According to a recent report, even without strong federal regulations the U.S. Hemp industry would have been larger in 2022 than state marijuana markets and roughly equal to sales of craft beer nationwide.
Whitney Economics, a research firm, published the report in the last week. It offers a comprehensive assessment on the hemp industry’s evolution since it was legalized federally under the 2018 Farm Bill.
The report states that despite frustration in the hemp industry as businesses struggle with regulatory challenges mainly related to cannabinoid-based products such as CBD, this industry sold about $28,4 billion worth of these products last year.
It says: “For context, in 2022, the total legal sales of cannabis for medical and adult use were higher than hemp-derived cannabinoids.” This may surprise some people, as most states have already legalized marijuana.
The hemp-based cannabis market is also a direct competitor to the craft beer industry, which is much more established. According to the American Beer Association, craft beer sales will reach $28,4 billion by 2022. This is the same as the hemp-derived cannabis product market.
The total demand for cannabinoids derived from hemp is currently valued at more than $28 billion. This supports 328,000 jobs and wages of $13 billion. Whitney Economics estimates that the economic impact on the U.S. of the hemp-derived cannabis industry is more than $79 billion. These estimates, while they seem high, are conservative because they don’t include the demand for and employment at gas stations, groceries, and convenience stores.
The firm estimated that the combined tax revenue generated by the states in 2022 will be $1.5 billion based on the sales tax alone on hemp products.
Beau Whitley, the author of report told Marijuana Moment the data was critical, especially as state legislators and regulators are moving to ban or restrict cannabinoid-containing products like delta-8THC.
He said that the state officials did not “have the data about how big the market is, and the number of consumers who prefer it over adult use and medical,” The result is a large displacement of labor and an increase in business failures.
He said, “It is unfortunate that the “big cannabis” industry has been vilifying the hemp industry when it makes hundreds of millions of dollars from the sale these hemp-derived products.” Whitney Economics believes that adult-use markets and medical markets should be supported by the hemp distribution model, as it enables cannabinoids to be distributed widely. The adult-use market and the medical market would benefit from this model, as it would allow for a wider distribution of cannabinoids.
The hemp industry will grow a lot if federal regulations allow the marketing of cannabinoid-based products as food or dietary supplements. Congressional legislators have proposed to set up these rules , given that the Food and Drug Administration has stated that it lacks the authority to do so.
Industry stakeholders ask if the state-bystate system works from a regulatory standpoint. The executive summary of the report states. While some claim that state interventions have improved public safety, others say that state-by state systems do more harm than good. They argue that an enhanced federal regulatory system is more appropriate given the size and scope of the industry, and the need for standardization in cultivation, manufacturing, and retail.
To address these issues, all policymakers need data. “There hasn’t been a national, comprehensive assessment of the hemp-derived cannabis industry up to this point,” it states. “Whitney Economics took a conservative approach in data collection and projections. This report was created to provide baseline data to help stakeholders in the hemp industry understand the economic activity related to hemp cannabinoids and the impact of policy changes on the future.
The survey used data from “statistically feasible sample” of over 800 operators in more than 45 states.
Hemp has huge potential in the U.S. The FDA’s failure to clarify its policy creates significant uncertainty in the market, increasing investor risks. Whitney stated that this is suppressing hemp growth in the U.S. The FDA would address many of these issues with greater clarity.
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A group of House Democratic legislators who are pro-business and center-left is pushing for the use of the next Farm Bill to reduce regulatory burdens for hemp growers . This would include creating a difference between “industrial hemp” that’s cultivated for products such as fiber, and “hemp grown for any purpose”, which would cover crops cultivated for cannabinoids, like CBD.
In a recent hearing of a House subcommittee, the focus was on the impact that the FDA’s lack of rules has had on consumers. A separate bipartisan health committee also sought expert opinion on this issue when considering possible legislative solutions.
Cannabis Regulators Association members from the states sent a similar letter to the leaders of the congressional agriculture committees, asking them to use the Farm Bill in order to modify the federal definition for the crop as well as the rules governing hemp-derived cannabinoids.
Connecticut Officials double the state’s marijuana purchase limit for adults
Photo by Brendan Cleak.
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