Highway to Hemp: ‘Wild West’ of the CBD Market – Flatland

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Published January 6th, 2022 at 6:00 AM

Across the country, bags of hemp grown as long ago as 2019 still sit in barns, waiting to be sold and extracted.

When the 2018 Farm Bill legalized industrial hemp, most growers grew hemp for cannabidiol (CBD) extraction, because it had a high profit-to-acreage ratio. With an estimated 455% increase in U.S. hemp producers, the CBD industry quickly found itself with a glut of product and not enough consumer demand. Moreover, there wasnt enough processing capacity to make the crop profitable.

Heres the crux of the problem. While the trendy therapeutic, commonly used to alleviate aches, pains, anxiety and difficulty sleeping, popped up in small shops across the U.S., it still lacked approval from the U.S. Food and Drug Association (FDA).

Without big food and pharmaceutical companies getting in on the CBD craze, the more than 130,000 acres of hemp planted across the country could never be fully used. Most CBD shops or dispensaries sell the product in single ounce bottles, with the CBD diluted down by other oils to a consumable amount.

Put simply, it doesnt take a lot of the plant to stock the shelves (or the webpages) of an independent CBD shop.

Despite the saturated market, Heath Martin, president of Kancanna, a CBD extraction company in Wichita, Kansas, remains hopeful for the future of his business. The consumer goods side of the industry, he said, has continued to grow.

This is supposedly going to be a $25 billion industry by 2025, Martin said. So obviously, that leads to a lot of growth in the cannabinoid side. But hemp, in general, I think we have just drastic strides that we could make.

As with everyone in the hemp industry, trust in the future of hemp has been vital for Kancanna. Martin had to start the business without loans, security nets nor trust from the bank, so hes not easily deterred.

Martin believes the FDA ultimately will approve CBD, so his company is already trained and following FDA protocol.

FDA approval is critical for two main reasons.

First, it would encourage widespread use and sale of CBD, driving up demand and price.

Second, FDA approval would regulate a market thats currently making its own rules.

As Martin said, creating an industry in an unregulated environment doesnt always lend itself to the best players.

At its warehouse in southwest Wichita, millions of dollars of high tech equipment extract and isolate CBD from about 1,000 pounds of hemp each day.

Once the harvested crop arrives at Kancanna, its ground into a tea-like powder, then spread on thin sheets and set to roast.

This is a vital step in cannabinoid extraction called decarboxylation.

In this process, the acid chain is broken down, making the material bioavailable. If youve ever tried to make an edible, youll know the weed has to be cooked first or youll just end up with some skunky brownies. This process is essential in order to reap the benefits of any cannabinoid.

Now that the fine green powder has been decarboxylated, it moves down the hallway into the supercritical CO2 (carbon dioxide) extraction room.

The shiny machines pump pressurized CO2 into a column, loaded with about 20 pounds of decarboxylated hemp powder. At a pressure of 4,000-5,000 pounds per square inch, the supercritical CO2 is between a liquid and a gas.

The fluid nature of the CO2 at this pressure allows it to pass through the hemp and strip the plant material of its cannabinoids (along with some other properties) before it journeys into the next couple of chambers. Here, the pressure is slowly reduced until the CO2 is fully returned to a gas state and the CBD it had collected drops off as a crude oil.

Each of the six machines can process 20 pounds of hemp in an hour.

Once its run through, the CO2 is recycled, the hemp column is reloaded and it goes again. All in all, the facility can process about 1,000 pounds of hemp in an eight-hour work day. Martin said this puts Kancanna in the top 3% of processors in the nation.

The crude oil is then brought to yet another room to be refined.

For the refining process, crude oil is mixed with ethanol. The mixture is then winterized and chilled overnight to a very low temperature (usually below -100 degrees Fahrenheit).

At these freezing cold temperatures, the cannabinoids in the oil bind to the ethanol and remain liquid, while the fats, waxes and other remaining materials in the crude oil float up to the surface, like a sludge. The sludge is removed and the cannabinoid-bonded ethanol remains.

In the same room, this winterized crude is taken to a rotary evaporator which heats the mixture until the ethanol evaporates and is vacuumed out, leaving just the cannabinoids.

The ethanol then condenses in a coil and can be reused.

The remaining cannabinoid oil is either 100% ethanol free, or only contains trace amounts, which are removed in the next step: wipe film distillation.

In another highly scientific-looking machine with glass vessels and coils, the oil is spread thinly and heated to the vaporization point of CBD. The vaporized substance is vacuumed up, hits chilled coils and condenses back into a liquid, now as a pure CBD concentrate.

It drips out at a honey-like consistency into buckets, where it will crystallize until heated back up to be put into products.

