This year, we will see sophisticated new hemp farmers, product companies and manufacturing projects enter the market. Genetics has always been king, but that lesson was learned the hard way by many, if not most, hemp growers last year.
Hemp is now federally legal but that doesn’t mean it is without controversy.It will still be a talking point for candidates at every level of government.
Cannabigerol (CBG), cannabinol (CBN) and other cannabinoids will find their way into consumer products in 2020. To avoid a redux of the cannabidiol (CBD) regulation quagmire, the U.S. Food and Drug Administration (FDA) will race to establish regulatory clarity for these newly commercialized cannabinoids in addition to outlining regulations for CBD. Regardless, some brands struggling to distinguish themselves amid a fiercely competitive retail environment by making health claims will find themselves cited for violating the Food, Drug and Cosmetic Act also known as the Wheeler–Lea Act. Newly commercialized cannabinoids will also add further demand for already scarce high-quality hemp genetics and science demonstrating efficacy.
Hemp’s versatility will lead to a retooling of the U.S. manufacturing sector as companies race to embrace hemp for its countless applications and products. In addition to the well-publicized interest in hemp-derived cannabinoids, other uses have the potential to go mainstream in 2020, including building materials, animal bedding and feed, fiber for textiles and paper. Hemp’s versatility may make it an important substitute for plastic products. Because hemp processing often takes place in close proximity to where it’s cultivated, hemp-related commerce may begin to bring economic development to rural communities throughout the U.S.
Decades of prohibition effectively erased centuries of innovation of American hemp genetics. Unfortunately, that now puts our national economy at a competitive disadvantage vis-à-vis Europe and China. That disadvantage is exacerbated by the arbitrary tetrahydrocannabinol (THC) limit imposed by the federal government because the North American market does not have sufficient high-quality hemp genetics that remain below 0.3% THC through maturity.
While additional and superior hemp genetics will enter the market in 2020, they will still be inadequate to satisfy the burgeoning demand for high cannabinoid strains that meet the strict THC thresholds. Growers will struggle to locate specific strains and vet seed businesses.
There is plenty of CBD available, theoretically, based on the quantity of hemp biomass grown in 2019 and planned for in 2020. But with inadequate processing infrastructure, early-stage processing technologies and undeveloped supply chains, the harsh realities of non-THC cannabinoid production will become more apparent as farmers search for hemp genetics that remain below the legal THC threshold.
Competing interests between cannabis and hemp growers as well as local opposition to both cannabis and hemp will make hemp an important issue in the 2020 elections. Cross pollination concerns will pit state cannabis legalization efforts against state industrial hemp production plans. Those two overlapping lobbies will collide in statehouses across the nation. Odor-related concerns will pop up wherever hemp is cultivated near existing development. Those concerns will generally be in the hands of local legislators. These complex issues may factor into voter preferences across the country as we approach November.
Federal, State and Local Hemp Rules
Last October, the United States Department of Agriculture (USDA) issued its Interim Final Rule outlining the U.S. Domestic Hemp Program. That is on course to be finalized soon, though Kentucky has challenged that process. While establishing the framework for a domestic hemp program helped the industry in many ways, there are also significant concerns as we enter the 2020 growing season that will put the new hemp regulations to the test.
A big question mark is the robust THC testing requirements and the availability of certified testing labs, which currently make it challenging for growers to remain compliant. In response, 2020 may see dramatic advances in technologies that test for and measure THC levels. States and local governments will also experiment with new hemp regulations to address potential impacts from hemp cultivation, taking cues from cannabis regulations.
The above trends will unfold amid a backdrop of a rapidly developing international market in commodity hemp and specialized hemp product manufacturers. The future of the hemp industry is very bright but only for those who are strategic and adequately capitalized. “Quick buck” opportunities are few and far between.