Illinois is going all-in on cannabis. In becoming the first state to legislatively enact (rather than pass via ballot measure) both to legalize adult-use cannabis and create a state sales marketplace, Illinois has seen a surge in interest for industrial hemp. Prompted by the passage of the 2018 Farm Bill, which federally legalized industrial hemp for the first time since World War II, the Land of Lincoln is on its way to establishing a dynamic hemp market.
Case in point: Within 24 hours of opening the application process for hemp cultivation licenses, the Illinois Department of Agriculture (IDA) was inundated with over 400 applications from interested farmers. Since the application process began in May, the IDA received 667 applications, approving 434 cultivators and 89 processors.
That is significant, especially given other states with similar population levels. By comparison, despite Pennsylvania’s being in the second year of its industrial hemp program, only 319 cultivation permits have been issued there.
Confident that Illinois is poised to become a major hemp producer, the Ontario-based hemp company Red White & Bloom (RWB) is making major bets on the market. Late last month, the company signed a letter of intent to acquire what could be one of the world’s largest hemp production facilities.
Located in Granville, the new production facility totals 3.6 million square feet with over 451,282 square feet of production and warehouse facilities. That represents a massive undertaking compared to other hemp production facilities, as it is nearly 1.5x the size of Canopy Growth’s (NYSE: CGC) new production facility in Kirkwood, New York.
Some see hemp as a solution to many of the agricultural woes facing the state. As the top soy-producing state in the U.S. in 2017, Illinois has been hit particularly hard by the Trump administration’s ongoing trade war with China.
In the last year alone, soybean prices have fallen by nearly a dollar per bushel, from $9.54 per bushel to $8.59.
For farmers feeling a pinch, hemp provides a viable alternative. As previously reported, cultivating hemp can be far more profitable than soybeans. Hemp is also viewed as a great rotation crop because of its ability to absorb some impurities from the soil while still gleaning revenue from the land that would otherwise lay dormant.
Whereas soybean farmers might expect to make between $30-$40 in profit per acre, farmers can make around $250 to $300 per acre for hemp grain, and about $480 per acre for hemp fiber, according to Joe Hickey of Atalo Holdings, a Kentucky-based hemp R&D outfit. When cultivating hemp for CBD, farmers stand to clear more than $2,500 per acre.
For now, the number of hemp cultivators in Illinois is fractional among approximately 72,500 farms in the state. However, the surge in interest from farmers and outside companies like RWB represents a wave within a budding industry. By 2022, the Hemp Business Journal estimates that the hemp-derived market will reach approximately $1.2 billion. If the present course continues, much of it may be generated in the Prairie State.