Hemp: Historical American Commodity Resurgence
A staple crop of American agriculture in the 1800’s, Hemp’s prominence in American history continues to be reflected in town names such as ‘Hempfield’ and ‘Hempstead’. Our founding fathers grew hemp, advocated for commercial hemp and even drafted the Declaration of Independence on paper made from hemp.
Despite significant positive economic and environmental impact on foods, beverages, cosmetics, personal care products, nutritional supplements, fabrics, paper, construction, insulation materials and other manufactured goods, industrial hemp continues to be subject to U.S. drug laws and growing industrial hemp remains restricted. Under current U.S. drug policy, industrial hemp remains a Schedule I substance.
The United States is the only industrialized nation to prohibit hemp production
We are optimistic about the increased use and growth of hemp on U.S. soil. Since the first hemp laws were passed in 2014, U.S. hemp production which began in Kentucky, Vermont and Colorado has now surpassed 10,000 acres across 32 states.
- Business Opportunity: Hemp sales in the United States topped $600 million last year, with the vast majority imported from China and Canada. The hemp market has been growing at a 15% CAGR and we expect this to accelerate with further increases in domestic production. The absence of commercial and unrestricted hemp production since the ’50s makes it challenging to accurately predict the economic and employment impact.
- International: Approximately thirty countries around the world permit their farmers to cultivate hemp. Global product acreage is estimated at over 175,000 acres and ~60,000 metric tons with China, Russia and North Korea accounting for ~70% of that production. The United States remains the only industrialized nation that does not allow industrial hemp production.
- Agriculture: Hemp does not require any synthetic pesticides or fertilizers, has far reaching environmental benefits including soil remediation and prolific pollen production, and is used in over 25,000 products. Despite a 2.5X agricultural value compared to US corn and soy, we continue to import ~$600,000,000 of raw hemp from Europe, China and Canada while simultaneously depriving many of our farmers of this profitable opportunity.
- Environmental Impact: Industrial hemp has the potential to have substantial positive impact on our environment. Hemp fiber is stronger and softer than cotton, lasts twice as long as cotton, and will not mildew. A natural substitute for wood fiber, hemp can be pulped using fewer chemicals than wood because of its low lignin content. Hemp adoption will spur dramatic positive ecological and economic benefits. Renewable, fast-growing hemp is a substitute for many unsustainable products like plastics, paper and non-organic cotton (the ‘world’s dirtiest crop‘, grown on 2.4% of global agricultural land yet user of 24% of global insecticides).
U.S. government drug policies and DEA concerns remain obstacles for the future of hemp production, while global competition continues to put downward pressure on margins. China, the world’s largest hemp fiber and seed producer, continues to have a major impact on global pricing and producer profitability. Canada maintains its North American lead for hemp seed and hemp oil production, ultimately influencing U.S. profitability as well.
Nevertheless, the U.S. market for hemp-based products has a dedicated and growing demand base. The rising demand for regenerative agricultural practices and advancements in plant-based innovations makes it possible and increasingly likely that hemp could once again be a vital and viable crop in the United States and around the world.