The Promise of America’s Bittersweet Crop

Alaska Gold Rush (1897) Above Skagway, Alaska

John Fraim

Hemp, or industrial hemp, is a strain of the Cannabis sativa plant species that is grown specifically for the industrial uses of its derived products. It is one of the fastest growing plants and was one of the first plants to be spun into usable fabric 10,000 years ago. It can be refined into a variety of commercial items, including paper, textiles, clothing, biodegradable plastics, paint, insulation, biofuel, food, and animal feed.

But it’s not all of these uses that hemp is known for but rather its psychoactive properties. The mixture of industrial and psychoactive use has given it a unique position in the American mind. In one sense, it is the Jekyll & Hyde of the plant world. Or perhaps that archetypal character of the Trickster in Jungian psychology. In some ways, it seems to operate like the reflective, mirror-like water the Narcissus of mythology stared at.

It can be argued that it’s the most important and useful plant in world history. Certainly, it is perhaps the most important and valuable crop in American history with thousands of uses creating the “fabric” of American history and culture. Hemp arrived in Colonial America with the Puritans in the form of seed for planting and as fiber in the lines, sails and caulking of the Mayflower. British sailing vessels were never without a store of hemp seed, and Britain’s colonies were compelled by law to grow hemp. Later, hemp sails caught the wind that powered American naval ships in battles. Or, served as the rigging on America’s great naval sailing ships like the USS Constitution (Old Ironsides) which used 55 tons of fiber for the lines and rigging and even more for making the canvas sails and caulking for the wooden hull. It created the protective coverings of the Conestoga wagons that took pioneers into the western frontier and served as the media on which the US Constitution was drafted.

But in another sense, hemp has also represented the poison or “forbidden fruit” of American crops with the plant’s association with its Cannabis flower and leaves in the production of marijuana. Influenced greatly by the morality of the reformist temperance attitude and movements in the early part of the twentieth century, the memory of hemp’s positive attributes faded into the background. This new association of hemp with poison is a theme that can be viewed in many advertisements of this period.

An attitude about the dangers of hemp increased through the 20s reached its zenith in 1937 when hemp was complexly banned from cultivation in America by the Marijuana Tax Act of 1937. The finger is pointed at the government for this doing in most of our children’s textbooks these days. But perhaps the real truth of all of this illegality designation of hemp in America was not really related to Temperance Movements but rather political lobbies of particular industries in DC at the time such as lobbies for the cotton, oil and chemical industries. Among others. The industries at the time threatened by the expansion of the hemp plant into it.

The Danger of Hemp

So, its little surprise that hemp enters 2020 with this mixed Jekyll Hyde persona. Legalized again after nearly seventy years, there has been a “gold rush” to use its flower and leaf parts for CBD as well as massive investment by global conglomerates in the psychoactive marijuana parts of the plant. In the background, away from all the noise and flash of the marijuana and CBD industries, the hemp industrial use of hemp is just beginning to be explored after being illegal for almost seventy years. The uses number into the hundreds and even thousand such as its use for building materials, foods, supplements, bio-composites and biofuels.

And, looking back over the first years of hemp’s reintroduction back into legality, hemp has seemed to live up to its dual persona association to both good and bad things. For example, the gold rush to grow CBD hemp has left many farmers with far too much surplus and a disenchantment with this new industry. The government has not helped much in giving hemp a bad name by imposing unclear regulations on how it is to be grown or confiscating “hot” crops grown over the low THC limits imposed by the government. The response of the government has flowed over to other peripheral industries associated with hemp such as the banking and insurance industries. Unlike other crops, hemp is currently not subject to getting federal crop insurance protection.

Added to these farming problems with hemp are the crashing stocks of the great CBD and marijuana companies like Canopy Growth and MedMen. In fact, the six largest publicly traded cannabis companies lost a collective $25 billion in market value since March of 2019. The online publication Quartz quoted Kevin Murphy of Acreage Holdings as saying 2019 was “the 2008 of the cannabis industry.” The Marijuana Index, which tracks stocks of the 45 leading North American cannabis companies plummeted 63% percent after April 2019, as investors fled a sector rocked by new regulations which slowed rollouts in mega-markets such as California and Canada. There were also additional problems such as the vaping disaster and the growth of the illegal marijuana market in California.

