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Will 2021 be another struggling year for the hemp industry?

Will 2021 be another struggling year for the hemp industry?

The legal hemp industry has had a turbulent couple of years.
2019 was the first full year that the legal hemp industry operated in the United States, and it was a slow start. 2020 was a difficult year for just about everybody, the hemp industry included.

The question many are now asking is, will 2021 be the year that the hemp industry begins to thrive, or is it already dying?

The boom of Cannabidiol, more popularly known as CBD, in the United States might lead some to believe that with so much publicity and demand for CBD products (which are made from hemp), the industry would be thriving. But it isn’t that simple.

In fact, in 2020 several states produced less than 40% of the acres that were licensed for hemp production by their respective states.

In a collection of hemp industry data collected by Hemp Grower they found that numerous states, some being licensed to produce thousands of acres of hemp, had only produced a fraction of what they were allotted. Arizona for example, planted just 1,130 acres, or 3.3%, of the 34,480 acres that were licensed. The state had the largest disparity out of any other in the country.

Reasons for disparities

A problem that was found in just about every state that vastly underproduced hemp had to do with the licensing processes and fees. In Arizona, no matter how many acres a hemp farmer is planning to use, they pay the same $1,000 fee. If one farmer only has 10 acres, and another has 2,000 they pay the same exact fee.

This led to many traditional row crop farmers with a lot of land to claim all of it for hemp, despite only using a fraction of the land to actually produce hemp. In other words, a large scale farmer that claimed 5,000 acres for hemp production, may only use 50 acres to grow hemp while the rest is kept for traditional crops, leading to large discrepancies in the data collection for the state.

Additionally, Arizona state inspection fees for collecting samples include a $25 per acre fee up to the first 100 acres, and then $5 an acre beyond that. Brian McGrew, the industrial hemp program manager in Arizona says that several other factors also figure into acres planted, including weather trends during growing seasons.

“There were a lot of things that did impact 2020,” McGrew says. “It actually is probably the hottest and driest year we had on record. So that really did affect not only with hemp but a lot of other industries dealing with that.” For other states, licensing was also an inhibitor.

Hemp industry licensing problems

Minnesota hemp growers planted roughly 4,700 acres, or 56% of the projected 8,400 acres that were licensed, according to Anthony Cortilet, the state’s industrial hemp program supervisor. During the licensing process, Minnesota registers farmers by the number of individual grow locations, no matter how big or small, he says. The fee is $400 for the hemp grower license at one location, and $250 for each additional grow location.

The $400 licensing fee includes the delta-9 tetrahydrocannabinol (THC) sampling and testing of one variety of hemp, but the department of agriculture collects $125 for each additional variety a grower cultivates in his or her field, which goes toward paying the laboratory costs, Cortilet says.

In Tennessee, hemp growers planted 4,836 acres in 2020, or 30.8% of the 15,722 acres that were licensed. The state department of agriculture has a staggered licensing fee system, like Minnesota, but the differences in costs are minimized to $50 increments: 5 acres or fewer is $250; between 5 and 20 acres is $300; and 20-plus acres is $350.

Each state’s hemp industry spokespeople have their reasons for the disparities, mainly that farmers and growers have different business plans and business models, while others simply underestimate the cost of hemp production, but don’t realize the costs until they have already paid for the land use.

Is the hemp industry already dying?

The current reality of the legal hemp industry may not seem very promising. In another study conducted by Hemp Benchmarks that utilizes the most current and available data on 2020 and 2019 hemp production, the results were scary.

The reports underscore the contraction that occurred in the hemp industry in 2020. For example, the amount of acreage licensed for hemp in the U.S. reached just over 400,000 in 2020, down by over 30% from roughly 590,000 acres licensed in 2019.

Additionally, Hemp Benchmarks estimated that only 35-40% of acreage licensed for hemp was actually planted in 2020, or between 140,000 to 160,000 acres. With the assumption that 85% of all U.S. acreage was for CBD or other cannabinoid production, that amounts to between 119,000 and 136,000 planted acres devoted just to CBD or other cannabinoid hemp. Their initial estimate for acreage planted with CBD or other cannabinoid hemp in 2020 is roughly half of their estimated planted acreage for 2019.

To summarize their reporting, CBD hemp production was nearly halved in 2020, while overall hemp production dropped by 30%. But it isn’t just because farmers are growing less hemp.

