The U.S. hemp industry has seen massive growth since the 2018 Farm Bill legalized the cultivation of industrial hemp. Bolstered by the demand for hemp-derived CBD, the sector is already worth millions just a year after federal legalization, and experts predict it may hit $20 billion in 2024.
However, according to a report released by the U.S. Department of Agriculture (USDA), the nascent industry hasn’t yet settled into a rhythm. Titled ‘Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs,’ the report explored the economic viability of the growing American hemp industry after decades of prohibition due to hemp’s close connection to marijuana.
The 2018 Farm Bill defined hemp as cannabis with less than 0.3% THC, differentiating hemp from marijuana and setting the stage for countrywide cultivation. But before that, Congress had approved state-level pilot programs in 2014, allowing a select group of farmers in certain states to grow and sell hemp for research.
“Under the pilot programs, United States industrial hemp acreage reported by states increased from zero in 2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 acres planted in 1943. By December 2019, hemp could be grown legally in every state except Idaho, Mississippi, and South Dakota,” says the USDA report.
According to the report, one of the biggest issues facing the U.S. hemp industry is inconsistency among the states. “There is no comprehensive data source regarding the emerging United States hemp industry or requirement to report a consistent set of data for the pilot programs,” says the report.
“States collected data at various times and levels of aggregation. For example, some states report hemp data by intended end use (grain, fiber, cannabidiol or other extracts) while others do not report data,” noted the report.
The report also mentioned the lack of correct data that’s common to the U.S. hemp industry. On top of that, hemp’s connection to marijuana makes it a sensitive topic. The report states that getting stakeholders involved early seems to help smooth out some wrinkles, adding that in some states, hemp legalization failed because of law enforcement concerns or lack of public support.
“Colorado and Kentucky are two examples of states that included law enforcement stakeholders early when establishing their pilot programs. This shows an early basis for dialogue and shared knowledge.”
The study concludes that although the U.S. hemp sector seems to be growing in leaps and bounds, it likely won’t emerge as a strong economic player in every state.
“As with other crops, it is not likely that hemp will be economically viable in every state. States that moved quickly to establish pilot programs were not leading producers of competing major field crops, and growers are not likely to plant or process hemp if more profitable options exist.”
Industry watchers believe that the USDA report has given hemp industry players like MCTC Holdings Inc. (OTC: MCTC) a lot to think about going forward.
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