Nick Cannady, Kancannas director of business development, said most people still dont understand the CBD industry. Everyone who tours the facility comes away with a different perception.

I think most people come in expecting to see a bunch of stoners around a cauldron or something, but instead they see millions of dollars of high end equipment.

Kancanna consults with its growers across the state of Kansas from seed to harvest to ensure the crop is grown optimally for extraction.

Martin has a background in agriculture, so to him, this element is essential, and means Kancanna can reach the soil to oil standard he believes in.

We dont have anything to process unless the grower has a successful harvest, and so if we can help that ensures that we are going to have a crop to extract and high quality cannabinoids to offer the market once weve done the extraction, Martin said.

Attention to the growth and cultivation of the hemp in a CBD oil is another indication of a quality product.

The Poindexter family in Drexel, Missouri, walked Flatland through their hemp fields. But the small operation takes the hemp all the way to the finished product as well.

Similar to Martins motto, the Poindexters line of CBD products say: We farm it. We extract it. We bottle it.

With all the other CBD products and lines on the market, Michelle Poindexter said Rural Route Hemp Co. stands out because every step of the process is controlled by the Poindexter family.

(Other CBD companies) are acquiring their hemp from someone else, and they dont know exactly whats been put into the soil, applied to the plants, or even what the extraction process is and they dont know if theres anything necessarily harmful, Michelle Poindexter said. And we have that control from beginning to end.

About 15 minutes from their family farm, the Rural Route Hemp Co. extraction facility sits in the middle of Adrian, Missouri.

Since the Poindexters extract only their 10-acre hemp harvest, its a much smaller operation, with slightly different practices than Kancanna. A normal extraction at the Adrian facility uses five pounds of hemp.

Dried hemp is ground down until it resembles tea, then loaded into five-pound tea bags and put into a vat of cold ethanol.

The hemp and ethanol are agitated in a washing-machine-like contraption, which allows the ethanol to pass through all of the plant material and strip the cannabinoids out.

This extraction method uses ethanol rather than CO2. For a small operation like the Poindexters it doesnt require too much ethanol and the equipment is relatively inexpensive as compared to Kancannas high-volume extraction machines.

The ethanol mixture passes through a filter to remove all plant material. Then, the ethanol must be evaporated to leave a crude CBD oil.

At Rural Route Hemp Co. this happens in two stages to ensure all of the ethanol is boiled off.

Similarly to Kancanna, a big scientific looking boiler heats the ethanol to its boiling point, and a vacuum sucks the evaporated ethanol, which is then cooled back into a liquid on coils, allowing the ethanol to be reused in future extractions.

The heat from this process decarboxylates the cannabinoids, which is essential to the effectiveness of oil.

The Poindexters and their crew will continue the refining process until all of the ethanol has evaporated off. Then, the crude oil will go into a short path distillation unit, which will pull out remaining other trash (plant material, chlorophyll etc.).

Once the color has changed and all of the trash has been pulled off, someone will switch the flask to start collecting the clean CBD.

The longest part of the process is waiting for their third party tester in Colorado to receive, test and send back the samples. Missouri testers charge almost twice the amount to test, so its cheaper for the Poindexters to ship it to Colorado, where hemp testing is done more regularly and therefore less expensively.

Third party testing is a crucial part of both Rural Route Hemp Co. and Kancanna products. It ensures there are no trace chemicals or unwanted materials in the oil, and that a bottle claiming 1,500 milligrams of CBD, actually has that amount.

Every batch of hemp that comes into this facility is independently, third party tested for, not only for potency, but also for heavy metal contamination, pesticide contamination, microbial contamination, Cannady with Kancanna said. If its anything but non-detectable on any of those, we reject it, (but) chances are, its still going into the supply chain somewhere.

Quality producers like the Poindexters and Kancanna want FDA approval because it will weed out the people who dont follow good CBD practices and are just looking to make a buck.

As Cannady said, that contaminated product is still going into the market somewhere. FDA regulation would keep that from happening.

Luke Poindexter said right now, the industry is like the Wild West.

FDA control would not only standardize CBD practices, but also make the botanical extract available as a food additive, or pharmaceutical product. For producers like the Poindexters and Kancanna, it would mean more entities buying their extractions.

Full blown FDA approval for food additives, pharmaceuticals, I mean, thats when this crop will really be able to take off, Luke Poindexter said.

Then, maybe, all those barns full of 2019 harvested hemp could finally be emptied.

But the FDA doesnt seem quite ready to steward the CBD market.

As of today, the FDA has one, approved usage for CBD.

