The Economic Opportunities of Hemp
“It’s no secret that since the passage of the 2018 Farm Bill, the hemp industry in the United States has grown by leaps and bounds”
1. A Growing Industry
It’s no secret that since the passage of the 2018 Farm Bill, the hemp industry in the United States has grown by leaps and bounds, and has generated generous revenues for various states. For example, according to Hemp Industry Daily, hemp sales in the United State are projected to grow from $1.2 billion in 2019 to $10.3 billion by 2024 (1). As far as industrial hemp, Vote Hemp estimates that the total retail value of hemp products totaled $820 million in 2017, and will only grow in the coming years (2).
2. A Multifaceted Industry
The market for hemp oil and CBD are well-known, but there is also a demand for hemp in the manufacture of construction materials, food, beverages, textiles, yarns, paper, carpeting, home furnishings, automotive, and personal care products. Hemp is so multi-faceted, that it’s used in nutritional supplements, medicinal, pharmaceutical and therapeutic products, as well as for lightweight insulating materials, and is a potential livestock feed and cover crop (3). As a textile, hemp is hypo-allergenic, stronger than cotton and resistant to mold and mildew (4).’
3. Jobs, Jobs, Jobs
Hemp production in the US has the potential to create tens of thousands of new jobs across multiple sectors. With $1.2 billion in revenues in 2019, the hemp industry has created jobs in agriculture, processing, manufacturing and is estimated to double by 2022 to $2.6 billion (5). In addition, the industry will provide jobs in the areas of law, retail, transportation, research, marketing, IT, banking and government regulation.
4. Increase in State Revenue
As mentioned earlier, the hemp market has generated millions of dollars in revenue. And according to the USDA, US hemp sales could increase as much as $25 million in 2020 and by more than $100 million by 2022 (3). Under the 2014 hemp pilot programs in various states, US industrial hemp acreage increased from zero in 2013 to over 90,000 acres in 2018, the largest US hemp acreage since the 146,200 acres planted in during WWII. (4). For example, in Montana, approximately 22,000 acres of hemp was planted in 2018, and in 2019, 51,000 acres were planted, with 279 hemp licenses issued in 2019 and 235 of those growers successful in producing hemp (6). As of today, 46 states produce hemp, and according to the Hemp Business Journal, the US hemp industry produced over $1 billion in 2018, with an expected 14% annual growth rate through 2022. (7) Unlike other cash crops, hemp offers a sustainability, durability, and a multitude of uses.
5. Low Cost, Low Input Farming
It’s well-known that the marijuana industry has been an economic boon for many states, and although it’s production requires less than an acre per operation, industrial hemp offers much more market opportunity. Industrial hemp does require a lot of acreage, but it’s cheaper to grow than marijuana and producers don’t need to worry about all of the regulations surrounding marijuana. Producers can grow hemp in large open fields like other crops such as corn and alfalfa. The good news is that hemp requires less water than corn and other crops, and can tolerate a variety of soils and temperatures. It also requires little or no pesticides, and grows very fast, from 20-100 feet in as little as 100 days (8). That means less input costs for the producer. Also, hemp growers can use existing farm machinery to plant and harvest hemp, but given that hemp is a very fibrous and bushy plant, producers may need to develop modifications, or purchase attachments to prevent clogging of machinery.
6. Cheaper Material for Construction
Hemp-based construction materials are stronger, lighter and durable, as well as more environmentally friendly than traditional construction materials. A material called “hempcrete” can take the place of fiberglass and sheet rock, and can easily be added around supporting timber frames. Hemp building materials are renewable, carbon-negative and non-toxic, unlike popular construction materials that require expensive processing. Also, hemp building materials are cheaper than steel or concrete blocks. A study by the Colorado Hemp project estimates that hemp construction costs range around $7,000 per square foot, as opposed to block-and-steel that runs $8,500-$10,000 per square foot (9).
7. Sustainable and Low-Cost Fuel Alternative
Industrial hemp can be an alternative for non-renewable energy sources, and studies suggest that it is about five times cheaper than gasoline. For example, hemp ethanol could be produced for $1.37 per gallon, and with tax credits and future technological improvements could further reduce the cost per gallon. It’s potential use for biodeisel and ethanol fuels make it an ideal renewable alternative to gas and oil (10).
1. Annual Hemp and CBD Industry Factbook. 2019, https://hempindustrydaily.com/wp-content/uploads/2019/10/Hemp-CBD-Factbook-2019-executive-summary_FINAL.pdf.
2. Industrial Hemp. Agricultural Marketing and Resource Center. 2019. https://www.agmrc.org/commodities-products/fiber/industrial-hemp .
3. Industrial Hemp Policy 101. Renée Johnson Specialist in Agricultural Policy, June 22, 2019. https://www.industrialhempsummit.info/images/press-release/Hemp-2019-Peoria.pdf .
4. Industrial Hemp Market Size, Share & Trends Analysis Report By Product (Seeds, Fiber,Shives), By Application (Animal Care, Textiles, Food & Beverages, Personal Care), And Segment Forecasts, 2020 – 2027. https://www.grandviewresearch.com/industry-analysis/industrial-hemp-market .
5. Woods, Bob. Newly Legalized Hemp Industry Set to Create Jobs Boom in the US. May25, 2019. https://www.cnbc.com/2109/05/24/newly-legalized-hemp-industry-set-to-create-a-jobs-boom-in-the-us.html .
6. Rose, Morgan. 2019 a Huge Year for Montana Hemp. Oct 25, 2019. https://www.agupdate.com/theprairiestar/news/crop/a-huge-year-for-montana-hemp/article_70779b0c-f4e5-11e9-86c9-578280cb1889.html .
7. Even Brighter Future Projected for Global Cannabis Markets. May 20, 2019. https://www.marketwatch.com/press-release/bright-future-for-cbd-and-hemp-industry-as-demand-continues-to-grow-2018-08-21 .
8. Weisner, Matt. Could Hemp be a Lifeline for Struggling Farmers? May 25, 2018. https://psmag.com/environment/hemp-is-the-future-of-agriculture .
9. Colorado Hemp Project. https://www.coloradohempproject.com/search?q=construction .
10. Kin, Annie. Hemp Ethanol is Five Times Cheaper than Gasoline. August 2, 2019. https://achnews.org/2019/08/02/hemp-ethanol-is-about-five-times-cheaper-than-gasoline/.