In this episode, Jim talks about the major opportunity around the emerging hemp industry and how you can position yourself to take advantage of this.
He covers topics including:
- Difference Between Hemp & Cannabis
- Market Opportunity
- Affected Products & Industries
- Licensing Application Requirements & Fees
- Testing Process for Hemp
- Financial Aspects
- Profitability Considerations
If you would like help with your hemp licensing application, then please reach out to GreenGrowth CPAs or give us a call at 800-674-9050.
Full Webinar Transcript
Hey everyone. Thank you for taking the time again to join our webinar this afternoon. Really appreciate it. Today our topic is how to start your hemp farm business. My name is Jim Breese, chief marketing officer here at GreenGrowth CPAs, and again, thank you for taking the time to join.
Before we hop in, I just want to let you know a little bit more about GreenGrowth CPAs so you can get some color and context to why we can speak to this topic here. So we are a cannabis only CPA firm. We prepared over 1,200 annual tax returns for cannabis operators spread across all verticals from the dispensaries, distribution, cultivation, manufacturing, delivery and testing. And we have 400 cannabis business clients where yes, we do their taxes, but we do also other aspects of the cannabis industry such as licensing, compliance, work, business plans, pro formas, pretty much anything that’s cash and cannabis is what we help cannabis operators with. We’re operating now in 12 States with clients in California, Oregon, Washington, Colorado, Oklahoma, Hawaii, Arizona, Florida, Montana, lots of different states, as well as, international clients trying to bring their brands from outside of the U.S. into the U.S. As well as becoming hubs for brands that are within the U.S. to bring them to other countries outside of the U.S. Aside from that, we’ve done 15 audit related and evaluation projects for 2018 in the first nine months of 2019 so where we help people understand and get confidence around the numbers for their business and helping them either sell their business in an MNA transaction or do an audit, give that back to the investors to increase confidence, maybe also to go for another funding round. We have a thorough and deep understanding of tax compliance and assurance related requirements of the cannabis industry. So we are very deep in the industry. We know a lot about the industry, have a lot of clients from very large public companies down to the small individual operator making a $100,000 a year. So we have a lot of vision and scope and our hands into a lot of different aspects of the industry and all parts of the spectrum from again, beginners to multi-state operators that are public operating companies.
Before we get into today’s presentation I need to let you know that the information contained in this webinar presentation is meant for guidance purposes only and not as professional legal or tax advice. And further, it does not give any personalized legal tax investment or any business advice in general. So without other way, let’s hop right into today’s agenda.
So I’m very excited to talk about today’s topic because it’s very eye opening as to how impactful hemp is going to be over the next 2, 7, 15, 30 years for the entire world for so many industries. It’s just very, very exciting. So for today’s agenda, we’re going to talk about the difference between hemp and cannabis, the market opportunity that’s there, the affected products and industries that hemp will disrupt. Why starting in hemp right now, why you should actually do that, the types of licenses you can get and will need, licensing process and fees associated with that, the testing process for your hemp and then financials and aspects around profitability.
So a side note before we get too deep into the presentation, just to preface this, a lot of the information comes from California operations. However, most markets are similar to California in many regards, but also know that all counties are accepting applications for hemp cultivation, right? So the Humboldt, Mendocino, Monterey, Napa, San Bernardino, Santa Barbara, Sonoma, those are just a few. But at any rate, what we’re going to talk about is kind of the base 80-90% of what you need to know and the little nuances for each state or for each county. We can dive a little bit deeper into when you engage us as your licensing partner or someone to help you out with your licensing process for your business plan, for your pro forma, and helping you start and open up your hemp business.
