For nearly a century, antiquated laws prevented U.S. farmers from growing industrial hemp, but in 2014, Congress passed legislation legalizing low-THC cannabis varieties. Since then, the United States hemp industry has undergone a renaissance—what was once an illicit plant is now a cash crop. Let’s take a look at the landscape of the new booming hemp market.
Hemp: A New Agricultural Commodity
Hemp laws in the United States began their recent evolution in 2014. That year’s Farm Bill allowed states to regulate hemp research and production through the creation of hemp pilot programs. Under the new law, anyone authorized by their state’s department of agriculture could begin growing industrial hemp. Four years later, with the passage of the 2018 Farm Bill, hemp was removed from the list of controlled substances and became legal to produce as an agricultural commodity.
The Biggest Players in the Hemp Market by State
Since its legalization, over 30 states have licensed hemp cultivation, nearly 17,000 state hemp licenses have been issued, and more than 500,000 acres of hemp have been licensed nationally. States like Colorado, California, and Kentucky developed extensive hemp pilot programs and are now leading the pack when it comes to total acreage of hemp production.
In 2019, the largest hemp producers in the country by acreage were:
- Colorado: 52,275 acres
- Montana: 45,000 acres
- Kentucky: 26,500 acres
- California: 21,844 acres
- Oklahoma: 21,635 acres
Additionally, states like Michigan, Nevada, North Carolina, New York, Oregon, Pennsylvania, Tennessee, and Vermont are all rapidly expanding their agricultural acreage dedicated to hemp.
The Future of the Hemp Market
The hemp market is predicted to continue growing throughout the next decade. An analysis by Grand View Research forecasts the market value for the global hemp industry to grow by 15.8% between 2020 and 2027 with revenues for CBD alone increasing from $9.3 billion in 2020 to $23.6 billion in 2025.
A majority of that growth will be concentrated in North America. However, overenthusiasm for the new crop in the United states has led to oversupply and price drops for some hemp producers. In Colorado, hemp prices plummeted from $40 per pound in the summer of 2019 to $10 per pound in the summer of 2020.
While the U.S. hemp industry has grown rapidly since 2014, the long term viability of the market is still unclear and will largely depend on:
- Competition from the more established European and Asian markets
- Competition for acreage from conventional crops
- The ability to fine tune production to meet demand and avoid large pricing fluctuations
- Continued market development
To maintain a competitive advantage, hemp growers must ensure that their hemp meets federal potency guidelines and basic quality standards. At Encore Labs, we offer a full suite of cannabis testing services for raw cannabis as well as concentrates and other hemp-based cannabis products.