Hemp 101

Hemp 101

Supplement - Market Expansion // HEMP

Understand the basics of this burgeoning market.

August 30, 2019

President Donald Trump signed the 2018 Farm Bill into law Dec. 20, 2018, officially legalizing the nationwide cultivation and sale of industrial hemp, which is defined as cannabis containing less than 0.3-percent THC. Congress passed the legislation Dec. 12 after months of preparation and debate.

The new law removed hemp from the Controlled Substances Act and allows farmers to pursue federal hemp cultivation permits. Individual states can regulate the industry within their borders as they see fit, and several states, including Florida and Texas, have passed laws to legalize and regulate hemp and CBD. Each state can submit a plan for a state program that follows USDA rules. The state program can be more restrictive than the USDA program.

What is hemp?

Industrial hemp is an agricultural commodity that is cultivated for use in the production of a wide range of products, including foods and beverages, cosmetics and personal care products, nutritional supplements, fabrics and textiles, yarns and spun fibers, paper, construction and insulation materials, and other manufactured goods, according to the Congressional Research Service. Hemp can be grown as a fiber, seed, or other dual-purpose crop.

Hemp regulations

Several federal agencies have taken up hemp regulations. In late December 2018, just after the Farm Bill was signed, the Food and Drug Administration (FDA) Commissioner at the time, Scott Gottlieb, said the agency was looking for “pathways” that would legalize CBD in food, beverages and supplements, but quickly followed that announcement with a statement clarifying that the FDA considers CBD as a drug ingredient, and that it is therefore illegal to add the compound to food or health products without FDA approval. In April, the USDA issued its first official guidance on the legal hemp industry by authorizing hemp seed imports. The department rolled out additional guidance in June with a memo indicating that hemp can legally be transported across state lines. The Transportation Security Administration (TSA) updated its cannabis policy in May to allow travelers to bring certain CBD products on flights. The U.S. Postal Service (USPS) quickly followed suit on June 6 when it provided new mailing standards that allow certain products derived from cannabis and industrial hemp to be shipped under specific conditions.

Hemp production

Cultivated industrial hemp plants usually consist of a spindly main stalk covered with leaves. Considered a low-maintenance crop, hemp plants typically reach between 6 to 15 feet high. Depending on the purpose, variety and climatic conditions, the period between planting and harvesting ranges from 70 to 140 days. One acre of hemp can yield an average of 700 pounds of grain, which in turn can be pressed into about 22 gallons of oil and 530 pounds of meal. The same acre will also produce an average of 5,300 pounds of straw, which can be transformed into approximately 1,300 pounds of fiber.

Industrial hemp may be an excellent rotation crop for traditional crops, because it suppresses weeds and decreases outbreaks of insect and disease problems. Hemp may also rebuild and condition soils by replacing organic matter and providing aeration through its extensive root system.

Hemp can be certified as organic by the USDA.

Hemp is dioecious, meaning plants can be male or female, and there are differences between male and female plants in growth rate and development. Male plants tend to flower and die earlier. To minimize the impact of this on production, many cultivars are bred to be monoecious, resulting in plants that are mostly females (a small percentage of males plants are included for pollination), to harvest more seed (since male plants do not set seed) and greater fiber productions (since male plants die after flowering).

The retail market

The Hemp Industries Association (HIA) has reported total U.S. retail sales of hemp products of nearly $700 million in 2016, which includes food and body products, dietary supplements, clothing, auto parts, building materials and other consumer products. HIA has also reported that U.S. hemp retail sales have increased by about 10% to more than 20% annually since 2011. Much of this growth is attributable to sales of hemp-based body products, supplements, and foods.

Sources: Cannabis Business Times (a GIE Media publication); Congressional Research Service; Agricultural Resource Marketing Center; North Carolina State University; Purdue University Hemp Project