The issue of hot hemp

A consistent problem that has plagued the legal hemp industry is hemp produced with a THC content over .3%, commonly known throughout the community as “hot” hemp. Farmers and growers across the country have long been asking the federal government to adjust the THC requirement for hemp to be at least 1%. As such a low THC content could not realistically produce a psychoactive high, the argument is that by raising the limit slightly, more farmers would be able to produce passable hemp.

And until the majority of farmers secure trustworthy hemp genetics or the laws change, these problems will continue.

A hemp farmer in Colorado had to completely destroy 80 acres of hemp that had THC levels that were slightly above the requirement. His plants tested at .47%. That is just .17% above the legal limit, but all of his plants had to be destroyed or he risked thousands of dollars in fines. In the eyes of the government he had 80 acres of psychoactive, illegal cannabis despite being just a fraction of a percent over the limit.

For that one farmer, hot hemp means thousands of dollars flushed down the drain after months of hard labor producing flowering hemp plants or biomass. The same problem plagues farmers across the country, leading many to either cut back their production to save in the case of hot hemp issues, or stop production all together.

These factors combined have caused the shrinkage of the legal hemp industry that we saw in 2020, and what we will likely continue to see through 2021. However there is a silver lining to the trimming down of the hemp industry.

Less hemp, but higher quality

While millions of pounds of hemp were lost to the trash heap because of high THC levels in 2020, and thousands of farmers cut back their production or left the industry all together, the cream has begun to rise to the top. Hemp farmers and producers with high quality genetics, that test consistently at .3% or lower, while also enhancing the natural cannabinoids in the plant like CBD, CBG and CBN have become the go-to suppliers for serious farmers across the country.

One cannabinoid in particular exploded in 2020, and it wasn’t CBD. Delta-8 THC, the close relative to Delta-9 THC which is the main psychoactive cannabinoid bred in cannabis, was unwittingly legalized along with hemp through the 2018 Farm Bill.

Those who have tried Delta-8 THC claim that is has comparative effects to Delta-9 THC, although subdued. Advocates for D8 THC claim it is the best, legal alternative to D9 THC. This is sparking another revolution in the hemp industry as growers race to produce varietals with the highest Delta-8 THC content possible.

At the same time, the consumer’s palate is evolving to desire more complex terpene and cannabinoid profiles in their cannabis and hemp products. The increase in demand for new hemp products has the chance to give the industry a big boost in 2021.

Overall, the trend of the hemp of the industry shows a dip in 2020 that has many questioning if 2021 will be a rebound year or just a continuation. To insert a little opinion; the cannabis industry faced similar issues as it matured, as consumers demanded higher quality product and cheap producers were weeded out…pun intended.

Despite the hit that the legal hemp industry took in 2020, the demand for CBD products doesn’t appear to be slowing, and the addition of new cannabinoid-rich hemp varietals and products will bring more attention to the plant and its benefits. More research will be done this year than last year, and more people will become educated about hemp products than ever before.

Suffice to say the legal hemp industry isn’t going anywhere in 2021, if not slowly upward.

Recreational marijuana sales in Arizona could start this week

Recreational marijuana sales in Arizona could start this week

Cannabis dispensaries in Arizona could open this week.

Marijuana sales to anyone 21 or older in Arizona could start within a day or two, with state health officials telling dispensaries they are poised to issue licenses for recreational sales.

The first stores able to sell recreational marijuana and marijuana products, such as vape pens and gummy edibles, are existing medical-marijuana dispensaries. Some of those businesses said Tuesday they are awaiting approval from state regulators to show up online so they may open their doors to anyone with a state-issued ID. 

“I’m sitting here at my computer hitting refresh, refresh,” said Raúl Molina, a partner and senior vice president of operations for The Mint dispensaries in Mesa and Guadalupe.

A spokesman for the Department of Health Services said 40 medical dispensaries had applied to sell recreational marijuana as of Tuesday afternoon.

The quick turnaround for licenses was unexpected by some dispensary owners, who anticipated the state agency would use the full amount of time given under the law to approve applications, meaning recreational sales wouldn’t begin until March or April.

About two-thirds of dispensaries in the state have yet to make an application, meaning their competitors will have a jump on them in attracting the recreational market.

Molina said he is ready to begin sales as soon as he gets the OK, and that officials with the Department of Health Services told him it could come at any time.