But again, living up to its bittersweet associations with a dual persona, there has also been a rising recognition that CBD and cannabis have substantial pharmaceutical, food and health benefits. At the UCLA Cannabis Research Initiative, Research Director Dr. Ziva Cooper, leads investigations about the potential for THC and CBD to reduce reliance on opioids as well as studying the impact of cannabis use on HIV-associated inflammation or the effectiveness of cannabidiol to address symptoms associated with rheumatoid arthritis.

And professor Josh Kaplan is quoted in Leafly about new research into CBD as a preventive strategy to protect against damage from a traumatic brain injury. As noted by Kaplan, a recent study suggests it may also help in preventing long-term devastation from severe psychological trauma. Studies such as this have tremendous effects for those suffering from exposure to a traumatic or stressful event labeled with the designation of PTSD. In fact, early lab studies suggest that CBD might prevent the development of PTSD by impairing the memory of a traumatic or stressful event. Further, the studies extend support for CBD’s potential value as a preventative strategy for high-risk activities such as military combat. Professor Kaplan notes that the benefits extend beyond the military as nearly 7% of the population experience PTSD symptoms from ono-combat related events such as vehicle accidents or domestic violence. Clinical trials that back up this lab research are on the horizon.

Ziva Cooper, Director of UCLA Cannabis Research Initiative 

Hemp has a mixed persona in the same way we all have a mixed persona. And, with the technologies of modern process engineering and bioscience and engineering, hemp will obtain new personas in the future. Hardly considered or mentioned today in the grand hemp debates and battles for market share is its role in creating an eco-friendly and sustainable world.

While much of the future of hemp is about changing consumer minds and its associations with its psychoactive cannabis strain, much of hemp ‘s future will be involved with changing business minds rather than consumer minds. In this area, there is less emotion and psychology involved but rather hard ratios for substitute inputs into manufacturing processes in need of sustainable alternatives to current unsustainable inputs.

An entrepreneur or company desiring to pursue the tradition use of hemp in American culture can spend a lot of time and money attempting to educate and influence American consumers about hemp. Much more worthwhile is showing manufacturers that hemp can be an efficient and cost-effective substitute for current resources they are using. Here there are a number of important questions that need to be asked. One of the most important questions for manufacturers are what current unsustainable manufacturing inputs used are closest to “extinction” as a resource. These are the ones where substitutes are needed the most. What industries are involved here? Is there a pattern? Even for industrial inputs not close to “extinction” are there cost efficiencies and product qualities associated with using hemp over other resources? One of the qualities of hemp fiber is both its incredible strength and lighter weight than many other resources.

There are many other questions to ask such as the right interfaces between hemp producers and manufacturers. Which employees and positions of manufacturers have this information and understand it? Process engineers? In fact, are those who understand the use of hemp in manufacturing process in manufacturing industries in the first place? Or, are most of them presently outside industry in the academic, research and science professions? Who understands the key business metrics, indexes and ratios in this area?

One factor to consider if the future “life expectancy” of a particular unsustainable industrial input, resource given present use and projected future use. As life expectancy decreases does cost of using the unsustainable resource increase? For example, as oil moves towards greater scarcity in the world, it becomes more expensive to obtain as greater pressure is needed to bring oil out of the ground from increasingly deeper holes. Another example is the use of hemp in the cotton market. The US cotton crop uses 25 percent of all pesticides used in US agriculture, so a cotton replacement or supplement is a likely candidate for manufacturers who utilize large amounts of cotton.

New Trading Platforms for Hemp

The current interface between hemp and consumers garners most of today’s news and activity. Yet the future interface between hemp and industry might be where the real potential of hemp might reside. In effect, selling hemp to consumers involves a number of familiar business forms and structures such as product branding and retail distribution. Selling hemp to businesses, though, though, is much different involving perhaps the creation of new business forms outside of consumer products, brands and retail outlets. Business structures for the interface between hemp and business might have some of the characteristics of current B2B markets. However, there will most likely be a number of interesting new techniques and methods contained in new structures.

