PORTLAND, Ore.–(BUSINESS WIRE)–Whitney Economics, the leading economic consulting firm in the cannabis industry, has just released its latest in a series of hemp reports, “Déjà vu: An Economics Analysis of the U.S. Hemp Cultivation Industry,” which looks back on the development of the U.S. hemp industry over the past two years, and has not surprisingly found that there continues to be an enormous oversupply of hemp biomass. The average left-over biomass was 24,795 pounds per farm, resulting in over 135 million pounds across the U.S.
“The hemp industry is going to continue to be mired with difficulties until regulators can determine if it’s an illicit drug or if it was legalized by the 2018 Farm Bill. Confusion across jurisdictions is causing a regulatory quagmire, slowing down growth and suppressing investment, which is critical to building out a proper infrastructure that can support the rapidly growing industry,” said Beau Whitney, Founder & Chief Economist of Whitney Economics.
Five major factors that impacted U.S. hemp in 2019 have carried over to directly affect the 2020 season and are all explored in this report:
- The collapse in wholesale hemp biomass pricing
- Inexperienced farmers challenged by scale-up in operations
- Ongoing confusion in hemp regulation
- Gaping holes in the hemp industry infrastructure
- Lack of buyers and cash at every level
The single biggest factor affecting the hemp market was the lack of processing capacity. In 2019, there were 3,179 licensed processors in the U.S. While the definition of processor varies widely from state to state, with the 522,193 acres licensed, there was one processor for every 164.26 acres of licensed capacity. If each cultivator harvested 2,000 pounds per acre, then this would mean that every processor would have to process 900 pounds per day to keep pace with the licensed capacity. Most processors only had one tenth of this capacity.
To inform their findings, Whitney Economics conducted their 2020 Hemp Survey, which reached out to more than 10,000 licensed operators in 27 states. The report is a business and economic analysis of the 2020 U.S. Hemp Cultivation industry. It examines acreage licensed, provides updates on the regulatory and supply chain environment, provides insights and recommendations for hemp operators and investors, and provides predictions and forecasts on the direction of the industry. It is a data-rich, state-by-state baseline for the hemp industry.
More details can be found in the report for sale here on the Whitney Economics website and the free Executive Summary can be accessed here.
“Even with the collapse of pricing in the market, supply chain issues and regulatory obstacles, cultivators and processors in 2020 still had faith in the hemp opportunity. Optimism remains high, even though there is more realism in terms of expectations. For those with vision and resources, there is still significant opportunity for economic gains,” added Whitney.