It’s been eight months since the 2018 Farm Bill passed, which legalized the production of industrial hemp, and already, the market has changed considerably. The supply of and demand for industrial hemp skyrocketed thanks to a booming cultivation market, and now, hemp-derived CBD products appear on store shelves across the country – from cannabis dispensaries and smoke shops to supermarkets, big-box stores, and even gas stations.
Today, the demand for hemp-derived CBD products and other hemp products continues to grow as does the number of growers, processors, and other license holders. The team at Cannabiz Media is tracking 12,343 active hemp licenses as of September 1, 2019 in the Cannabiz Media License Database and more licenses are added all the time. Those 12,343 active licenses are split with 11,944 in the United States and 399 in Canada.
Hemp Cultivation Growth from 2018 to 2019
The biggest hemp-related story of 2019 is booming cultivation. As with most industries, the hemp industry is dependent on supply, which starts with seeds and cultivation. In 2019, supply is skyrocketing.
The Cannabiz Media License Database lists 544 active hemp seed licenses in the United States as of September 1, 2019 and 10,672 active cultivator licenses across 30 states. In addition, there are 1,323 active processor licenses.
The hemp cultivation landscape has changed significantly as the number of licenses has grown, and it will continue to change in the foreseeable future as farmers jump onboard what they believe will be a highly profitable crop.
For example, cultivation in Colorado in 2019 is expected to be more than double 2018, and in Oregon, it’s projected to jump by 225%. The amount of approved hemp acreage in Kentucky will triple in 2019, and in Tennessee, there will be more than 12-times the acreage in 2019 compared to 2018.
Overall, the U.S. Department of Agriculture (USDA) reported that by August 2019, U.S. farmers had more than quadrupled the amount of land they planted with hemp over the prior year.
According to data in the Cannabiz Media License Database, the 10 states with the highest number of hemp cultivator licenses as of September 1, 2019 are:
New York: 422
North Carolina: 396
It’s important to keep in mind that some license holders grow more acres of hemp than others, but it will be interesting to see how the distribution of hemp cultivation looks when 2019 ends compared to 2018.
The 2018 U.S. Hemp Crop Report from Vote Hemp found that 23 states grew (or started to grow) a total of 78,175 acres of hemp in 2018. Among those states, the five leaders were:
Montana: 22,000 acres
Colorado: 21,578 acres
Oregon: 7,808 acres
Kentucky: 6,700 acres
Tennessee: 3,338 acres
Comparing those acreage numbers from 2018 to the number of active licenses in each state as of September 1, 2019 pulled from the Cannabiz Media License Database, the leader board could change significantly in Vote Hemp’s 2019 report.
The Future Looks Bright for the Hemp Industry
Since the 2018 Farm Bill passed in December 2018, regulators have been working to develop federal and state rules for the industry. Hemp production rules from the USDA should come soon, and states will be required to modify their own processes and rules to comply.
Take note, the USDA rules might change between the time they’re released and the time they’re required to be final in 2020. That means state and local laws are likely to change more than once as well.
The good news is that hemp license holders are starting to see some positive changes across the supply chain. For example, the Drug Enforcement Agency (DEA) sent a notice in August 2019 reminding law enforcement that hemp is not a controlled substance and DEA registration is not required to grow or manufacture it. This should help hemp businesses that have had to defend themselves against legal confusion since the 2018 Farm Bill passed.
In addition, the USDA made crop insurance available to hemp growers that produce hemp for fiber, flower, or seeds for the 2020 season. The insurance provides coverage under the Whole-Farm Revenue Protection (WFRP) program and cultivators who are part of state or university research programs will have access to it. According to Vote Hemp’s 2018 U.S. Hemp Crop Report, 40 universities conducted hemp-related research in 2018, and that number has gone up in 2019.
Beware of and Prepare for Potential Problems in the Future
Consumer demand for hemp-derived CBD and other products continues to rise, but there will come a point in time when supply will outweigh that demand. The result will be a significant drop in price. U.S. Secretary of Agriculture, Sonny Perdue, gave the following warning about hemp overproduction during an interview with Cheddar back in March 2018, “Farmers in the United States are so productive, they could crash this market before it gets off the ground.”
Bottom-line, basic economics always prevail, but what will be the tipping point in the hemp market? Only time will tell.
Key Takeaways for the Hemp Industry in 2019 and Beyond
Is hemp the biggest opportunity in the cannabis market? Possibly. While the prospects look extremely bright right now, there are still roadblocks that will make this industry a challenging one to operate in through the short-term.