBD merchants had received for up to six months.”
Legalization will also open up access to growth capital. Scott Greiper is the president of Viridian Capital Advisors, a boutique investment bank based in New York, helps companies raise capital in the cannabis industry. Over the past 12 months, business has grown 350 per cent. Over the past few years, Greiper said the firm’s capital raises were in the range of $1 million to $5 million. This year, capital raises have increased to the range of $15 million to $25 million.
“This is a very dynamic marketplace for investors and acquirers,” Greiper said. “This is driving companies to become more efficient and more profitable operators.”
Full Legalization May Be Around the Corner
The world is headed toward full legalization, and the US is no different. Brian Vicente, founding partner of Denver law firm Vicente, Sederberg, said that full legalization in the US is just around the corner.
“The biggest issue facing the industry is will the Feds legalize marijuana?” said Vicente. “We believe marijuana prohibition is a failed policy. I think there’s about a 70 per cent chance that it happens next year. The more states that make it legal the better it is.”
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