Attempts to provide this interface between hemp production and manufacturing, has produced a number of interesting new structures in the form of exchanges, indexes and brokerages. One of the most interesting and promising is Julie Lerner’s PanXchange, the first hemp commodities exchange and hemp’s first trading platform. One of the results is the creation of a futures markets for hemp. Since its founding in 2011, PanXchange has become the industry’s leading provider of market structure solutions for OTC commodities. Lerner is more than up to the task coming not from the cannabis industry but from the giant global food conglomerate beginning her career with Cargill International in Geneva, Switzerland and later becoming senior trader for the firm’s Latin American sugar markets. In this role she focused on the development of origination markets with successful financing programs, and warehouse and distribution programs. One of her specialties is in bringing liquidity and efficiencies to thin and/or nascent markets. Like the nascent market for industrial hemp.

Another company attempting to help provide an interface between hemp producers and hemp buyers is Jonathan Rubin’s New Leaf Data Services and their price index called Hemp Benchmarks. New Leaf Data Services is a leading provider of financial, business and industry data for emerging markets in North America and offers comprehensive and unique benchmark services for public, private and financial institutions through their Cannabis Benchmarks and Hemp Benchmarks divisions. Rubin has nearly 30 years of business experience in regulated and unregulated commodity markets, including 20 years in commodity data services advising on strategy, financing, M&A, sales, partnerships, and new business creation. He co-founded Cannabis Benchmarks & Hemp Benchmarks in 2015 to bring transparency and efficiency to cultivators, dispensaries, investors, traders and other cannabis market participants through validated, standardized benchmark price assessments.

The managed marketplace called, created by Michael Gordon, is dedicated to building bridges between licensed producers, processors and retailers with a B2B platform for wholesale transactions and business development. The company maintains a carefully curated network of verified and vetted buyers and sellers that helps to streamline sales and procurement of hemp.

Jeffrey Cole founded a hemp brokerage service in Boulder, Colorado called U.S. Hemp Brokerage Services that provides industrial hemp farmers, processors and manufactures with brokerage services. More than a brokerage services, though, the current focus of the company is on hemp brands and markets for local, regional and national wholesale clients. While the focus of USHB is currently on branding and retail, future plans are to act as an interface between producers and the business community. Cole notes they are targeting four sections in the non-CBD market: building, packaging and paper, food & beverages and eventually even fiber markets. In the future, the company might become a true brokerage service or interface between hemp producers and industrial buyers.

A Business Platform for Industrial Hemp Might Be What Is Needed

In the end, what is perhaps most needed for the interface between hemp producers and industrial users is some hybrid form of the above business structures. This hybrid form might exist in the form of a business platform connecting producers of sustainable inputs to manufacturers using unsustainable inputs. In ways, a business platform that connects agricultural products to industrial inputs, crops that are grown to minerals that are mined. Within this platform hemp would certainly be a prime candidate for a key actor.

Creating a business platform interface between hemp and industry is one of ways to perhaps bring agriculture to the forefront of the world of technology. As observed in the brilliant new book The Business of Platforms (2019), the dominant companies of our era are technology companies that have one thing in common: they are all platform businesses. The book The Business of Platforms is authored by David Yoffie at Harvard Business School, Michael Cusumano at MIT’s Sloan School of Management and Annabelle Gawer at the University of Surrey. The book offers an in-depth look at platform strategy and digital innovation, exploring how a small number of companies have come to exert extraordinary influence over every dimension of our personal, professional and political lives.

The book argues that the value of business platforms is largely created by their network effects, with the potential for a winner-take-all or winner-take-most outcomes. However, the authors caution that platforms are a double-edged sword fraught with abuse of power, bullying, poor labor practices and bad actors that undermine even the most successful platforms. The result is that failure is more likely than winner-take-all with mispricing, mistrust, mistiming, and hubris lead to hundreds of failures compared to relatively few successes. One of the most important observations from the book is that “old dogs can learn new tricks” in that conventional companies can adapt to a platform world with a buy, build, or belong strategy.

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As this interface between hemp and industry is explored, the current “gold rush” in the CBD and marijuana industry continue on for the near future and then most likely reach some level of maturity with growth flattening out and industry segments gaining definition. Niches of the market will stabilize, and dominant players will establish their positions and move towards monopolies. Much of the groundwork for the future industry is already being established with the world’s largest beverage companies buying marijuana and CBD companies with the great tobacco and food firms close behind.

