South Dakota legalized rising hemp; farmers say legal guidelines make it a chance

Editor’s Note: This story is part of 100 Eyes on South Dakota, an investigative initiative powered by reader questions and news tips to hold officials accountable and shed light on the truth in the area. the Argus Leader, the Aberdeen American News, and the Watertown Public Opinion.

WILLOW LAKE, South Dakota – A two-wheel drive pickup truck sped down the weathered gravel road. Dust swirled in the early afternoon air, and narrow-tailed mourning doves flew up and scattered from the adjacent field.

The first is a tell-tale sign of the drought that farmers and ranchers across South Dakota have been fighting for more than a year. However, some would say that the second indicates a battle was won.

These gray-feathered birds look through the yellowish pods of the state’s very first hemp crop, said Derrick Dohmann, a seed sales manager at Horizon Hemp Seeds.

When the birds come, it’s time to harvest.

Commercial hemp production was legalized earlier this spring, but South Dakota government officials resisted hemp production for years – even after the U.S. Department of Agriculture ordered state officials to outline crop production programs in 2018.

In fact, Governor Kristi Noem fought the harvest for a long time, saying in 2019 that she would “open the door” to legalize marijuana in the state.

But after much dismay and compromise, the first class of hemp farmers in South Dakota has the harvest underway.

For most, the crop year was good, albeit with some learning curves. For others, it was a constant reminder of the state government’s stronghold during a harvest it apparently does not want.

“They didn’t think it was going to happen,” said Craig Franken, a Clay County hemp processor. “They thought there was no way the hell that would ever be chosen. And then it was time.”

Dryness: SD is divided by the Missouri River. Drought underscored that for ranchers.

What does hemp look like in South Dakota?

Franken promised his late father that he would find a way to get the “best CBD oil in the world”.

Joshua Klumb, a Senator in the South Dakota Legislature, wanted to be harvest experience and an “authority” on the subject for the upcoming 2022 session.

Alex Ufford, a Clay County farmer, was just curious.

At least 20 producer licenses and three processing licenses have been approved by the state’s Department of Agriculture and Natural Resources for the 2021 crop year, according to Argus Leader documents. Of these, 13 growers ultimately planted less than 1,700 hectares, said Derek Schiefelbein, program manager for industrial hemp at DANR.

These growers then chose between the two main types of hemp: hemp grown for grain and fiber (think grocery store hemp hearts or plywood-like boards for house building) and that grown for processing into cannabidiol (CBD).

Almost 100% of the hectares planted were for grain and fiber, according to DANR officials.

Overall, the hemp farmers were successful, said Schiefelbein. However, growing hemp is not the same as growing standard row crops like corn or soybeans.

Grain and fiber plants are incredibly easy to grow. No pesticides are allowed on hemp, but the plants grow so large that the weeds usually die before harvest and the soil remains surprisingly clean.

“You really can’t do anything once you’ve planted it,” said Dohmann of Horizon Hemp Seeds. “You let it go.”

Grain and fiber hemp – like wheat – is densely cultivated with around 750,000 plants per hectare. The crop can be grown on a wide variety of hectares and the input costs are relatively low.

But CBD hemp is a completely different ball game.

Only about 5,000 to 10,000 plants are in any given acre, and seeds cost between $ 0.50 and $ 1 each, Ufford said. Each plant is started individually, and those that are successful are then transplanted to the field one by one.

More: CBD is gaining ground in South Dakota as retailers adopt hemp-based compounds

Regulations, stigma are costly to CBD growers

Ufford and his business partner Franken have been planning to grow and process a small CBD plant for more than six years. But countless state regulations have cost thousands of dollars to run a start-up that could have been saved had it ended up in another state.

First off, they can’t propagate plants for seeds because state law doesn’t allow an indoor greenhouse to be smaller than 2,880 square feet. While Ufford began building a small greenhouse, it didn’t meet state requirements.

Now the greenhouse tarpaulin is lying unused on barren ground, and the Clay County farmer has to plant expensive seeds from North Dakota.

“The people who make the laws are either: First, to make sure it doesn’t happen and doomed everyone, or, second, have no idea,” Ufford said.

Additionally, Ufford and other hemp growers – both CBD and grain / fiber – must do banking outside of state lines.

While South Dakota passed law at the previous session that would allow banks in South Dakota to partner with hemp and cannabis companies, none of that challenge has risen. Instead, hemp producers in need of banking or loan help had to look outside the state, with many banks operating in North Dakota.

Karl Adam, president of the South Dakota Bankers Association, said the organization had hosted meetings for banks in South Dakota interested in working with hemp producers. In 2021, however, none did.

Banking: Marijuana stores, cannabis growers can do banking in South Dakota

High license fees, tests required

However, before seeds can be planted, budding hemp growers must obtain a state hemp license. The applicant, key contestants, and landowner are also required to pass state and state background exams, according to the South Dakota Department of Agriculture and Natural Resources.

If the applicant has been convicted of a marijuana or controlled substance-related crime in the past 10 years, their application will be denied. Once approved, breeders must pay a license fee of $ 500 and processors a fee of $ 2,000.

Compared to the surrounding states, these fees are incredibly high.

In North Dakota, a breeder license costs between $ 100 and $ 350, depending on the number of batches, and a processor license costs $ 200. In Minnesota, a breeder license costs $ 150 plus $ 250 for each location and a processor license costs $ 250 plus an additional $ 250 for each location.

Once the hemp is ready to harvest, state officials test the fields for tetrahydrocannabinol (THC), the main psychoactive compound in cannabis. When crops are tested below the limits set by the U.S. Department of Agriculture, farmers are given the go-ahead to harvest.

If the limit is exceeded, the crops are burned, which leads to a total loss, as there is no crop insurance. Until the beginning of October, no tested fields had crossed the border, said Schiefelbein.

However, many of the farmers who grow for CBD have yet to receive their results. Grain and fiber growers rarely exceed THC limits.

Interest has increased, but concern remains

DANR’s Schiefelbein assumes that, given the success to date, more farmers will apply for licenses for the 2022 growing season this year. There are even reports of corporations planning to invest in hemp fiber processing facilities starting in 2022 or 2023.

But there’s no doubt that hemp still carries a stigma in South Dakota.

With hemp, medical marijuana, and recreational cannabis all simultaneously in the spotlight of South Dakota’s political scene in 2021, the three are often wrongly equated, farmers say. This is unlikely to change anytime soon, despite legalization or further training.

At the end of the day, Dohmann said, “It’s just a large collection of words.”

Rebekah Tuchscherer is the agriculture and environmental reporter for Argus Leader. Contact them at 605-331-2315 or email RTuchscherer@gannett.com.

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