So let’s hop into the difference between hemp and cannabis. So three main aspects for it that I want to point out. There are a lot of different aspects to it, but let’s just point out three main differences here. So the main difference in the way to identify hemp versus cannabis starts off with a concentration of THC, which is one of the psychoactive ingredients in the cannabis plant. So in hemp it’s equal to or less than 0.3% THC. And in cannabis it can be from anywhere from zero or 0.3 all the way up to 40% we’ve seen some getting towards that higher range there and I’m sure as the genetics and the breeding happens more and more you’ll see even stronger cannabis, raw bio mass. That’s the main difference. It’s not as strong with the THC with the CBD component is either elevated or at parody with cannabis. Now the laws that govern each of these plants here is, we’re not lawyers, but just some high level thoughts about it, hemp is regulated by the Farm Bill of 2018 and the regulatory bodies in the USDA and the FDA. So the Farm Bill was signed into law in the United States in December 2018. What that did essentially was hemp was removed from the Schedule 1 of the Controlled Substances Act, which then legalized its cultivation throughout the United States. Whereas cannabis is still a Schedule One Controlled Substance and the DEA, Department of Justice, and the FDA are the regulating oversight bodies for cannabis. So essentially you’ll see that hemp can be grown pretty much anywhere with a lot more lax licensing and scrutiny from regulatory bodies whereas cannabis, big magnifying glass over the top of that, everybody’s keeping a very watchful eye. And one of the most important aspects is that the tax codes, right? Hemp is not subject to 280E tax code, meaning that you can take the deductions and the exemptions and all these other credits and things like that, just like an ordinary business. Whereas a cannabis business where you’re selling primarily THC based products, you cannot take a lot of these deductions or credits. So it opens you up as a hemp operator to more tax benefits.
So let’s talk about the hemp market opportunity. So you know when you hear hemp, you think probably right to CBD? Well, what they’re saying is that total CBD sales in the United States is expected to reach $22 billion in the next three years by 2022 and that’s projected by the market research company, the Brightfield Group. But then you have hemp industry daily estimates that the annual U.S. Hemp derived CBD retail sales would between, $6.1 billion to $7.5 billion by 2023 right? That’s a subsection of that total CBD sales. Now understand that these are just some estimates with our current understanding in the current demand, but the opportunity is much, much bigger when you take into account the advancements that will be coming from the industrial hemp applications outside of CBD. CBD is just the hot topic right now. It’s one of those additives. It’s one of those things that gets people excited, it’s something new. But when you look at the industrial hemp applications in the commercial space, even in the consumer space, this opportunity could be in the hundreds of billions of dollars. Lots of industries are going to be affected by industrial hemp cultivation. Lots of products are going to be transformed. So let’s just take a look into what that’s going to be.
So the products and industries that are affected by hemp is massive, right? There’s going to be consumer and industrial applications. And talking with a lot of our operators and the people that are our clients, we’re understanding that this is like the innovation similar to the Dot Com Boom. And then what happened in that situation is the internet transformed communication, data transfer. It just advanced things very, very quickly. And we see that hemp will change industrial products and consumer products in that same magnitude. Obviously not in the same way. It’s not bits and bytes, it’s a plant. But the industrial applications for the hemp plant are going to be amazing. You’re going to see a lot of transformation again over the next 10, 15, 30 years with hemp joining the market is a viable, raw product to be created into many other final products. So let’s hop into some of those products. You have biofuel, bioplastic, right? Hemp only produces 1/3 of the waste and carbon footprint than any petrochemical processing for bioplastic. You have textiles, again, CBD products, beer and alcohol, sunscreen, ropes and fibers. Hemp strands are extremely, extremely strong. Some of the manufacturing methods make them 200 times stronger than steel. You have car parts. Henry Ford built a hemp car in 1953 these parts are lighter, cheaper, and stronger than traditional materials. You’ve got paper, building materials, food and food additives, non-toxic ink, batteries, makeup and cosmetics, UV resistant surfboards. There’s so many applications. When you take this raw product and make it into a lot of end products for the consumer or other industrial applications. If you start to think about it, you look around the room that you’re in right now, anything that’s got plastic in it can be changed with hemp. Anything that is a textile can be transformed by using hemp. Batteries… All these different things start to come to mind and you sort of see the magnitude of how hemp can impact everybody’s daily life.
