Market Overview

A New Year's Worth Of Pressing Topics For The Hemp Industry

Share:
A New Year's Worth Of Pressing Topics For The Hemp Industry

By New Frontier Data for the Hemp Business Journal

It has been a seminal year for the U.S. hemp industry. In a full year since passage of the 2018 Farm Bill federally legalized hemp cultivation for the first time since World War II, the new domestic market has seen everything from gold-rush enthusiasm to unexpected gloom. Welcomed as a boon for struggling American farmers who had been missing out on a $3.7 billion market in 2018, it has also seen the abrupt downfall of some who bet all-in before a market and supply chain could be established to sell their harvests.

As a new year arrives, some key points to consider from industrial hemp's bumpy baptism:

Skyrocketing CBD Demand Has Stirred Hype

Over the past few years, demand for CBD has increased exponentially. Indeed, between 2014 and 2018, it grew by a factor of six, and gained an immeasurable boost of momentum through passage of the 2018 Farm Bill.

A slew of mass-market retailers started carrying CBD-based products, including pharmacy chains like CVS and Walgreens, as well as grocery stores such as Lucky's Market and Southeastern Grocers. The Hemp Business Journal has estimated that by 2022 CBD sales will reach approximately $5.4 billion, though much remains contingent on the framework provided by federal regulators.

The US Domestic Hemp Market Suffers From Oversupply

The passage of the 2018 Farm Bill led to an explosion of hemp cultivation in the United States. According to the U.S. Hemp Market 2019 State Rankings Report, the acreage of licensed hemp cultivation areas rose from 112,163 acres in 2018 to 480,334 acres in 2019, representing an increase of 328%. The unfortunate drawback is that the industry was not equipped to handle this growth.

While there is certainly expansive demand for hemp and hemp-derived products, there is a critical lack of processors capable of keeping up with such, due primarily to a lack both of hemp-processing equipment or a mature supply chain. In the coming year, the introduction of new processors and established markets will remain vital to the pace and overall health of the industry.

Definitive FDA Guidance About CBD Will Likely Take Years, Not Months

With the growing popularity and marketing ubiquity of CBD products, federal regulators are challenged to perform research and establish policy about the cannabinoid. Questions of health and public safety abound, especially as manufacturers and retailers make far-flung claims about the range and efficacy of such applications.

Since holding a May public hearing with nearly five dozen industry experts and stakeholders, the U.S. Food and Drug Administration (FDA) has pledged to provide guidance and issued consumer updates, but apart from some cease-and-desist warnings has not yet issued definitive guidelines or a framework for the industry's direction.

Between the recency of the mysterious vaping crisis and the scientific community's desire for long-term health studies, no immediate determination seems forthcoming.

USDA's Interim Hemp Regulations Have Caused A Stir

In October, the U.S. Department of Agriculture (USDA) released its interim rules for the federal hemp cultivation program. Though the interim rules provide some much-needed guidance to hemp cultivators, they also generated some confusion, particularly per testing standards.

Under federal law, hemp must not contain more than 0.3% delta-9 THC. However, the USDA's interim rules state that hemp must be tested for total THC content, which includes the non-psychoactive cannabinoid THCA. Given that most tests currently do not test for total THC content, the USDA might be expected yet to tweak its rules as the agency edges closer to its finalization of regulations.

The Global Hemp Market Continues To Grow

The global hemp market has grown by leaps and bounds. Spurred by growth in the CBD market, China has reluctantly started to approve hemp cultivation for CBD extraction. While only four companies (all located in China's Yunnan province) have been approved for CBD production, Chinese corporations are nevertheless making major investments in CBD production overseas.

In the European Union (EU), the CBD-based drug Epidyolex was cleared for sale. Canadian licensed producers have also started to invest in EU-based hemp companies in the hopes of gaining a foothold in the emerging EU market. Though the European Food Safety Authority has determined that cannabinoids derived from hemp are considered as a "novel food" additive, the European Industrial Hemp Association is challenging the ruling.


William Sumner

William Sumner is a writer for the hemp and cannabis industry. Hailing from Panama City, Florida, William covers various topics such as hemp legislation, investment, and business. William's writing has appeared in publications such as Green Market Report, Civilized, and MJINews. You can follow William on Twitter: @W_Sumner.

The post A New Year's Worth of Pressing Topics for the Hemp Industry appeared first on New Frontier Data.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Image Sourced from Pixabay

Posted-In: Cannabis Government News Regulations Eurozone Global Markets General

 

Related Articles

View Comments and Join the Discussion!

Cannabis Movers

Sign up for our secret cannabis newsletter!
Never miss out on the breaking news in the Cannabis Industry!