Unraveling the Paradox: Hemp's Market Dive Amidst Product Booms
The savior of American farmers failed. Were bad policies or false prophets responsible?
By Matt Weeks
Hemp was meant to be a miracle. It was the crop that would deliver us from evil, a vessel through which all things were possible. It was a cash crop with unlimited uses that would allow us to build better buildings, make better clothes, get healthy, and stay relaxed. We were reminded that George Washington grew hemp, and only by following in our founding father’s footsteps would we find salvation, profit, and deliverance.
But the miracle never came.
The hemp surge was as bright as lightning, and as brief. After two years of replacing their soybean and tobacco fields with hemp, farmers today devote fewer acres to hemp cultivation than they did in 2017—a year before the latest Farm Bill made it legal to grow. According to the USDA, the total value of all hemp grown in the country in 2022 was worth about $238 million, a staggering 71 percent drop from the year before. That kind of hit isn’t a dip in the market; it’s a free fall.
So how did the super crop, championed by everyone from Bernie Sanders to Mitch McConnell, go belly up? And how has hemp, which seems to be included in every product sold at the gas station, lost more interest than the Metaverse?
There’s not one simple answer. But here is an in-depth peek at a few possibilities that attempt to explain the current failure—and potential resurrection—of our Lady of the Green Market.
It’s the Economy, Stupid
Many experts place blame for the cratered hemp market squarely on the broad shoulders of American capitalism. They claim the 2018 Farm Bill pushed open the doors to a new market, and too many people rushed inside at once. The result led to a supply of hemp that far outpaced demand.
It makes sense. But to see the downward spiral of hemp as a simple market correction seems to leave out a few salient facts.
For one, vape shops are exploding. Every year for the last half decade has seen a 20 percent increase in the number of shops that sell hemp-derived products. And those products are legion. Take CBD, for example.
CBD wasn’t so much a fad as a harbinger. It was John the Baptist promising the coming of the Messiah – or in this case, Messiahs. In the wake of CBD came the Deltas 8 and 10, HHC, THCA, CBG, THC-O, and more. Every quarter seems to bring a new hemp-derived molecule.
Even if CBD products are less popular than they were at their peak, the explosion around hemp-derived cannabinoids is bigger than ever before. Every data tracking organization we could find predicts a lucrative and expanding future (provided that activists manage to keep these compounds legal).
How can hemp markets be in free fall when hemp products are soaring? Fans of the Invisible Hand believe the hemp market has room for growth, but only modestly. In other words, hemp may be green, but it’s not a cash crop.
Divide and Conquer
The full economic data on hemp fields is hard to parse, but several esteemed agricultural economists have pointed out that hemp is not one monolithic market, but several smaller markets. Farmers who grow hemp for textile uses are flourishing, they argue, while those whose fields fueled the nation’s CBD craze are floundering.
A close reading of the FDA’s 2022 Hemp Report reveals that industrial hemp grown for fiber was indeed the solitary bright spot. While there was less total production of this hemp, most of what was grown was sold—and it sold at a higher price than in the previous year.
It’s an interesting theory. Both Forbes and the New York Times have run pieces lauding “hempcrete,” a commercial building substance made from hemp. While hempcrete costs about 25% more than similar materials, it’s sustainable, resistant to fire and mold, and easy to use. But the biggest selling point is that hempcrete blocks shave valuable time off construction schedules. When buildings can go up in 25% less time and require less insulation, the material can pay for itself.
But all of that sounds like a new spin on the old promises we’ve been fed for years. Even if hempcrete has already proven itself in South Africa and Canada, it’s hard to picture hemp blocks replacing bricks in America.
Advocates argue that hempcrete has recently been approved for use in the United States, but for many in the industry, those words don’t hold a lot of meaning.
Why? Well …
Let’s Blame the Government
A cliché as it is, there’s a solid argument that the federal government’s missteps have prevented the hemp market from realizing its full potential.
Advocate groups like the U.S. Hemp Roundtable believe that the lack of regulation by the FDA has prevented hemp-derived products like CBD from reaching their full potential. The lack of clear rules has led to uncertainty in the market and a lack of consumer confidence in products.
What’s more, the federal rules limiting the amount of THC in hemp (less than 0.3 percent) mean that many farmers who grow hemp for fiber and grain regularly have to destroy otherwise healthy crops that test slightly “hot” (often due to weather conditions or other factors outside their control). And what farmer wants to put up with that mess?
The Second Coming
If the hemp market can be resurrected, the hope lies in the next Farm Bill—which happens to be coming this year.
The legislation has the chance to correct the policy and market mistakes that have hampered the hemp industry, allowing businesses, investors, and manufacturers a clearer picture of what will be allowed in the future. It can also tighten controls over how much can be grown, so that farmers don’t flood the market with unneeded plants.
Congress can push the FDA to clarify the legalities around hemp derivatives, like Delta-8 THC, and provide thorough guidance about the use of hemp for feeding livestock and its inclusion in pet food.
But while improvements are possible, there is also reason for apprehension. With just a few minor adjustments to the text of the 2018 Farm Bill, Congress could close the Delta 8 loophole completely.
Will any of this happen? Can our faith in the hemp market bring about its resurrection and allow our hopes to be born again?
Sure. But it will take a miracle.