New to the hemp industry? Here's what to look out for.

A Comprehensive Intro Guide to the Hemp Industry

The legalization of cannabis in many states has led to what some are referring to as the “green rush”, drawing parallels between the 1850’s American gold rush and the booming cannabis industry. One can also find similarities to the ending of alcohol prohibition and the “creation” of a new, legal industry.

It seems that the federal legalization of Cannabis sativa L. (with less than 0.3% delta-9 THC), a rapid emergence of lucrative business opportunities, and general lack of understanding of the cannabis plant has led to a perfect storm for fraudulent, deceitful, and dishonest business practices in the booming “hemp CBD” industry. This post is meant to shed light on some of the schemes perpetrated by bad actors.

The Most Common Hemp Scams

1. Seed Scams

Cannabis has been cultivated mainly for fiber production in many other countries, including but not limited to China, Russia, Italy, Czech Republic, Slovenia, Poland, Netherlands, Hungary, Germany, France, Japan, and Canada. Cannabis grown for grain and stalks oftentimes produces very little cannabinoid content — close to zero percent THC and zero percent CBD.

The US government classifies “hemp” as any cannabis plant containing less than 0.3% delta-9 THC. Therefore, breeders have been able to develop high-CBD, low-THC cannabis plants, while falling under the legal classification of hemp. The hemp plants, from which most CBD is extracted, is not your typical industrial cannabis that’s grown for fabrics or grain.

Not every seed will produce high-CBD, low-THC plants. You will need specialty seeds if you intend to grow CBD-rich hemp plants.

Generally speaking, fiber and grain varieties will be less expensive per seed than CBD-rich varieties. This is largely due to the fact that certified cultivars for grain and fiber already exist and have been cultivated for many years — they are more widely available and importable from different parts of the world.

The most common seed scam is knowingly selling fiber and grain seeds as CBD-rich seeds. The second most common scam is selling regular seeds as feminized seeds.

One way to prevent buying “bunk” seeds is understanding how and where to attain high-quality seeds. Also, understanding what kind of certification you should be asking for from seed producers is key. You should be asking for: 1) a germination report to confirm the germination rate; 2) a cannabinoid analysis of the variety to confirm potential CBD and delta-9 THC content; 3) an analysis of purity to confirm that no plant pests are detected; and 4) an explanation of lineage from the breeder to better understand how the current cross came to be.

2. Clone Scams

Starting from clones can be advantageous when growing CBD-rich varieties. Cloning essentially takes the guess work out of sexing plants and can improve the odds of a hemp plant not exhibiting a concentration of delta-9 THC higher than 0.3 percent.

Clones cut from mother plants are grown similar to seedlings but skip the germination stage and first week or two of growth. If the clone survives, it will develop a root system, and eventually this clone can then be transplanted just like a seedling. A “mother plant” is a desirable plant, which the grower wants to reproduce over and over again, kept indefinitely in the vegetative stage to produce genetically identical cuttings. Clones from a mother plant will retain genetic characteristics, including sex, potency, terpene profile, yield, resilience, etc.

Cuttings are taken from the end shoots and kept in a slightly more humid environment to prevent them from drying out, allowing the clones to develop roots. Because of the excess humidity, it’s possible for the plants to develop powdery mildew or other molds. Clones must be kept in a sterile environment to prevent plant diseases and deter pests. Purchasing clones with pests and diseases is a quick way to sabotage your grow.

Most scams are perpetuated by folks selling, perhaps unwittingly, clones of plants that have either not been properly sexed or genetically unstable, meaning the variety is susceptible to becoming a hermaphrodite due to stress or more likely to exceed legal THC levels.

One way to avoid purchasing bad clones is sourcing from a producer who has had several successful harvests with the same variety, can provide a plant sex test, and has a good reputation providing clean clones.

3. Flower Scams

You can absolutely grow high-quality cannabis outdoor—as demonstrated by the notoriety of Humboldt county. Growing indoors can be an effective method of cultivation, and it's possible to consistently produce great cannabis indoors. However, to assume that indoor cultivation will always produce higher-quality cannabis than growing outdoors is, in our opinion, flawed. There are plenty of examples of high-quality, outdoor cannabis being grown around the world.

Growing for hemp biomass indoors is not a sustainable solution. Outdoor cultivation is necessary to grow enough cannabis to supply a nationwide and global demand for cannabinoid isolates, distillates, extracts, and other cannabis byproducts. With that being said, hemp grown for biomass looks nearly identical to "smokable" hemp flowers.

It's likely that few people new to cannabis will be able to tell the difference between biomass and "smokable" flower.

One of the most common flower scams is selling hemp biomass as “smokable” flower. In other words, selling hemp that is worth $20 per pound for $400 per pound.

One way to avoid overpaying for mid-quality hemp is understanding how to identify high-quality cannabis.

4. CBD Scams

Consumers may become wary of CBD products overall due to a seemingly increasing number of CBD products not containing the levels of CBD advertised. One explanation for this phenomenon is that inexperienced manufacturers are simply doing bad math, creating products that are inaccurately formulated.

The most common CBD scam is untrustworthy suppliers selling products that do not contain the CBD content advertised.

It's also possible that some manufacturers are cutting corners, selling products with lower CBD content to maximize profit, or sourcing extracts from unreliable brokers. Another possibility is that the certificates of analysis accompanying specific batches of extract are, in fact, of another batch and, therefore, contain incorrect information that is then used to formulate products that do not undergo a final lab test for potency. Unfortunately, when folks purchase "white label" products, they are at the mercy of the distributor and have to trust that the manufacturer did their due diligence.

These pitfalls can be easily avoided by purchasing products from trusted, established companies and/or acquiring third party cannabinoid analyses for said products. It's also important to learn how to read a certificate of analysis.

Opportunities Beyond Cultivation and Processing

We are reminded that during the Gold Rush, it was the service providers that profited the most and not those who actually dug for gold. The hemp industry is rapidly growing and along with it is a growing need for supporting goods and services. This may include, but is not limited to, extraction and harvesting equipment, drying equipment, lighting equipment, plant nutrients, transportation services, logistical and administrative support, brokerage and storage services, laboratory facilities, product formulation, legal and marketing services, and many, many more.

A Race to the Bottom

While hemp CBD is predicted become a multi-billion dollar industry, for most large producers it's a race to the bottom to produce the most CBD at the lowest price. Eventually, this will mean importing more hemp derivatives from countries where it's cheaper to produce hemp. If demand for CBD doesn't exponentially increase (demand could greatly increase if the FDA creates a pathway to include CBD in food, supplements, and cosmetics) farmers should be prepared for a consistent decrease in prices.

To conclude, we hope this post was informative to those new to hemp CBD but also demonstrates a need for building integrity in this growing industry.