As Hemp trade in the US is booming, there are more uncertainties regarding its products. Most people confuse Hemp with Marijuana. However, these two plants are entirely different. They might be branches of the same family but have completely different purposes and composition.
Hemp is now a growing industrial raw material. It is used to make over 25,000 industrial products that include paper, cloth, plastic, and concrete. In addition to that, it produces Hemp and CBD oil, which have extensive medicinal properties. It is beneficial for heart disease, psychological disorders, and helps with pain management.
In December of 2018, the United States legalized industrial Hemp by removing it from its lists of control substances. Moreover, the United States Department of Agriculture (USDA) will have hemp licenses for farmers to regulate the cultivation of the crop. This step has doubled the hemp plantations since the legalization.
The US hemp market has increased at an exponential rate. In 2018 the net worth of the industry stood at $1.1 Billion, which is to increase to a $1.9 Billion by 2022. Ken Anderson, the founder of Legacy Hemp, commented on the boom, stating “That’s a profit that blows corn and wheat and everything else out of the water.”
Hemp Trade in the US: New Regulation and Sales
One of the most successful hemp products, popularly growing for the past two years is hemp oil. It makes 23% of the billion-dollar revenue. Most producers opt for making oils with different concentrations that have huge claims about their medicinal properties.
Henceforth, these oils come under the regulation of the Food and Drug Administration (FDA) and here is where the USDA’s jurisdiction ends. The FDA has many regulatory procedures that assure all CBD and Hemp products fall under given criteria.
However, right now, their goal is to prevent mislabeling and mismarketing of CBD oil. In a press release, FDA officials made a statement saying “Our biggest concern is the marketing of products that put the health and safety of consumers at greatest risk, such as those claiming to prevent, diagnose, treat, or cure serious diseases, such as cancer.”
They do not want people to confuse the availability of hemp products, with its legality. This includes strict regulations for hemp production from seed to shelf!
The Hemp trade in the US
The United States is one of the top contenders in the global hemp market. Analysts at U.S. financial services firm Cowen & Co estimate the CBD and Hemp product market to reach a whopping $16 Billion in retail sales.
More and more CBD stores sell consumable Hemp products, balms, oils, and cosmetics. They have also successfully expanded into the CBD pet market, producing dog treats, oils, and food. This has pushed mainstream industrial giants to take their shot at CBD products as well.
A popular ice cream company, Ben and Jerry’s is soon to launch their ‘CBD flavor.’ These new products will come under the regulation of the FDA and require approval.
Another good side to this boom is the benefit it is providing to the farmers. It gives them an opportunity to provide for the growing industrial demand. However, many more farmers have a lingering fear of the trade war and are familiar with growing wheat, corn, and maize.
The Labor Intensive Harvestation
Unlike most crops, the hemp plant is safe to cultivate by hand. This is one of the best ways to salvage its seeds and other products. This process tends to make the cultivation expensive, and that cost is then transferred on to the byproducts sold in the market.
Moreover, the hemp crop requires harvesting and drying facilitates. Most farmers try to make do of existing resources, but everyone cannot. This is mainly why the prices have varied. Anderson recommends these farmers to have a contract agreement with bigger firms before planting season.
This contract can safeguard the rights of the farmers and creates a price floor for them. This way growing the crop is as beneficial to them as it is for the secondary and tertiary producer, although many farmers have lingering fears about the future of hemp and its sustainability as a crop.
Nathan Kean is a Montana farmer who is exclusively growing female Hemp crops. He commented on the uncertainty and market position. He said, ‘Honestly, I think the CBD thing is going to be a bubble, I will ride the wave, but I’m really hoping the sustainability of hemp is going to be in the grain and the fiber.”
The Bottom Line
Hemp trade in the US is budding, and it is to benefit producers, retailers, and farmers, all agents of the supply chain. In the coming years or so, more developments will take place in the hemp production side. More technologies have the aim of making hemp products easily available and affordable for most consumers. You can witness more states legalizing the crop locally.
This also predicts to lower cost for farmers struggling to keep costs within a limit, regardless of the special equipment they require. Over the coming years there will be more development with the stalk, seed, and leaves of the plant; rendering even more industrial uses and booming demand further.
This predicts to make the US an exporter of Hemp products and make their goods competitive compared to the giants in the Chinese Hemp industry. China currently enjoys one of the top spots as a retailer of the Hemp crop and the other CBD products, however, there is a lot of global competition trying to cash in on the growing hemp demand.