This week, the U.S. Department of Agriculture (“USDA”) revealed that the value of the hemp market in 2021 reached $824 million. The survey is the first federal study into the hemp sector, and the analysis is meant to be used as a benchmark for the sector’s economic impact.
According to Hubert Hamer, an administrator for USDA National Agricultural Statistics Service (“NASS”), the report would provide producers, state governments, regulators, processors and other key players with benchmarks on hemp production.
The Hemp Acreage and Production Survey was undertaken in collaboration with the University of Kentucky and the National Association of State Departments of Agriculture after it received approval from the White House last year.
The agency wanted to determine the size of the hemp market and collected data from about 20,000 hemp growers who cultivate about 54,200 acres for the crop. Respondents were asked questions on the acreage for operations, the prices producers are able to bring in, primary and secondary uses for the crop, acreage for operations and outdoor hemp production.
The department also included the areas it was interested in including smokable hemp, CBD, fiber, seeds and grains for consumption. Hamer also adds that the results will not only guide producers into cultivating hemp but also inform on the type of hemp under production. He also adds that it may impact the policy decisions in the hemp industry.
The study finds that hemp is being cultivated for its different products including grain, seed and fiber. It found that floral hemp came from most of the acreage from a total of about 16,000 acres and was valued at $623 million. However, the market for floral hemp is facing stumbling blocks because of a lack of federal regulation around marketing cannabinoid products derived from hemp. Stakeholders have said that sound legislation such as the bill from Rep. Chellie Pingree (D-ME) could improve the segment.
Furthermore, the study also reveals a reduction in hemp production, which stakeholders have been monitoring for years. For example in January 2019, a report by an advocacy group found that the hemp cultivated in the United States covered about 78,000 acres in comparison to the 54,200 acres mentioned in the study. According to Jonathan Miller, general counsel for the U.S. Hemp Roundtable, burdensome testing requirements and the lack of regulations for CBD products is leading to the decline in hemp production. A possible solution would come from Congress passing legislation that regulates CBD.
The USDA has placed strict THC requirements for cultivators and processors resulting in a significant inequality between the acreage of hemp plants harvested across many states. This might become a thing of the past if Congress passes the Pingree-sponsored bill known as the Hemp Advancement Act. The bill seeks to raise the legal threshold of THC concentration in hemp products from 0.3% to 1%.
There are plans for such reports to be produced every year, but according to a NASS representative, that is only possible if there is funding. The periodic surveys are necessary because they help regulators and policymakers track how different stakeholders, including entities making hemp-derived pharmaceutical-grade products such as Flora Growth Corp. (NASDAQ: FLGC), are faring in this rapidly evolving landscape.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
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