In this sense, it is likely that this marijuana and CBD industry will take on the characteristics of old school, traditional industries. America might be entering the peace and love with the Age of Aquarius. But a skeptic like me sees little power in the force of astrology matched up against the product demands of the American consumer.

Marijuana and CBD products will become more sophisticated and sold at retail locations designed by America’s great designers of retail space. A quick browse through a publication like Marijuana Business Magazine shows an industry that has grown far away from its old hippie days and publications like High Times, now struggling to become relevant in this new business environment. Advertising is not the old cut and paste stuff thrown together on the kitchen table but now brands built with perfect lighting and copy from leading advertising firms.

And, the dispensaries or retail locations selling the product will come to appear more like outlets of a Tiffany & Company or the showroom of a Rolls Royce dealership. One is no longer buying that plastic bag of weed off the street from a suspicious looking kid. The product branding for this particular part of the hemp plant obtaining a status similar to a luxury car or diamond. The branding will not be based on photos from an old edition of High Times. Now, branding will be the beneficiary of millions of dollars-worth of media propaganda.

Modern Cannabis Dispensaries / A Long Way From the Old Head Shops

Hemp might offer a duality persona or symbol to many Americans. But the CBD and marijuana side of hemp is not about duality symbols but rather those single-purpose symbols called products. Anyone who doubts this needs only needs to visit one of the CBD and marijuana trade shows like the MJ Biz Convention last December in Las Vegas occupying 275,000 square feet of the Las Vegas Convention Center and close to bursting out of the seams of the massive place. Over 35,000 were in attendance with close to 1,500 different booths. The fastest growing trade show in the nation. After the show, even one of the writers for Hemp Biz Daily, the sponsor of the show and one of the leading news sources in the industry, asked if things in the industry are getting too big observing booths at the show from companies only vaguely connected to the industry.

Marketing research companies like Brightfield Group and New Frontier Data track this incredible growth. They are not your staid old market research firms. Take a woman named Giadha Aguirre de Carcer, founder of New Frontier Data in Washington DC. The logo of the company features a slick logo of a Mustang running, the mane of its hair looking like flames blowing in the wind.

Giadha arrived in the industry from a little different track from those old cannabis entrepreneurs of yesterday. Fluent in five languages including French, Italian, Spanish and Portuguese, she was born in Italy, raised in France and Spain, earning an Associate Degree in Business Administration from Miami Dade Community, a Bachelor of Arts degree in International Relations & Trade from the University of Pennsylvania and a Master of Arts degree in International Security from the Edmund Walsh School of Foreign Service at Georgetown University.

50 Tons of Hemp Rigging on America’s Greatest Battleship Old Ironsides

When I think of the position of that old traditional American hemp plant in all of this, the plant that helped the Pilgrims cross the ocean, that rigged old Ironsides, that served as a draft media for the Constitution, a particular image that comes to mind. The image is from a photo of a line of people going over the mountain above Skagway, Alaska in 1897, part of the Alaska gold rush into the Yukon. The Klondike Gold Rush as it was called. It has added significance to me since I visited Skagway on a cruise with my family in the early 1990s.

A few sentences about this gold rush seem in order because of its relationship in my mind between the CBD and marijuana market – described as a “gold rush” – and a type of outsider firm position to the larger industry this gold rush is part of. A gold rush seems a good metaphor for this type of phenomenon that has gripped much of the nation in the past few years, particularly last year. In ways similar to past events like the Tulip bubble of 1637 or today’s bitcoin mania.

On August 16, 1896, an American prospector named George Carmack, his Indian wife Kate Carmack (Shaaw Tláa), her brother Skookum Jim and their nephew Dawson Charlie (K̲áa Goox̱) were travelling south of the Klondike River. Following a suggestion from Robert Henderson, a Canadian prospector, they began looking for gold on Bonanza Creek, then called Rabbit Creek, one of the Klondike’s tributaries. It is not clear who discovered the gold: George Carmack or Skookum Jim, but the group agreed to let George Carmack appear as the official discoverer because they feared that authorities would not honor an indigenous claimant.

