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Industrial Hemp: New Markets for the Ancient Plant


With the long-awaited release of the USDA Hemp guidelines, the U.S. industrial hemp industry is well on its way to fruition. We will be focusing on the regulatory nuances, business challenges, and growth opportunities of hemp as they emerge. In the meantime, we’ve put together an introduction to hemp and take a look at the early market movers for this potentially game-changing crop.

Hemp has been an agricultural product for millennia, and it was once an important crop central to the founding of the U.S. Yet for decades, the cultivation of hemp was banned and a once flourishing industry died with it. That all changed with the passage of the 2018 Farm Bill, which made hemp cultivation legal again.

Suddenly a timeless plant with countless industrial and medical uses is back in a big way. As individual states work to create regulatory programs, many established and emerging businesses are leaping at the opportunity to cultivate hemp or use it as an ingredient in a wide variety of uses.

What exactly is industrial hemp?

Industrial hemp is a variety of the plant Cannabis sativa L, a genetic cousin of cannabis. The major difference between them is that hemp has 0.3 percent or less of THC, the psychoactive ingredient in cannabis. The Farm Bill effectively descheduled hemp as a controlled substance, so that hemp and all of the useful products derived from it, are no longer regulated in the same way as cannabis (although CBD, remains in a regulatory gray area).

A brief history of industrial hemp

The cultivation of hemp is as old as farming itself. Anthropologists have found evidence of human cultivation dating back to the advent of agriculture, roughly 10,000 years ago. Hemp was also one of the first plants to be spun into fiber. An 8,000-year-old piece of ancient Mesopotamian cloth, the oldest ever found, was made of hemp. Evidence has shown China has grown hemp for about 6,000 years, while cultivation in Europe and the rest of the ancient world began around 1,200 BCE. By the sixteenth century, hemp’s fiber and seeds made it an important cash crop in Europe, and soon after it became the dominant crop in the British Isles and Russia’s number one export.

Hemp was also an important agricultural product and commodity in the U.S., where in the 1700s it gave rise to cordage and canvas businesses across the nation. It remained a core crop for a century until other industries, along with anti-cannabis legislation, contributed to its being banned. But, with thousands of uses, from paints to textiles to paper (the original Levi’s jeans and the paper the U.S. Constitution was written on were made of hemp), industrial hemp has always been a vital agricultural crop worldwide.

Some of industrial hemp’s innumerable uses

  • Hemp as Food — Hemp seeds are about 30 percent oil by weight, and the U.S. Department of Agriculture has shown hemp seed oil to be highly nutritious, with 20 percent high-quality digestible proteins. Meal made from the seeds is also used in food products, from nutrition bars and tortilla chips to beer, as well as in animal feed.
  • Hemp as Fiber — Hemp fibers were once widely used to make, among other things, canvas for sailing ships. The word “canvas” comes from “cannabis.” Today hemp is used to make rope, paper, and plastic and composite materials for everything from car parts to bathroom fixtures. It’s also used to make consumer goods, including clothing, shoes, and accessories.
  • Hemp as Medicine — Cannabidiol (CBD), which can be derived from industrial hemp or from any cannabis plant, has surged in popularity in recent years for its potential health benefits, which are growing in number as more research is done. The Food and Drug Administration has approved the first drug with cannabidiol as an active ingredient, and more drugs are likely on the way. With CBD already an additive in a wide variety of food and beverage products, cosmetics, skincare, and health products, the market is set for significant growth.
  • Hemp as … — Hemp can be used in bio-diesel fuel, lubricants, paints and varnishes, inks, plastics, a wide variety of body care products, animal bedding, garden mulch, and building materials.
    First Steps of the Industrial Hemp Market

    With so many uses both new and old, industrial hemp is quickly becoming a market to be reckoned with. U.S. farmers quadrupled the acres of land planted with industrial hemp to more than 511,000 between August of 2018 and August of 2019, according to the USDA. That represents a 368 percent growth, larger than any other cash crop in the same time period.

As of September, 16,877 new licenses to grow hemp were issued in 34 states in 2019, four times more than the previous year, according to one report. And, the number of licenses issued to process hemp jumped 483 percent.

Who is building the industry?

Cannabis production in maturing markets like Colorado and California are seeing price erosion because they’re doing what markets are supposed to do, competing with one another and achieving efficiencies that ultimately benefit the consumer. But with industrial hemp production now legal, major cannabis producers have been aggressively entering the suddenly enormous domestic market. Companies like Canopy Growth and Tilray are among many Canadian cannabis producers that have invested heavily in industrial hemp-fueled markets in the U.S. in 2019.

Producers of other crops are moving into the hemp market, too, switching from crops like corn, cotton, and wheat. Hemp requires far less water and has thousands of uses that utilize the entire plant, and as experienced large-scale farmers, they’re already set up to cultivate hemp. The Farm Bill also created a path for hemp cultivators to access to privileges conventional farmers have always enjoyed, including crop insurance, legal interstate travel, and basic banking services.

A bright future

Industrial hemp’s 2018 revenues were $1.1 billion, and are expected to reach $2.6 billion by 2022. New Frontier Data, a research company focused on the cannabis industry, predicts that with the signing of the Farm Bill, hemp-based industrial products will see stronger growth than any other cannabis sector over the next five to 10 years.

With that growth will come new jobs, as well, in nearly every sector and at every income level. In addition to roles on farms, the industrial hemp industry will create opportunities for specialized law experts, state and local regulators, financial and insurance experts, marketers, C-Suite executives, and distributors, just to name a few.

The hemp industry has a long way to go before we can accurately assess the crop’s market value, but in less than a year, legal industrial hemp is already a clear disruptor.

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