So you’re probably asking, well, why start or convert to hemp? What is the big deal? Why? Why should I do this now? Well, other commodity prices are either stable or dropping. Things like corn, soy, wheat, these things are dropping in value, and hemp uses 1/2 the water and almost 4x the yield of biomass with little to no pesticides compared to the traditional crops. Again, the corns, the cottons, the wheats, the soy. So that could be an eight times or an 8x increase in the production of raw material. Also with hemp, you get multiple crops per year, so if you’re in El Paso, Texas or Arizona, you could be looking at four times a crop per year, which means that you’re almost looking at 32x compared to your traditional crops. Oklahoma, two to three crops a year. The Northern States one to two times per year and corn is one crop per year. It maybe you get to throw wheat in as a winter crop. At any rate, you get a lot more biomass per year because you can grow this multiple times a year. Another reason to start or to convert into hemp, is that crop insurance is now becoming available since there’s now enough data and metrics around the yields in what reasonable payout should be if your crop doesn’t come out well. Another one is that the demand is increasing. Again, we saw the products and the industries and the other page, but also you see CBD demand is going up, all these other products, their demand is going to be going up, so as demand increases, prices are going to rise. Of course, there’s going to be a leveling. Market Conditions will come into play. Supply and demand will play out, but at any rate, you’re seeing a lot higher income per acre as we’ll explore later in this presentation where it makes sense to jump in now and even in 12 months or in six months.
With hemp, you have access to banking, right? With cannabis, the traditional cannabis, you don’t necessarily always have access to banking unless you’re a very large company or you’re willing to pay a fair amount of points on your money. That could be changing with the Safe Banking Act. But at any rate, being a farmer in hemp, you will have access to banking. It’s also a smaller carbon footprint and less water is needed. Hemp uses 2.1 liters to get one kilo of biomass, whereas cotton uses 9.7 liters to get one kilo of biomass. So when you look at that, it’s what a 3-4x reduction in the amount of water. If we’re coming into a point now where in California droughts, lots of droughts in the South, you’re going to start seeing more droughts. Climate change is real. As you start to see that we’re going to have to go with crops that pull less water from the water table, and allow us to create the same standard of living, the same great products again on less water. And lastly, I think the most important part of this is that you can do interstate commerce. You can go out to Oklahoma, Texas, Arizona, anywhere in the Southern States, the Central Plain States, get property that’s very cheap, produce your hemp and then ship it throughout the entire country and then at some point throughout the entire world to help extend your reach to help do business activities that make financial sense in the right spots, right? You can do the grow and processing right in the Southern States and then sell your product to a large manufacturer somewhere up in the North where they can buy big, big orders, right? You start seeing orders come in for 50 million pounds, 70 million pounds, 30 million pounds, right? This is big business. This is not just some farmers growing two acres of hemp. We’re talking 5,000 acre farms, 9,000 acre farms. This is real big business and you have an opportunity now to get in on maybe not the ground floor, but that first floor, second floor of a hundred floor building. The opportunity is presenting itself now.
So there are two types of licenses for hemp, right? So you’re going to have the license to cultivate hemp, which means simply you’re going to be farming the land, planting seeds, clones and creating that plant, harvesting that plant, getting the bio mass, producing hemp fibers, seeds and flowers and buds. Then you have the license to do seed propagation or seed breeding. And this is where you breed different types of seeds and strains intended for sale or for research. Why? I think this is a very attractive licenses that you can create intellectual property for the future farm that you have or to license out to other operators and other farmers. So this year in July or reported in September, Charlotte’s Web Holdings secured what appears to be the first American patent for a hemp plant. It was resistant to cold and it’s capable of producing up to 6.24% CBD and only 0.27% of THC. So when you start to get into plant patents you think of the bigger conglomerates in the space of seeds, the Monsanto’s of the world. They are creating cultivars and seed strains that are very, very good for certain soils, for certain climates, for certain areas to have this stuff produced. When you start to create a bank of intellectual property, you can license that, right? You can get this stuff out to the masses of farmers, have them use your strains and your seeds, and then you benefit from that. So it’s not just the actual product, but the intellectual property behind the seeds is how you can benefit as a hemp producer or a seed breeder.
