LEXINGTON, Ky. – Speaking to an industry group in the fall of 2015, then-state Agriculture Commissioner James Comer said he saw a bright future for industrial hemp.

“This is going to be a big crop in the state of Kentucky,” Comer said, predicting farmers would grow tens of thousands of acres and that the industry would create thousands of jobs, with hemp fiber, seeds and oil being turned into everything from auto parts and construction materials to pharmaceuticals. Kentucky, he said, “is going to be the epicenter of industrial hemp production in America.”

But this summer, the 10th growing season since hemp returned to Kentucky, hemp has not been the economic benefit many people hoped for. The industry grew steadily for a few years, with increases in the amount of hemp farmers produced and in the number of processors licensed to turn the crop into products. But several large processors went bankrupt after a brutal market downturn in 2019 and farmers collectively lost millions of dollars, driving many out of the business.

Gross sales reported by hemp processors dropped from $193 million in 2019 to $43.5 million in 2021, and this year, the amount of hemp authorized for planting in Kentucky is the lowest since the early days of the program in 2015.

Advocates for hemp argue that ups and downs in the hemp market are to be expected and that hemp still holds potential to boost farm income and jobs in Kentucky. However, a lot of former growers are leery about reinvesting time and resources into an industry in which many lost hundreds of thousands of dollars.

“You mention hemp to a farmer right now and they’ll run and get in their truck and leave,” said Brian Furnish, a Harrison County farmer and longtime advocate for legal hemp who formerly headed the Kentucky Industrial Hemp Commission and the U.S. Hemp Roundtable. “Kentucky’s hemp industry struggles to recover from the 2019 downturn.”

Growers planted the first legal hemp crop in Kentucky in decades in 2014, after Congress authorized pilot projects. It was one of only four states, along with Colorado, Indiana and Vermont, to have crops that year.

Kentucky had hemp on just 33 acres in 2014 and none of it grew to a successful harvest. But over the next few years, interest continued to grow as farmers and researchers worked to figure out the best varieties of hemp plants to use in Kentucky and fine-tuned growing techniques. By 2018 there were 210 licensed growers who planted 6,700 acres of hemp and harvested 6,000 acres, according to state records.

Another development along the way was the emergence of a market for chemicals derived from the flower of the hemp plant (cannabidiol) or CBD. CBD was touted for use in food and beauty products and for relieving problems such as pain, anxiety, inflammation and insomnia. With the emergence of the CBD market, that came to dominate production in Kentucky.

Licensed hemp processors in Kentucky reported $16.7 million in gross sales in 2017 but that number jumped to $57.7 million for 2018. The reported payments to growers for 2018 were $17.5 million, more than double the year before, according to the Kentucky Agriculture Department.

Industrial hemp took another major turn in 2018. Late that year, decades after the federal government effectively outlawed hemp along with marijuana, Congress approved a farm bill that legalized hemp production.

The 2018 farm bill was pivatol in revitalizing the commercial U.S. hemp industry. The law set the stage for an explosion of hemp production in 2019, as growers – some looking to replace a drop in tobacco profits – and processors rushed into the market to try to capitalize on a new opportunity, even though the size of the market wasn’t yet clear.

Kentucky approved the most acres of hemp in the nation, and while not all the approved acres were used, growers ultimately ended up planting 26,500 acres of hemp. That was up from 6,700 the year before, according to state records. Of that, 92 percent was intended for CBD. The number of licensed growers in the state also jumped, from 210 in 2018 to 978 in 2019.

The same thing was happening around the U.S., which had the biggest hemp crop in 2019 since World War II, when the government pushed wartime production for rope and other needs.

“We all had these visions of grandeur. It was gonna be like money growing on trees,” said Will Brownlow, who operated a tobacco warehouse in London but became a licensed hemp grower and processor/handler.

And then the bottom fell out. Hemp production in 2019 swamped the market, causing prices to nosedive. The price for hemp biomass started down in July 2019 and dropped a total of more than 80 percent into early 2020, according to Julie Lerner with PanXchange, which tracks prices and contracts.

“There was a gold rush mentality in the cannabinoid market when hemp became legal in late December 2018,” Lerner said, but “a little bit of hemp goes a long way in the CBD market.”

The fallout for farmers, businesses and investors was ugly.

AgTech Scientific, a large hemp processor in Bourbon County, ultimately sold out to pay its debts after a bank alleged the company was in default on $35 million in loans. Several well-known hemp companies (like GenCanna and Atalo, both large processors in Clark County, and Sunstrand, a Louisville company) declared bankruptcy in 2020.

The market was so volatile that the state Department of Agriculture put out a guide for hemp growers in June 2020 on what to do if they were concerned about a processor going bankrupt.

For the nation, the value of hemp products in 2022 totaled $238 million, down 71 percent from 2021, according to the U.S. Department of Agriculture. The downturn also cut the number of licensed growers. There were 450 in 2021 – fewer than half from two years earlier – and fell by about half again for 2022, to 240.

Not everyone who gets a license to grow hemp does. Some people get a license so they can legally store and sell a crop from a prior year. Of the 240 licensed growers in 2022, for instance, only 77 planted a crop, according to the state agriculture department. The department licensed just 170 growers this year.

There have been some positive stories in Kentucky hemp as well. Victory Hemp Foods, which started in 2015 and has offices in Louisville and a plant in Carrollton, produces high-protein food from hemp seeds. The company, which has 20 full-time employees, ships products across the U.S. and to Canada and Asia, and recently received its first orders from South America, CEO Chad Rosen said.

Hempwood, which is in Murray, turns hemp fiber into flooring and dimensional lumber without using potentially cancer-causing compounds, and can help with the solution to deforestation with a renewable crop, the company said. CEO Greg Wilson said the company has doubled in production and sales every year since opening. It now has 30 employees and buys hemp fiber from 20 farmers, he said.