Middlebury hemp food maker shuts down over lack of seed

A hemp seed processing facility in Middlebury has closed and the Kentucky company that made hemp seed oil and hemp flour there has either sold the equipment or shipped it back to Kentucky.

A Vermont company that specializes in CBD has taken over the space.

Chad Rosen, CEO of Victory Hemp Foods, confirmed that because his company couldn’t obtain seed from farmers in Vermont or neighboring states, the cost of shipping hemp seed to Vermont from as far away as Wisconsin and North Dakota made operation of the Middlebury facility financially impractical.

“There was simply no seed in Vermont,” said Rosen. “The farmers made the call that [hemp for] CBD was what they wanted to grow. Who’s supposed to grow the grain when CBD is so hot?”

Hemp cultivation for CBD extraction is done with feminized plants, which have higher concentrations of CBD and other cannabinoids.

“We are sad to see this sector of the hemp processing industry leave Vermont,” said Agriculture Secretary Anson Tebbetts. “As the hemp industry matures we expect to see the seed oil sector grow. … We expect to see the full spectrum of hemp production in Vermont as folks transition to this new industry.”

Victory Hemp had taken over the 8,000-square-foot facility on Exchange Street in Middlebury from Full Sun, a local seed oil company that ceased production in 2017. Full Sun’s equipment was purchased with the aid of a loan from the Vermont Community Loan Fund, which Victory Hemp is still paying off. Rosen said Victory Hemp’s headquarters in Carrollton, Kentucky, is expanding.

The hemp food maker has seen a rapid growth in sales, said Rosen, who added the company is now shipping “pallets instead of pouches.” Sales have doubled from the fourth quarter of 2018 to the first quarter of 2019, he said, and doubled again from the first quarter of 2019 to the year’s third quarter.

A group of three farmers in Addison County did grow about 30 acres of hemp as a grain crop for Victory in 2017, according to Rye Matthews, one of the three farmers.

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“The profits were a little bit better than corn or soybeans but pretty much in that ballpark,” said Matthews, now chief technology officer of Northeast Hemp Commodities, a Florence-based hemp farming and manufacturing company. “To make good money growing grains, any kind of grains, you need to be at a relatively large scale and there’s just not that many [farmers] up here that are doing that.”

Northeast Hemp Commodities took over Victory Hemp’s space in Middlebury last month and will use it for cannabinoid extraction, product manufacturing and retail sales.

Matthews sympathizes with farmers who have been stymied in growing and harvesting hemp as a grain crop. When Matthews grew hemp as a grain, he borrowed a neighbor’s combine for the harvest and agreed to his neighbor’s demand that the combine be cleaned before and after it was used to harvest hemp.

One of the farmers who grew hemp as a grain and hoped to sell it to Victory Hemp Foods said a neighboring farmer from whom he hoped to borrow a combine feared that the machine would make his soybean crop smell like cannabis. Sam Bellavance, a young dairy farmer in Alburgh, grew 10 acres of hemp last year but decided that the 70 cents a pound Victory Hemp was offering for seed was not enough to make it worth his while. Bellavance left 90% of the crop in the ground rotting.

“I needed at least a buck a pound to make a profit,” Bellavance said. “I’m not at all bitter about it. I know they can get seed cheaper out west.”

This year Bellavance is growing 15 acres of hemp for CBD. He said he’s able to sell trimmed hemp flower for $300 a pound and will market his hemp to consumers who want to make their own CBD-infused products at home.

Chris Bailey, founder of Vermont Smoke & Cure in Hinesburg and now Victory Hemp’s chief operating officer, said that in order to grow hemp as a grain, Vermont farmers need to have multiple hundreds of acres in grains and legumes, as well as storage bins, dryers and a combine.

“It’s going to be viable [in Vermont] when hemp matures in 15 years,” Bailey said.

The CBD gold rush in Vermont is showing signs that it won’t last forever. Though the number of hemp growers and acres registered with the state’s Agency of Agriculture, Food and Markets have more than doubled this year, prices for dried hemp used for CBD production have been falling.

Carl Christianson, CEO of Northeast Processing in Brattleboro, one of the largest CBD extractors in New England, notes that two years ago the bulk price for hemp biomass was as high as $150 a pound but it dropped to around $75 a pound last year. This year Christianson reports the price is around $30 a pound.

Joel Bedard, a veteran hemp entrepreneur and activist in Vermont who is a shareholder in Victory Hemp, thinks the CBD market may be in for a big jolt when the Food and Drug Administration issues regulations on cannabinoids, probably some time in the next 18 months.

“In the next year and a half I expect the FDA to clamp down on CBD and then I anticipate the focus is going to shift [from hemp cultivation for CBD] to fiber and grain,” said Bedard. “There are 600,000 tillable acres used for hay production in Vermont. If the dairy market collapses, all of that acreage could be used for hemp grain and fiber production.”

According to Christianson, most hemp farmers are composting their stalks. In past years the Green Mountain CBD farm in Hardwick, now known as SunSoil, burned its stalks. Bellavance is investigating the possibility of drying and shredding stalks to make a hemp sawdust for use in horse stables. 

Victory Hemp’s Rosen said he expects to see hemp seed eventually make its way into more Vermont barns and kitchens.

“Even if it’s feeding livestock the protein-rich seed cake or small on-farm oil presses being used for home apothecaries,” he said.

One longtime observer of the hemp scene thinks that there could be a substantial percentage of people growing hemp as a grain in Vermont this year. Netaka White, a hemp business consultant who is preparing a brief for the Legislature on the hemp market, said that after examining detailed responses from 2019 hemp registrants with the Agency for Agriculture, he found that 12% of the close to 200 processors indicated that they were planning to produce seed oil and that 13% of the 900 growers were raising hemp as food for humans.

“Clearly, people are going ahead to grow and process hemp as a grain,” White said.