US hemp industry continues to face problems of oversupply, murky regulation

CBD News Blog – The US hemp cultivation industry continues to face problems of oversupply and unclear regulation, according to Whitney Economics’ two-year overview of the industry. The economic consulting firm surveyed more than 10,000 licensed operators in 27 states in its 2020 report “Déjà vu: An Economics Analysis of the US Hemp Cultivation Industry.”

The 2018 Farm Bill removed low-THC (under 0.3%) cannabis – otherwise known as hemp – from the Schedule I controlled substances list at the federal level. The bill also opened up legalized hemp farming to federal agricultural grants and other benefits such as marketing and crop insurance.

Hemp can be used to manufacture rope, textiles, clothing, and other products. It can also be used to produce increasingly popular cannabidiol (CBD) products – which lack psychoactive effects due to a low level of THC.

The bill’s passing led to a surge of licenses in 2019 – and then a vast oversupply of hemp and resulting depressed prices. According to Whitney, this situation was caused by a lack of buyers, persistent regulatory confusion, and an immature supply chain.

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