So let’s jump into the licensing process and the fees associated with that. So again, I’m gonna review the process for the state of California, but understand that this process is pretty much the same throughout the country. There may be few little nuances here and there that need to be tweaked and we can help you with that as we go through this licensing process with you. So in California, the licenses are submitted and issued through the County and many States and counties are sponsoring pilot programs to teach hemp farming to their communities. So for example, on Oahu in Hawaii where I was this past weekend, they only have a handful of farms and the University of Hawaii is helping research hemp growth and sharing that knowledge with the local community. So one thing that happened earlier this year, I think in August, 18 crops came in hot, which means they were way over their THC limits and they had to be destroyed in Hawaii. Okay. So why is this important? So breeding 0.3% THC for the certain strains that are out there right now is really difficult in Hawaii because they have a really unique climate and photoperiod compared to other States. So things that are being developed in Colorado, Oklahoma, Nevada, California, those seed strains may work very well for those climates. But you move those seed strains out to Hawaii where they have volcanic soil, very rich in nutrients and vitamins, sun pretty much every day of the year. Lots of rainfall. It’s going to produce a different final product than it would in a mainland state. So just be aware that this is why having a cultivator license and a seed breeder license could be very, very helpful for you as a hemp entrepreneur. So the process is simply this: you’re going to get the application and you’re going to fill it out and there are small nuances that can cause hang ups and back and forth between you and the County commissioner. So for the application you need the name, address of your applicants, so yourself, you need your name and your address, mailing address, and your physical address. Then you need your legal description, the GPS coordinates and the map of the land areas that designate where the cultivation will go as well as the size of the property that we’re talking about here. And lastly, the purpose. And when you look at that map, where’s the cultivation going to happen? Where’s the storage going to happen or is both going to be on the same parcel of land? Further from that, you’re going to need a list of approved seed cultivars to be grown, including the state and County of origin of those seeds. So you know for the one that we have down in San Diego, we have our hemp farm, we did cherry wine and that comes out of Colorado. We had to submit a form, which I’ll talk about in the next slide showing that this is an approved cultivar of hemp so that we can actually grow that and they know what product we’re growing down in San Diego. So aside from the application, there are registration fees. So prior to doing any kind of cultivation, you need to submit a $900 fee with your application in a separate registration fee is required for each County in which the applicant or the grower intends to grow industrial hemp. Then the registration is good for one year and then you have to renew it for $900 every year subsequent from that. Straight forward process, but again, there are small little nuances that you can get hung up on and then just a lot of back and forth and it becomes almost an egregious process to get your hemp license. And that’s what we’re trying to explain the process, but also be that resource to help you out with the licensing process and get that license done fast for you.
So a few other licensing considerations here. So you need to have the CCR4920 documentation. What this does, it shows that you are using a pre-approved seed cultivator to buy your seeds from. So someone who has developed some genetics that had been pre-approved you buy from them to develop either new seeds or you’re going to be growing that specific strain for cultivation, right? It’s a document that’s a very, very important, if you don’t have this document, you do not get a license. What cultivators put on their application is what they must grow. So you can’t just go, Oh, we’re going to go get this one seed from this cultivator over here and then go in the back door and do other strains. If they catch you doing that, they will pull your license. So if you want to grow something different than what’s on your application, it needs to be pre-approved by the County. Don’t forget that. Don’t try to pull a fast one on the County. Because again if they find out they will pull your license and it will reduce or eliminate your opportunity to get your license renewed. So I talked about you need to show a map. So simply how to do this is you’re going to need to show a Google map of the parcel that you’ll be cultivating on and growing your hemp as well as where your seed propagation will be. So as you see on the screen now, two of those images is just again an overhead shot from Google maps. You draw in the box and say this is where the seed propagation and cultivation will be at. You outline on the property where things will be at. So you keep hearing me talk about 0.3% THC. Well how do they know that there’s a testing process and requirements around testing your product before it actually gets harvested.