Gold was present along the river in huge quantities and Carmack measured out four claims or strips of ground that could later be legally mined by the owner, along the river. The claims were registered next day at the police post at the mouth of the Forty Mile River and news spread rapidly from there to other mining camps in the Yukon River valley. By the end of August, all of Bonanza Creek had been claimed by miners.

The gold rush began a year later in July of 1897 eleven months after the initial discovery of gold, when the steamship Portland arrived in Seattle from Dawson with “more than a ton of gold” according to the Seattle Post-Intelligencer. The Klondike Gold Rush was on and resulted in what was known as the Klondike stampede. An estimated 100,000 people tried to reach the Klondike goldfields but only around 30,000 to 40,000 eventually did.

Many Klondikers died. Or lost enthusiasm and either stopped where they were or turned back along the way. The trip was long, arduous and cold. Klondikers had to walk most of the way, using either pack animals or sleds to carry hundreds of pounds of supplies. The Northwest Mounted Police in Canada required that all Klondikers bring a year’s worth of supplies with them. Even so, starvation and malnutrition were serious problems along the trail.

The height of the Klondike gold rush lasted from the summer of 1897 until the summer of 1898. The migration of prospectors caught so much attention that it was joined by outfitters, writers and photographers. The Klondike Gold Rush slowed by the end of 1898 as word got out there was little gold left to be had. Countless miners had already left Yukon Territory penniless, leaving gold-mining cities such as Dawson and Skagway in rapid decline.

MJ Biz Con 2019 Las Vegas Convention Center / The Nation’s Fastest Growing Trade Show

The image of the long line of young men trudging over the mountain into the Alaskan gold rush,  a thin black line against the white snow of the Skagway Mountains, a piece of dark dyed hemp thread, thrown over the mountains, disappearing through a curve at the summit, seeking its fortune by going after an (unsustainable) mineral called gold. The little JPG from the Internet is such an important symbol and image to me these days.

It has a home on the desktop of my Mac and displayed on my HP Omen 32” inch screen. I click it into life every now and then when I think about the current gold rush of the marijuana and CBD industry. It never fails to offer some insight into that past episode of mass hysteria.

This outside perspective of observing the gold rush crowd go over the mountain pursuing gold seems to be a personification traditional American hemp in today’s marijuana and CBD industry, the current relationship of hemp’s stalk its fiber watching all the activity involved with the plant’s flowers, leaves and oils, the plant’s part directed at consumers. The other part directed towards business and not consumers.

It is the position of those involved in finding new uses for this hemp that built the nation. One searching for fellow travelers pursuing America’s traditional form of hemp in the current marijuana and CBD industry finds things are pretty lonely out there. If you were going to find these hemp soulmates anywhere, you probably would expect to find them at the world’s largest marijuana trade show, the 2019 MJ Biz Con. And, after studying the list of exhibitors at the show walking miles of booths in this marijuana city inside the Las Vegas Convention Center, you would discover maybe a few pursuing the traditional type of hemp. You would greet them like long lost brothers and exchange notes and maybe talk of some future deal. Let’s stay in touch you’d tell them as each of you disappeared back into the gold rush crowd of the show.

This was somewhat the case in Las Vegas last December. The position of a true outsider in an industry. Looking in on it perhaps from the outside perspective of the photographer of that 1897 photo of those young men trudging over that mountain above Skagway into the death of the Yukon.

Home Made of Hemp

The Canadian media scholar Marshall McLuhan made the distinction between mediums and messages observing that “The medium is the message.” One of the things McLuhan meant was the context of the world influences the meaning of content in this world. In this sense, the destiny of the traditional industrial hemp plant might be related more to creating mediums of the world rather than the contents of this world. These mediums will become the new constructed world related to architecture and buildings and roads and processes that go into this construction. In effect, the contents within this constructed world can be viewed as McLuhan’s messages.

This new medium of industrial hemp will create a relatively invisible ecology of our new, emerging world, surrounding everything like water around fish. Someone once noted that although it was unclear who discovered water it was clear it wasn’t fish. Maybe it is appropriate that it goes its own path, away from the noisy, flashiness of the gold rush of CBD and marijuana hemp.

It’s a strange plant, this hemp for industrial rather than consumer use. Few are shouting its arrival to the sky like the consumer hemp industry. And, for those shouting its arrival few seem to be listening. It is doubtful many will celebrate new processes for moving hemp fiber into manufacturing inputs, creating materials contained in products rather than products by themselves.

