Karli Miller-Hornick ’11 has been running her own hemp farm for the last two years, despite the various hurdles hemp farmers face due to societal views and legal blockages.

Courtesy of Karli Miller-Hornick ’11

Karli Miller-Hornick ’11 has been running her own hemp farm for the last two years, despite the various hurdles hemp farmers face due to societal views and legal blockages.

November 12, 2019

Alumni Spotlight: Entrepreneur Discusses CBD Startup, Challenges of Working in the Hemp Industry

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Just 17 miles from Cornell’s campus lies an organic farm which grows a particular variety of cannabis — hemp. The reason? Fueling the growing supply of cannabidiol (CBD) products produced by local startup Head and Heal.

Hemp is a term used to identify varieties of the cannabis plant that contain 0.3% or less tetrahydrocannabinol (THC), a chemical compound from the cannabis plant that can have psychoactive effects. While it contains low levels of THC, hemp is rich in CBD, a chemical compound which is not psychoactive and instead can help reduce pain and anxiety.

Head and Heal was created in 2017 after co-founders Karli Miller-Hornick ’11 and Allan Gandelman were inspired by the health benefits of CBD and decided to invest their farm in the industry. “We didn’t really trust any of the products out there,” Miller-Hornick told The Sun, “so we wanted to make a product that was safe, and also accessible.”

According to Miller-Hornick, the company sells a variety of CBD products, including tinctures (herbal extracts), soft gels and lotions, all of which are made with CBD grown and processed at Main Street Farms in Cortland.

Head and Heal’s products are now sold in Cornell Health’s pharmacy.

Early on, the team raised funding from friends and family in a seed round before beginning to grow their hemp crops. They also enjoyed support from the local community and business owners in Cortland. Since its founding, Head and Heal has grown rapidly, hiring about 1 to 2 people every month and developing from a 3-person team into a business of over 25 employees in just a year. “It’s been really great to create those jobs for our community,” said Miller-Hornick.

According to Miller-Hornick, Head and Heal’s main competitors are Charlotte’s Web, a Boulder, Colorado-based producer of hemp-based CBD wellness products and Garden of Life, a Palm Beach Gardens, Florida-based vitamin company that has recently branched into the CBD industry.

While Head and Heal may not have the geographic reach of its competitors, there are a number of factors which differentiate it from the competition.

For one, unlike products sold by Charlotte’s Web or Garden of Life, Head and Heal tinctures are USDA-certified organic. According to Miller-Hornick, because this certification is difficult to obtain “that is a huge deal in this industry.”

Furthermore, because Head and Heal is “farmer-owned,” it enjoys a “price point” advantage.

“Because we’re vertically integrated, because we’re the farm, because we’re the profiter, we can come to market at almost a third of what other companies are charging,” Miller-Hornick said.

While a 600 mg tincture by Head and Heal costs about $45, a less-concentrated 500 mg tincture by Charlotte’s Web costs about $75.

Despite its advantages, however, Head and Heal has not achieved success free of obstacles. The stigma surrounding hemp and its relation to drugs derived from cannabis has posed a number of challenges for the company.

“We’ve lost bank accounts, we’ve lost our credit card processing, we had our payroll company not willing to work with us, we’re not able to get normal business loans,” she explained. “So there’s a lot of challenges we face because of the stigma of hemp and marijuana.”

According to the American Bankers Association, even though several states have legalized the use of cannabis, possession, distribution or sale of cannabis remains illegal under federal law, which can expose banks–which are federally regulated–to regulatory risks.

Even after the 2018 Farm Bill legalized hemp and changed its classification from a Schedule 1 drug to an agricultural crop, challenges persisted. “We really thought that was going to change things for us,” said Miller-Hornick, “but it hasn’t, unfortunately.”

In response, the company has created a lobbyist group and has partnered with other hemp growers in the state to engage in legislative advocacy for the CBD industry.

“We’ve worked really hard on the legislation,” said Miller-Hornick. “We had Senator Schumer here a few weeks ago holding a press conference urging the banks to open up to hemp growers.”

The team also helped to write a hemp bill, which passed unanimously in the state senate and assembly last July. If signed by Governor Cuomo, the bill would, among other provisions, require companies to disclose where their hemp was grown and could legalize CBD-containing beverages in New York State.

According to Miller-Hornick, legalizing CBD in food and beverages in the state is important not only for eroding the stigma around CBD and hemp, but also for helping CBD companies respond to their consumers.

“We create products based on what our customers want,” she said. But the illegality of CBD in food has meant that, even though Head and Heal customers have requested CBD gummies, the company has not been able to deliver.

“New York State says that they want to create an industry here and support farms,” said Miller-Hornick, “but they’re not allowing us to go to market with products that consumers actually want.”

Despite the challenges of entrepreneurial work, however, Head and Heal has enjoyed success in only a short period of time. Miller-Hornick reflected on her path to the company, saying that although she felt a desire to start her own business right after graduating from Cornell, she received a piece of guiding advice that she is glad to have followed: “to go learn from others first.”

“I spent six years working at a startup company and watched them go through the whole process, from raising capital, to expanding rapidly, and then finally shutting down,” Miller-Hornick explained. “And I remember my interview for that job… The CEO asked me: ‘You have an entrepreneurial spirit; why aren’t you going off and starting your own business?’ And I remember telling him that I wanted to learn from his failures.”

For students interested in entrepreneurship, Miller-Hornick advised that “it’s great to go and get your foot in the door at a company that is in its beginning stages and just try to wear as many hats as possible and learn as much as you can through that process, before starting your own business.”