So let’s just go over the testing process. There’s three main aspects to it and then we’ll talk about the remedies. What happens if everything is good or if the crop tests hot. So the testing process simply breaks down into three subsets. Here you got the collection of the samples. So you’re going to have a commissioner or third party sampler designated by the commissioner come out to your property and get samples of your crop. And what they’re going to do is they’re going to verify the GPS coordinates of each sample and then the grower or the registrant, you have to be present to observe the collection of the samples and give access to all the plants on the registered land. So you don’t come back and say, hey, well that wasn’t from our land or that wasn’t from our crop or that exactly was not from this seed strain or this composite set of samples. You know, there’s some kind of discrepancy. Your oversight is needed and you’re overseeing the process to make sure that everyone is staying on the up and up. So once that collection of samples is done, let’s talk about the sample volumes. So it must include all parts of the plant, not just a leaf or a stock or a stem. It’s gotta include the stem, stalks, leaves, flowers, seeds, and buds. And it’s got to be from an 18 inch lateral branch from the lower third of your plant. And if plants are less than 18 inches, then the entire plant must be chopped down and taken in for testing. They need to have a composite of five primary samples from different plants for each cultivar, right? So a separate composite of samples for each cultivar that you have on the property. And if you’re doing indoor versus outdoor, it’s treated as separate fields. So if you’ve got cherry wine, indoor and cherry wine outdoor, they’re gonna need five samples from the outdoor and five samples from the indoor. So it can be a tedious process for testing, but it’s just what needs to be done. They also say to not take any samples from the outside, 10 feet of the field. So you’re gonna get a lot of samples from the inner portion of your field. Now you look at the handling of samples, the third part here is gonna be put into a permeable bag. It’s non conducive to mold growth. So things that don’t allow mold to happen and you have to maintain a chain of custody with the samples and has seals with the relevant information. I don’t want to go into the details of what those specific pieces are, but they maintain a chain of custody going from the field to the lab and needs to be delivered to the testing lab within 24 hours with all the custody documents so that you know what the samples are fresh, they’re going to get there, they’re going to get tested, and then we’re going to get some results back. So let’s hop into seeing what actually happens with those results. So if your product is less than 0.3% THC, great, you’re all set. Go ahead and move on to the harvest process and you’re all good.
But what do you do if your product fails or tests hot? Tests hot means over 0.3% well, if the crop is over 0.3% THC, then the laws in most States require and read that the crop needs to be destroyed. But in some States they have provisions to sell that crop to the medical marijuana market. But most governments are trying to discourage us from being a thing. So just again, no, there’s little nuances to it. We could look into that for you, but don’t bank on that being a thing. And this is why seed genetics play the largest part of the risk. If you get a seed strain that is on that upper level, say it’s a 0.27-0.28 of THC now you’re like, okay well what if we do really well and grow a really beautiful plant, very strong plant. And then it gets over to that 0.36-0.4 all that hard work, all that effort, all that time is now going to go to waste because that crop will have to be destroyed. But let’s explore the steps of the testing process and how destruction of the crop actually happens. So what’s going to happen if your crop tests hot, you’ll get that first test back. And if it’s between 0.3 and 1% then you can submit a new test for review. You just have the commissioner or that third party come out, collect the samples, and the same way we talked about in the slide before, and if the second test comes back between 0.3% and 1% then you got to destroy the crop as soon as practical, but no later than 45 days after you receive a receipt of abatement from the commissioner. But if the THC content comes back greater than 1% then you must destroy the crop within 48 hours and complete it within seven days. And before you do any kind of destruction, you need to submit a destruction plan to the commission of your County at least 24 hours prior to the start of your destruction process.