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Which way will the old hemp plant of American culture venture? It has seen so much over the years. If only it could talk. Maybe it can. But are we capable of listening anymore? If could talk, it might sound something like Huckleberry Finn, journeying down the great river through America containing all the stories about hemp. None of these stories are about the use of the plant for CBD and only a few about its use for marijuana.

Amidst all the flashy signs and loud noises of the current marijuana and CBD industry, the historic industrial hemp moves forward rather slowly and silently. Watching the big gold rush go over the hill in search of new riches. But the old hemp rather goes things alone with the help of a scattering of entrepreneurs and businesses here and there.

There is much against this fiber part of the hemp plant. Still, there are a few entrepreneurs and start-up businesses out there pursuing uses for it, attempting to make connections with manufacturers and industry. There is usually not a lot of financing behind these new hemp pioneers. Certainly not the financing behind big marijuana companies like Canopy Growth.

But this handful of entrepreneurs pursuing the fiber part of the hemp plant have a few things going for them. One thing is modern agricultural science and industrial technology like genetic programming, bioscience and process engineering. Hemp has been perhaps the world’s most useful and diverse plant of the past. Truly a magic plant. It has been the super plant in the past. What might it become with modern magic of science and technology applied to it?

Another thing that industrial hemp has going for it is the increasing need to find replacements for inputs into our manufacturers. This is much more than current buzz words like “eco-friendly” or “sustainable” that all politicians echo as essential parts of their political chants. Rather, they are deep concerns and challenges for manufacturers in our modern world of decreasing natural resources. Consumers have much less concerns about these words than businesses do. For many consumers it means little more than using different types of drinking straws or recycling materials. But for industry and manufacturers of products it means a certain clock is constantly ticking and time is running out. With each new day, millions of tons of irreplaceable resources are used as inputs to make our products. Not only are many of them close to extinction (like Yukon gold) but their input into the manufacturing system creates toxic things that threaten life on earth, moving other things on earth closer to extinction.

Hemp has played an important part in America’s past and it might play an even more important part in America’s future. Ultimately, the thin hemp stalk plant might win the day over its short, bushy CBD relative. The potential industrial use of hemp might ultimately be larger than the CBD and psychoactive parts of the plant. Technology will play an important part in not only creating new uses for hemp but also in creating the needed communication between two parts of America that have not had much communication in the past: agriculture and industry.

These new forms of communication between producers of sustainable agricultural resources (like hemp) and users of unsustainable mineral resources (like gold) are already starting to happen with systems like PanXchange. It is cause for optimism that some are listening. For example, PanXchange founder Julie Lerner’s talk at MJ Biz Con was well-attended with many questions from the audience. Perhaps PanXchange will itself evolve into this new type of business platform we mentioned.

Whatever the case, it seems likely that this non-CBD industrial hemp will never receive the media attention and promotion as CBD and marijuana. This is the fate of McLuhan’s mediums or environments that quietly and slowly move in over the landscape like San Francisco fog. Most likely, its fate is to become parts of new processes to create a sustainable world. To become part of that invisible context, or medium, of the world. The background of the world that is simply taken for granted like a fish takes water for granted. The great products and brands made from hemp flowers and leaves will continue to battle each other as larger and larger companies move into the consumer, retail hemp space.

For now, the hemp plant of American history (and industry) watches its relatives go over that gold rush hill above Skagway. It watches for just a little while, though, not transfixed by all the excitement like everyone else. It watches for a few moments and then turns away from watching all of this gold rush action and goes its own way into the world. Not in search of making the contents for increasingly sophisticated dispensaries but in creating the context of a new, sustainable, world.


John Fraim is Founder of Midnight Oil Studios and a Principal in Haywood Industries, a start-up company pursuing the industrial hemp space. More on John.



One thought on “The Promise of America’s Bittersweet Crop

  1. Very interesting John….thanks for sharing this. As time goes by, down through the ages, man finds new interesting
    ways to help others along with themselves…What progress to discover new ways to help people, make things from the Hemp and profit along the way. it is good to learn from the past, but also good not to stay in the past but venture forward with new discoveries and advance medical science also. Barbara

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