Hemp production has soared in the past year. The number of licensed producers and acres of cultivation space in the top 10 hemp-growing states grew by 140 percent. The number of licensed hemp producers rose from 609 in 2016 to over 1,200 in 2017. Additionally, the number of acres licensed for hemp cultivation also rose from 16,377 acres in 2016 to almost 40,000 acres in 2017.
States such as Kentucky, Colorado, Minnesota, Nevada, New York, North Carolina, North Dakota, Oregon, Tennessee, and Vermont are the top 10 hemp producing states in the U.S.
The Reason for the Spike in Production
Increasing acceptance for hemp and cannabidiol (CBD) oil, in addition to relaxed state level regulations allowed U.S. hemp production to surge in 2017. This increase is only the beginning for the fledgling hemp industry in the United States.
Since full-fledged hemp cultivation is still illegal at the federal level, the plant that produces hemp and CBD oil can only be grown in states that have an established hemp program. There are still lingering questions about the legality of hemp-based extracts, such as CBD oils. Farmers are also still learning the optimal growing processes. It is unclear the demand for products made from hemp grown in the U.S. However, CBD which is derived from hemp is soaring in popularity.
Brightfield Group, a cannabis research firm, estimates that the demand for hemp-based products will increase from $291 million in 2017 to over $1.65 billion by 2021. This increase in demand has prompted U.S. farmers who have grown more traditional crops to look into growing hemp as a replacement for lower-valued crops such as cotton or alfalfa.
Certain states have shown support to the fledgling industry by allowing more growers into their hemp programs and relaxing regulations to acreage limits. States that have shown increases in hemp production are set to cash in on the bull market of the next few years.
More than half of the United States hemp production occurred in Colorado. Even though Kentucky has more licensed acres, Colorado has more acres in production, farmers who grow the crop, more CBD processors, and more opportunities for selling hemp plants. Colorado was the first state to legalize recreational marijuana and in 2012, farmers began to grow the crop for cultivation.
Due to Kentucky’s well-suited growing climate, former tobacco farmers are taking a strong interest in hemp. The state’s willingness to experiment and invest in hemp processing and growing makes Kentucky a leader in the hemp growing industry. Kentucky has the most acres authorized for growing hemp in the nation at 12,800 acres. However, only 3,200 acres were planted in the bluegrass state.
With a well-established network of hemp processors and growers, along with a new testing regime, Oregon has grown in its position in the hemp industry. With new laws on testing requirements that have been passed in 2017, Oregon hemp products have the same testing regulations as marijuana. This means that all hemp products that come from Oregon will be food-grade quality and pesticide and contaminant tested.
As a future leader in hemp, North Dakota has more than 3,000 acres in active production. However, North Dakotas cold climate and recent drought have limited hemp’s potential to thrive. In addition to the natural determents to growing hemp in the state, high production costs and expensive seed costs that are higher than typical row crops, do not help entice farmers to grow hemp.
Since 2016, Minnesota has allowed farmers to grow hemp. In fact, there is an abundance of wild hemp from World War II-era crops. With a climate similar to Canada, varieties already grown in the neighbor to the north are a natural fit for the state. Unfortunately, no hemp farmer has reported a profit as of yet. Processing delays, legal confusion, and natural pests make growing hemp difficult for many farmers.
Governor Andrew Cuomo helped establish the hemp industry in New York in 2017 when he invited entrepreneurs to compete for development grants in excess of $5 million. These grants were a first in the nation. Most state programs are funded mostly by feeds paid by farmers, but New York’s decision to invest in promoting hemp cultivation and processing has allowed New York to be a frontrunner in the hemp industry.
For a state once dominated by textile manufacturing and tobacco farming, officials in North Carolina see hemp as a natural fit for farmers. In 2017, North Carolina finished the growing season with more growers, acres, and processors than any other state in the first year of hemp production.
The climate in Tennessee has created a challenge for hemp farmers. High humidity and a 50-plus inch per year rainfall makes it difficult to grow a plant that thrives in an arid climate. However, Tennessee hemp entrepreneurs are trying to develop strains for a damper climate. The state also has no legal restrictions in selling hemp products. The state also permits CBD extraction which is highly valuable.
With the nation’s most lenient hemp regulations, Vermont’s latitude makes it easy for hemp cultivars that were developed in northern Europe and Canada. However, hemp producers may be under an entirely new set of guidelines as the state implements regulations for recreational marijuana.
Nevada hemp farmers are selling their products as quickly as they can produce them. There is a booming demand for flower in CBD production. Prices of up to $350 per pound are being seen for quality, high-CBD varieties. This is almost 10 times what Colorado growers receive for midgrade hemp flower. In addition, Nevada growers are increasing the amount of acreage and processing equipment. Farmers in the state are hoping that they can cash in on the boom before states that have a better water supply and a milder climate overtake the market. Growers in Nevada are also expecting a challenge from California growers, so they are looking for new hemp uses in the industrial markets and animal feed.
Although the market players are still unclear about the future of the hemp industry, industry entrepreneurs and policymakers are forging ahead and hopeful about the industry’s future.