Ever since he was a child, Richard Pencek yearned for a way for his family’s farm in Lackawanna County to make enough money to survive.
As an adult, Pencek believes he may have found the answer.
Two years ago, Pencek began planting industrial hemp on his farm in Factoryville. The plants are grown for CBD oil – a valuable extract used as a therapeutic and one of the most common uses of industrial hemp.
This year, Pencek planted 8,000 hemp plants on a little more than five acres, and the planned harvest date of Sept. 30 will determine just how lucrative the crop will be.
But Pencek’s level of optimism isn’t as high as it was when he began growing hemp two years ago.
“At that time we had no clue that things would tighten up,” he said. “Two years ago, it was an opportunity.”
Pencek’s farm was one of seven entities in Lackawanna County to receive a permit from the state Department of Agriculture to grow hemp this year.
The state issued more than 60 hemp permits to growers in seven counties in northeastern Pennsylvania in 2020. Statewide, 577 permits were issued, a significant increase from the 324 farms that received a permit in 2019.
In Northeastern Pennsylvania, however, the hemp industry hasn’t reflected the statewide growth as the permits issued in 2020 were about the same as last year.
Pencek believes he knows what is holding hemp back in the region.
“In northeastern Pennsylvania, there is plenty of farmland capable of growing hemp,” he said. “But what comes after the farmer is what the problem is in this area. There are bottlenecks when it comes to a lack of places to process hemp and places to sell it.”
The root of the issue, according to Pencek is a surplus of harvested hemp from last year. He said 50% of the 2019 hemp crop remains unsold, sitting in warehouses. Coupled with the fact there are only three processors in the region, Pencek added, the current hemp market is one of uncertainty.
“We don’t know where the market is going. Those of us in it now expect bumps in the road with the hope if the market flourishes, we’ll be ready,” he said.
Erica Stark, executive director of the Pennsylvania Hemp Industry Council, believes that hemp production can increase in Northeastern Pennsylvania from the standpoint of land access. Wherever traditional agricultural crops were grown, she said, hemp can germinate from those same soils.
Like Pencek, Stark agreed that a lack of processing facilities is a limiting factor.
But not the only one.
“The caveat is the market is questionable right now, and the bigger question is are you going to find a buyer?” Stark said.
At least one grower in the region is attempting to reduce his risk by diversifying.
Jason Holly is a co-founder of Hempsylvania, an organic hemp operation encompassing 12 acres in Butler Township, Luzerne County. He transitioned into hemp after working in the tobacco industry, and is using that experience in his current endeavor. Holly is utilizing specific genetics and planted hemp varieties that are suitable for smoking in the form of cigars. The smokable hemp doesn’t exceed the state-mandated limit (.3%) on THC levels — the chemical found in marijuana — and it’s one avenue Holly hopes will grow his business and reduce risk.
Growing industrial hemp is a balancing act. The longer the plants are allowed to mature, the greater the CBD level.
But, the additional time could cause the THC level to rise and surpass the .3% limit, and by law the crop would have to be destroyed.
Holly plants a strain of hemp that produces no THC, so he isn’t worried about exceeding the state limit.
“We grow for our own brand and we want to expand that brand,” Holly said. “I can focus on that without worrying if the crop is going to have high THC.”
As far as growing the industry in the region, the potential is great, according to Holly. He said the transportation infrastructure is the best in the state, with two interstates and the turnpike traversing the area. That will help with accessing processing facilities and sending products to market.
Still, even though Holly is counting on the Hempsylvania brand to make his venture lucrative, planting and cultivating hemp can be an expensive affair.
Planting costs per acre can range from $1,000 to $2,500. Seeds can cost as much as $1 each, and this year Holly spent $20,000 on hemp seed for his farm.
But the return isn’t bad either, as long as the market holds true. Holly said a pound of top quality CBD hemp flower can be worth $200, while the CBG (a non-psychoactive cannabinoid) variety can bring as much as $300.
“We don’t look at the input costs as much as usable yield that’s compliant and passes our own testing,” Holly said. “We have plans to grow this venture right here in northeastern Pennsylvania, yet that depends on not only on access to processing facilities.
“What we really need here is a drying facility, and it would open the door for hand-grown and harvested hemp in this region.”
While an uncertain market and access to processing facilities may be hampering the growth of industrial hemp in the region today, Pencek said it’s not feasible for some to enter the industry due to overhead costs.
Hemp is labor-intensive from cultivation to harvest and without financial backing, it’s tough for a beginning farmer to make it work.
“Even if you did have capital, it can be hard to justify the expenses,” Pencek said.
Not only that, but it can be nearly impossible to find a bank willing to lend capital to a prospective hemp grower, Pencek added. The issues with the market and processing facilities don’t compare with the difficulty in finding a bank, he said.
“That’s probably the biggest challenge, and it’s because there needs to be more clarity with regulations,” said Pencek, who added some hemp growers have to turn to out-of-state banks to do business. “Banks are afraid if they’re involved in the industry of hemp, they’ll end up being involved in the industry of cannabis.”
If hemp production does eventually thrive in the region, Holly said the benefits will be realized by farmers and non-farmers alike.
A lucrative hemp market can bring new options for farmland, maintaining its integrity for agricultural use as opposed to being lost to development.
But the misconception surrounding hemp still makes the general public wary, he said.
“We’re not here to grow weed. This is a viable crop and a legal product that could protect the beauty of rural areas and prevent the urbanization of farmland,” Holly said. “Hemp can empower traditional agriculture by giving farmers another option for their land.”
Pencek agreed and added there are many farms in Lackawanna County sitting idle.
If certainty returned to the market, he said, hemp can trigger a rebirth for agriculture in the region.
“You’d love to see these farms in northeastern Pennsylvania flourishing and working again,” Pencek said. “With more clarity in the hemp market, farmers can really benefit from this.”