A York County hemp company has agreed to buy a Canadian maker of hemp processing machinery, boosting Pennsylvania in its race for market share in the newly legal crop.
Groff North America — which is developing an 80,000-square-foot site in Red Lion to be the state’s largest hemp processor — has signed the purchase agreement for acquisition of Canadian Greenfield Technologies Corp.
The Calgary-based company makes the HempTrain, a machine that can process up to 12 million pounds of hemp per year.
Earlier this year, Groff became the first U.S. firm to buy a HempTrain unit. Now the company will own the equipment maker itself.
Groff North America co-founder Steve Groff, a licensed surgeon who grew up on a dairy farm, announced the acquisition on Wednesday in the Lancaster Farming Industrial Hemp Podcast.
The deal, a stock purchase agreement, will close in the fourth quarter.
Groff declined to give the sale price, but he said it would be substantial and generate jobs in both the U.S. and Canada.
Canadian Greenfield’s entire engineering team will be retained and will remain in Canada to expand the machine’s capabilities.
"The HempTrain is sort of like an iPhone 1. It's not as good as iPhone 7, but it's an incredible platform from which we can build even bigger and better processing machines, as well as add-ons such as extraction and drying," Groff said.
The HempTrain, in commercial use since 2016, processes the crop for fiber, seed and CBD, a chemical reputed to have medical uses. Most machines handle just one of those outputs.
The new machine is also gentler than the traditional method for extracting the hemp fibers, called decortication, which involves mechanical hammering.
A HempTrain costs Canadian $1.94 million (U.S. $1.5 million).
Groff said the machine’s price and size position it for broad use in the fledgling U.S. hemp industry.
Since commercial hemp production was legalized in December’s federal Farm Bill, a number of states have been competing to build supply chains for the crop more or less from scratch.
The quickest states may well secure the largest share of the hemp manufacturing market, which in turn would maximize opportunities for local farmers.
Pennsylvania has about 320 permitted hemp growers and at least four processing companies.
“We expect this (acquisition) to positively impact the hemp industry in Pennsylvania, as there (is) currently a need for hemp processors across the state,” said Casey Smith, a spokeswoman for the state Ag Department.
Groff holds contracts with more than 20 farmers, mostly in Lancaster and York counties, to grow 2,000 acres of dual-purpose hemp this year for fiber and seed.
Some of this hemp is already being harvested and baled. It will be processed when the HempTrain in Red Lion is fully operational this October.
Listen to the full conversation with Groff on the Lancaster Farming Industrial Hemp Podcast at bit.ly/LFpodcast44