Hemp: The End of Prohibition
‘Cannabis L Sativa’ as nomenclature is used to describe Industrial Hemp as well as Marijuana, yet each is genetically distinct and can be differentiated by intended use as well as cultivation practice. Marijuana generally refers to the psychoactive plant uniquely positioned for medical and recreational use, while industrial hemp is cultivated for use in a wide range of nearly 50,000 products ranging from bricks to boats and blenders to buildings as well as for Cannabidiol (CBD) extraction.
Current US Hemp market size and growth estimates vary widely and largely underestimate the potential of this ancient plant. Attribute breeding along with upgraded equipment and modernized methodologies for harvesting, processing and manufacturing allows us to expand use well beyond the last great hemp era when ‘Popular Mechanics’ in 1938 called Hemp ‘The New Billion Dollar Crop’ and when cultivation in 1943 peaked at 150 million pounds in support of our war efforts. Supply-chain legalization along with USDA support means that farmers can access grants as well as crop insurance, while profitability along with environmental benefit makes hemp a unique impact investment opportunity.
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Hemp is naturally pest resistant and counts weed suppression, carbon sequestration and soil improvement amongst its environmental benefits. It grows well in areas that produce high corn yields and thus can transform vast swaths of American farmland towards higher value production. Its immense potential to impact large and diverse industries may well have the hemp industry see greater growth than its popular psychoactive cousin over time.
Governmental wisdom defines industrial hemp as any part of the Cannabis L Sativa plant, growing or not, that does not exceed 0.3% of delta-9 tetrahydrocannabinol on a dry weight basis. While this definition of hemp is botanically inaccurate, it does allow for all plants deemed to be ‘hemp’ by the government’s definition to be permanently removed from the Controlled Substances Act (CSA). This new definition of hemp includes cannabinoids, derivatives and extracts and thus also frees popular hemp products such as hemp-derived CBD from the clutches of the Drug Enforcement Agency (DEA).
Uses of hemp include:
Food & Beverage: Protein and oil contained in hemp seeds are in ideal ratios for humans and are an excellent source of fiber, iron, potassium, zinc, amino acids and essential fatty acids. Hemp tea is known to help with insomnia, anxiety, stress and chronic pain.
Fuel: Hemp biodiesel can be stored and transported like diesel and can be used with any diesel engine. It even replaces the smell of traditional diesel with the smell of hemp.
Fiber: Textiles made from hemp are durable, versatile and biodegradable. Hemp fibers are also more resistant to weather and ultraviolet rays than cotton and silk and can be mixed with other materials to create clothing hybrids that are both comfortable and fashionable.
Paper: The world’s first papers were made from hemp in ancient China, and hemp has since been used for this purpose across the world. An acre of hemp produces more paper than 4 acres of cotton; the word ‘canvas’ is itself a derivative of the word ‘cannabis’.
Personal Care: Hemp oil has a more optimal fatty acid profile than flaxseed as well as fish oil and is excellent for skin elasticity and hair sheen and strength. Soaps, shampoos, lotions and bath gels count amongst many popular hemp products, over 30,000 of which are sold by Amazon today.
Plastics: Hemp contains 65-70% cellulose compared to wood at ~40%, and hemp cellulose extract is used to make cellophane, rayon, celluloid and a range of related plastics. BMW and Mercedes are amongst many car makers who have begun to embrace hemp bioplastic as a fiberglass alternative for automobile manufacture.
Construction Materials: Concrete made from hemp is known as hempcrete and is strong, lightweight, breathable, non-toxic, water resistant, fire resistant, energy efficient and provides excellent insulation.
Hemp-derived CBD Products: CBD has been declared to be safe, non-toxic and non-addictive by the World Health Organization (WHO), the Food and Drug Administration (FDA) and Congress. While local government can impose its own restrictions on the growth and sale of hemp products, they cannot interfere with inter-state commerce in hemp or hemp products. Major banks and credit card companies are thus just as liberated to provide services to this industry as are retailers to carry its products and major Consumer Product Goods (CPG) companies to expand into the hemp-derived CBD space. We expect this to remain hemp’s highest growth sector, noting that early efficacy study results point to this molecule moving towards platform rather than destination status.
Hemp itself is one of the oldest agricultural crops we know and the new domestic industry surrounding it will likely take well over a decade to mature. Production cost, processing equipment, regulatory uncertainty, yield, overseas competition and government support are a few of the areas in which time will provide needed clarity. There is further work to be done in plant genetics, plant physiology, meteorology and soil science with tremendous implications for the passionate agronomist and investor alike. Hemp’s diversity of use and rising acceptance brings us to the cusp of a global shift for an industry that is likely to exceed even the most optimistic amongst today’s expectations.
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