New market opportunities in the hemp industry

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The value of US hemp production in 2021 reached $824 million, according to the US Department of Agriculture’s National Hemp Report. If the National Industrial Hemp Council’s estimates are correct, the value of U.S. hemp production will soar to over $10 billion by 2025. Based on these numbers, it appears as if the future of the hemp industry will be one of nothing but erratic growth, despite recent oversupply issues and falling prices.

While the hemp market may not reach that $10 billion projection within three years, growth is virtually guaranteed. It will take time for hemp production to normalize and laws to be modernized, but we will be there soon. In the meantime, there are many options open to license holders and ancillary operations.

Licensing Opportunities

Based on data from the Cannabiz Media License Database, the combined number of licenses for hemp dealers and growers has grown the most in 2021. Of course, the number of licenses and the types of licenses in each state depends on the laws of that state.

With this in mind, Florida approved by far the most licenses in 2021 with a total of 4,400 new retail licenses, 211 new sales licenses, 195 new processor licenses, and one new trial license. For perspective, the state that approved the second most new hemp licenses in 2021 was Louisiana with 902 new licenses (614 retailers, 64 distributors/retailers, 26 events, 21 processors, 16 distributors, and 9 cannabis seeds).

More licenses will be approved in the coming years, opening up more opportunities for companies throughout the supply chain to compete in the hemp industry. We’re still in the early days of the hemp industry in the United States.

production possibilities

The USDA tracks the production, harvest, sale, and pricing of hemp plants for the National Hemp Report as “under shelter” (indoors or in greenhouses) or “outdoor” (outdoors separated into flower, grain, fiber, and seed). ). As mentioned above, the total value of industrial hemp in 2021 was $824, broken down as follows:

• Flower hemp outdoors: $623 million (19.7 million pounds harvested from 16,000 acres at an estimated 1,235 pounds per acre)
• Grain hemp outdoors: $5.99 million (4.37 million pounds harvested from 8,255 acres at an estimated 530 pounds per acre)
• Fiber hemp outdoors: $41.4 million (33.2 million pounds harvested from 12,700 acres at an estimated 2,620 pounds per acre)
• Seeds hemp outdoors: $41.5 million (1.86 million pounds harvested from 3,515 acres at an estimated 530 pounds per acre)
• hemp under protection: $112 million (cropped from 15.6 million square feet)

In recent years, growers and processors have focused heavily on growth for the booming CBD market, but future opportunities will be found in emerging and high-growth markets such as textiles, fuel, and more. Over time, more acreage will be allocated for grain and fiber crops to create new products and replace old materials with new ones (e.g. plastic and petroleum).

Additionally, there will be numerous opportunities to improve the technology to meet the needs of the emerging hemp markets. Savvy entrepreneurs and investors are already looking to opportunities as hemp fiber and grain production supply chains evolve.

Product Possibilities

Data from Grand View Research provides the following ranking of global industrial hemp market share by application (from largest to smallest):

1. textiles
2. personal hygiene
3. food and drinks
4. Animal that
5. paper
6. automobile
7. construction materials
8. Other
9. Furniture

The apparel category accounted for nearly 25% of global sales, while personal care, food and beverage, and pet care each accounted for about 16%. Combined, textiles, personal care, food and beverage, and pet care make up almost 75% of the global industrial hemp market, while all other uses make up the remaining 25%.

Based on the market share breakdown, it is clear that there are significant opportunities to monitor consumer preferences and leverage buying trends to capture larger market shares. It will take time to replace what manufacturers and consumers are already using with hemp-derived materials and products, but consumer behavior trends show that people are ready.

For example, in recent years Patagonia has worked with Colorado regulators, Colorado State University and local growers to start a hemp fiber project. The goal of the project was to determine if Patagonia could source hemp to manufacture its products from the United States rather than China.

As the U.S. hemp market grows and supply chains develop, more companies could shift their hemp sourcing from China, Canada, and other countries to U.S. suppliers, meaning there will be even more opportunities in the industry.

It’s also important to watch what global brands are doing in relation to the hemp industry. For example, not only have companies launched a variety of CBD beverages over the past few years, but this year PepsiCo launched a new hemp-infused beverage, Rockstar Unplugged, to attract new customers to the Rockstar Energy and winning the energy drink category in general.

Instead of infusing CBD into the drink that’s been so popular over the last few years, PepsiCo infused hemp seed oil. This is just another example of how innovation will create even more opportunity in the hemp market in the years to come.

The central theses

The future of the hemp industry is all about growth, but supply chains must evolve, product innovation accelerate, and consumer demand increase. All of these things will happen as hemp normalizes, and they’ll happen faster as U.S. hemp industry regulations become more standardized from seed to sale.

In the near future, expect an increase in hemp research, a shift in focus from growers and processors from quantity to quality, and demand to catch up (and eventually overtake) supply as consumers and businesses become more educated about the safety and uses of industrial hemp be , including all plant parts.

Subscribe to the Cannabiz Media License Database to keep track of hemp and cannabis licenses in the US and international markets and to connect with hemp and cannabis license holders throughout the supply chain. Schedule a demo to see how you can use it to grow your business.