So let’s get into some estimate of financials and some considerations around the money to get started in the hemp industry. So hemp yields about one to 1.5 tons of biomass per acre. So when you look at the gross, right, profit is a very complicated formula. We’re going to get into some aspects of profitability in the next slide, let’s just talk about top line here, what you can expect. So with hemp, you can look at $20,000 to a $100,000 per acre in gross revenue and you’ll be on that lower end if you’re just doing straight bio-mass chopping down the plant, sending it out to a processor and you’re on the higher end if you are the processor and you know that way, high end, if you’re doing like CBD isolate, compare that to alfalfa. Alfalfa brings in $700 to $900 per acre. In corn $1,000 to $5,000 per acre. And I say more on that lower end. So you’re looking at like a 20x differential between hemp and alfalfa, between hemp and corn. That’s a big, big difference. And if you don’t want to hop all the way into hemp right away, just go straight only into hemp. You can throw it in as a rotation crop. It doesn’t need to be the primary crop. Just understand you could pad your margins by making it a rotation crop. So if you look at those numbers, you start to understand, all right, well that’s per acre. Now what if we have a 10 acre farm and we average $50,000 gross per acre, $500,000 per harvest? Right? Now, if you do three harvests a year, $1.5 million, now you want to go to a hundred, you’re at $15 million annual gross, and then you can scale that up as much and as much as you want. And I said at the beginning of this, you’re going to see farms in Oklahoma, Texas, or they’re at the thousands of acres, tens of thousands of acres of land going into hemp cultivation. But don’t get discouraged. You can start small. Look starting with 10, 20, 30 acres, and then parlaying that money into a bigger field later down the road. Like this opportunity is not going anywhere but up. So there’s gonna always going to be opportunity just as sooner you get in, the sooner you gain the knowledge to start scaling up your operation.
But we look at, all right, well what kind of equipment do we need? What’s our kind of capital expenditure budget that we need. So just some high level things. There’s a lot of details that go into this, but I would say around $500,000 right? That’s less the actual acreage you’re going to need that. We’ll talk about that in a moment here, but $500,000 for capital outlay for machinery if you’re bringing the farming in house for about a 100 to 500 acre farm, so something that’s smaller than that, you could do less capital expenditures. But the biggest differential here in the costs are two main ones here, is that you could buy the land and pay all the money upfront or get a USDA loan or you can lease the land from other people, right? So that you don’t need to actually own the property. You could lease someone’s land out, get all the licensing and then go cultivate on that land, right? This is a very common practice for all types of crops. Now further from that maybe you have the land but you don’t want to put all the money out to hire people, buy equipment and do all that stuff. Then you don’t need to be the farmer. You can outsource the farming on the other side of that deal and lease out your land for split of the profits. What this does is it aligns the incentives for a higher quality crop. There are a lot of groups out there and it’s growing even faster and faster now such that they are master growers. They’ll come out to your place and they’ll do all the cultivation for you for a split of the profits. So it’s a really sweet deal for most people and we’ll dig a little bit deeper into that.
This next slide, which is the aspects of profitability. So a lot of different things that are gonna go in bake into your margins here. And this is not an exhaustive list, this is just some aspects of profitability. I’m sure I could come up with a few more if I sat and pondered about it. But just a few things here. Skill level and yields. Are you good at farming? Are you terrible at farming? How good is your equipment? What is the yield like for the strain that you have? So seed strain plays a big important role into this, right? If it tests hot or if it’s at the upper level, you could potentially have to destroy some crops, which we’ll dig into your profitability. Then you have soil content and composition. So what kind of soil type do you have? Do you have sandy soil? Do you have clay type soil, right? There’s certain breeds that do well in a well draining soil and some that do well in a more clay type soil and they have different yields. So you have also input costs such as water, nutrients and labor, right? Are you paying for city water? Are you getting water from just natural precipitation? What’s the labor costs for you around your area if you are bringing all this farming in house. What is nutrient costs? Are you outsourcing the nutrients yet? Pest management? Are your crops being killed by Pests? Are you outsourcing pest management? Are you doing it yourself? Do you have to invest into more equipment for that? Then you have the weather. Kind of dovetailing into a few other points from before you have the rainfall. Are you getting natural rainfall? Are you paying for irrigation and maintaining the irrigation equipment? Are you getting a lot of good sun where you can grow outdoors or are you doing an indoor grow where we have to pay for electricity? Do you have economies of scale with your time, your effort, your equipment? Right? Economies of scale means as you get bigger, the sunk costs are, the fixed costs can get amortized over more acres, which makes you more profitable per acre.