In 2018, it approved Epidiolex, a CBD based drug used for the treatment of seizures associated with rare and severe forms of epilepsy.

Several months ago, the FDA published the Cannabis-Derived Products Data Acceleration Plan, which aims to work with state and local programs to better collect and evaluate data on cannabis-derived products.

The collection and evaluation of this data would be the next step to FDA approval.

So far, the plan has identified challenges to data collection related to online commerce of cannabis-derived products, product usage, buyer motivation and the current cannabis-derived product supply chain.

According to the plan, the FDA wants to understand these elements, as well as further evaluate potential safety issues of CBD (and other cannabinoid) products before it grants approval and builds a regulatory framework.

The fragmented and dynamic CDP (cannabis-derived product) market, with hundreds of small manufacturers selling products online, is rife with potential quality and safety concerns, the plan read. The FDA needs a better understanding of the quality and safety systems that are currently in place across the overall supply chain from origin, manufacturing, and distribution to consumer usage.

The FDA is also concerned with potential side effects from long-term use of CBD and other cannabis-derived products. The FDA assures that the study of and consideration of cannabis derived products is met with the same standards it would bring to any other product.

FDA continues to encourage industry and remind them of their responsibility to develop the needed data, aligned with FDAs current data standards, to ensure products are safe, reads the Cannabis-Derived Products Data Acceleration Plan.

Members of Congress have pushed the issue forward and presented the CBD Product Safety and Standardization Act of 2021 which would authorize the regulation of food containing CBD and direct the FDA to crafting regulation over the industry with its implementation in food products.

Aside from the impact FDA approval would have on the industry, it could have a profound impact on the people who use CBD products for pain relief.

Wendy Scott has been living with the painful effects of ankylosing spondylitis (a rare and severe form of arthritis) for the past 30 years. The condition affects her large joints, making it difficult to do everyday tasks like, opening a water bottle or putting a log on the fire.

In October, she started using CBD tinctures and relief creams to treat the pain, because ordinary anti-inflammatories and steroids caused Scott to have stomach bleeds.

Its totally changed my quality of life, Scott said. It was really dark, and now theres a great deal more light. I can enjoy myself a lot more not 100% pain free by any means but it has gone down from nines and 10s as far as pain goes, down to sevens and sixes.

The products she uses dont come cheap. And because its not an FDA certified drug, her insurance doesnt cover the several hundred dollars worth of CBD products she uses in a month.

I would like to be able to see those things covered just like you would any regular medication, Scott said. I dont think (CBD) is exorbitant, but when youre on a fixed income, it definitely makes it a little bit more challenging.

Martin and the Poindexters said many of their customers use CBD for pain relief like Scott. But no matter how effective a product might be, the brands are prohibited from making any claims about the benefits.

Rural Route Hemp Co. has found success in selling products at in-person events. They still cant make claims, but they can let the products speak for themselves by offering customers a sample.

Just getting out to events and getting in front of people theyll rub a little bit (of CBD salve) on at the beginning of the event, and then theyll circle right back around and buy it because it works that well and that quickly, Michelle Poindexter said.

She also has to rely on customer reviews and published studies that tout the benefits of CBD for online promotion. If she makes a claim, or says the wrong thing in a social post, she said Facebook removes it.

If the Rural Route Hemp Co. makes a claim about a product on its website, its credit card processor would shut down.

Kancannas retail line, Butler Hemp Co., faces the same problems.

Ultimately, with this not being regulated yet by the FDA, you cannot make any claims, Martin said. So thats hard. We may know that a certain blend of cannabinoids that we make is phenomenally good for sleep, (but) I cant tell anybody that.

Despite all of the challenges and potential risks in the industry, CBD has grown to an estimated $4.6 billion market just since the 2018 Farm Bill legalized hemp.

Martin said Kancanna continues to research uses for other cannabinoid extractions. Most recently, the company started pulling cannabigerol (CBG) for its digestive benefits.

Hes spoken with food and beverage companies who are interested in making CBD products as soon as its FDA approved.

And thats just looking at the future of the cannabinoid side of the industry, not to mention endless possibilities of hemp fiber and grain.

I hope that the government, whether its state or federal, really starts supporting this crop and gets behind that to put some grants out, put some funding out, and (for) some of the banks and lending institutions make it easier for people to access funding to actually take this crop into the next level, Martin said.

Next: Highway to Hemp returns next month to look at manufacturing with hemp fiber.

Cami Koons covers rural affairs for Kansas City PBS in cooperation withReport for America. The work of our Report for America corps members is made possible, in part, through the generous support of theEwing Marion Kauffman Foundation.

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Highway to Hemp: 'Wild West' of the CBD Market - Flatland