Then you have to look at the macroeconomics in the supply and the demand of the crop over the next 12, 24, 36 months, you’re going to see a parabolic growth in the demand for the crop. And you’re also going to see a lot of subpar product coming out of these initial farms because the knowledge just isn’t there. Right? We’ve been in prohibition for hemp for a very, very, very long time. We’re not just going to turn on and be at A+, A Grade product right away. But what that means is that there’s still an opportunity over the long haul to produce a very profitable crop, a very high yielding crop and a very powerful crop that you can then monetize if you learn the skills and the tactics and all the things necessary to produce that crop. And you also look into how vertically integrated is your business? Are you processing yourself or are you selling it out to a third party? We talked about this a little bit earlier. If you ship out just the bio mass, you’re gonna make less money per acre. Whereas if you are processing it yourself and doing it all vertically integrated, you can be on that higher end creating either more refined ingredients for final consumer products or even making the end consumer product yourself. Maybe you’re making textiles from the hemp fibers that you’re growing. Then you have the master grower fees. I talked about that earlier is like , you don’t have to be the farmer. You could bring in a master grower, they could either teach you how to grow or they could lease the property off you. But if they do teach you how to grow, you can do a profit split or a crop split and then you choose a duration. Be here for two years, three years, four years, whatever your kind of contract the negotiation was with them. And again, this aligns the interests and the incentives. When you do a split crop, they don’t want to make a junk crop and waste their time. They wanted to make the best crop they can as a master grower so that they can make the most money off that crop when you sell it off. And then lastly, pre-selling your crop versus selling on harvest. There are some people in some groups, in some big companies we’re talking fortune 500 that are just waiting on the sideline. They have these big, big, big purchase orders out there now and they’re just waiting for someone to be able to fulfill on that. Right there is food producers, there are car companies that are trying to produce panels come from him right there waiting on the sidelines. So maybe you’re pre-selling your crop and you do a little bit discount cause you know you’ve got some guaranteed money in the bank or you selling harvest. Maybe you can demand a little bit more cause you know your product will be better. Lot of different factors into the aspects of profitability.
So I know we’ve been talking for quite some time here in what, 25, 30, 35 minutes here. So I just want to wrap this up with a few key takeaways. So the demand for industrial hemp is increasing dramatically for consumer products and especially commercial applications. Businesses are always looking for lighter, cheaper, faster, better materials. And hemp is filling a void that has been there for a very long time, like petrol is not surely all the way out. Coal is not all the way out, but over the next 20-30 years you’re going to see a huge shift from antiquated inputs all the way into this hemp input. This hemp biomass to create the products that we use and love every day. Now, hemp is under much less scrutiny than cannabis, so more lax laws. You can do interstate commerce. You’re not subjected to 280E so a lot more room for you as an operator to seize this opportunity. Also, another takeaway is that there’s two licenses you can do cultivation or you can do seed breeding where you start to create intellectual property and different strains that work in different areas or for different applications. And then lastly, hemp is incredibly more profitable than most, if not all traditional crops, the alfalfa, the corn, the cotton, the wheat, those crops. So it makes sense to at least explore this as an option for either A) a rotational crop or B) converting fully over to hemp to juice up your margins by, or an order of magnitude, not just some small 15% 25% we’re talking 2, 5, 10, 20x on your return.
So again, thank you for taking the time today to listen and learn a little bit more about the opportunity for the hemp market for you, your company, your business partners. Hopefully this presentation has brought you some value. That’s my aim. Every time we sit down for one of these webinars, and if you’re looking to get into the hemp industry, first things first, you have to get licensed, so please get in contact with us to help you get your hemp license. We have a hundred percent success rate thus far with applications for hemp licensing, and if you want to get started, please reach out to us today at www.GreenGrowthCPAS.com or giving us a call at (800) 674-9050 this is one of the biggest waves, one of the biggest crops. It’s going to transform the way we see the world. You know, it may not be as fun and as sexy as cannabis creating a cannabis brand, but this is going to be an essential need over the longterm, lots and lots of applications for hemp and, again, in the consumer market and the industrial commercial market. So allow us to help you get your hemp license today. Reach out to us at www.GreenGrowthCPAS.com or give us a call at (800) 674-9050 again, thank you for your time. Have a great day, and we’ll talk to you soon.