“I am so ready,” Molina said, adding that he has submitted documents to the state for his employees to work in a recreational dispensary, stocked childproof packaging, added cash registers and programmed them to add the appropriate tax to recreational sales, and bought an additional 800 pounds of marijuana in the past month to meet the anticipated demand.

“We expect rushes like 4/20 (April 20) for probably like 10 to 30 days straight,” he said. “Basically it’s going to be 4/20 for a full month.”

Molina said he has dedicated registers for medical-marijuana patients to prevent a displacement by new recreational customers.

Arizonans approved Proposition 207 in November, legalizing adult use and possession of marijuana. The measure also allowed the state’s 120 or so operating medical-marijuana dispensaries to apply for a license to sell to any adult, not just those who have a state-issued medical-marijuana card.

Arizona Recreational Cannabis Marijuana Regulations Draft Released

Arizona Recreational Cannabis Marijuana Regulations Draft Released

Arizona recreational cannabis regulation drafts have been released

One month after Arizona voters overwhelmingly approved a ballot initiative to legalize marijuana for adult use, regulators have already put forward draft regulations to implement the program.

They’re working on a tight schedule to develop rules for the recreational cannabis market, as the measure stipulates that license applications must be accepted starting January 19. But industry stakeholders are optimistic that they will be able to accomplish that given experience in the existing medical marijuana program.

The new draft regulations cover licensing fees, the timeline for license approvals, the structure of the regulatory body, product labeling, public safety protocols and other technical matters. This is the first of what’s expected to be at least one if not more versions of draft regulations that the Arizona Department of Health Services will put out before finalizing rules.

Arizona’s secretary of state officially certified the Election Day results on November 30, which initiated the process of putting these regulations together. Now that they’ve been released in their initial form, stakeholders can use an online survey to submit feedback that regulators can use to amend the proposal. Responses are being accepted through December 17.

Samuel Richard, executive director of the Arizona Dispensaries Association, told Marijuana Moment that medical cannabis operators have an “open and collaborative” relationship with regulators and they expect that the department will be receptive to their input.

“Just a week and a half after Governor Ducey officially certified the will of Arizona voters, the Department is already hard at work to ensure the smoothest transition possible to adult-use in Arizona,” he said.

But again, this is a preliminary step and the provisions outlined in the draft rules are likely to be amended. Richard said he anticipates the department will put out at least one more proposal based on feedback they get and that the rules won’t be finalized until early January.

“They just want to give operators a sense of what the program will look like” before applications go live, he said.

Under the new legalization law, adults will be able to possess up to an ounce of marijuana at a time and cultivate up to six plants for personal use.

The States Voting on Legal Cannabis in 2020

The States Voting on Legal Cannabis in 2020

Updated on 11/5/20 to include results.
states voting on legal cannabis on November third

Every year there’s more states voting on legal cannabis. 2020 is no exception.

It’s become a regular trend. Each year, several states add an initiative to their ballot to vote for the legalization of cannabis. 33 states have legalized medical cannabis, and 11 of those states have legalized marijuana for recreational use.

It doesn’t mean that all of the initiatives are what we would ideally like, and there’s a couple states who have suffered from bad legislation.

For example, even though Vermont and Main legalized cannabis in 2018, neither had an actual regulated marketplace for legal cannabis until 2020. In other words even though cannabis was legal, there was nowhere to buy it, and selling it was still illegal.

But states voting on legal cannabis with some issues in the legislation is better than states not voting on legal cannabis at all. With that said, here’s the states voting on legal cannabis on November 3rd.

Mississippi

There are two measures on the ballot in Mississippi that aim to legalize cannabis for medical purposes.

Initiative 65 would make medical marijuana available for people with very specific qualifying conditions, according to WJTV. Patients could possess up to 2.5 ounces of medical marijuana at one time. The initiative also sets a state tax rate. This initiative basically fully legalizes medical and recreational cannabis in the state.

Initiative 65A does not specify qualifying conditions or possession limits. Regulations would need to be set by state lawmakers. This initiative is the more restrictive option, only specifying the use of medical marijuana for chronic illnesses and terminally ill patients.​

RESULT: PASSED

Arizona

Proposition 207 would legalize the possession and use of marijuana for adults who are 21 or older. People would be permitted to grow six marijuana plants at their home as long as the plants aren’t in public view. The Arizona Department of Health Services would be responsible for regulating marijuana facilities and stores.

Four years ago, voters narrowly rejected a measure to legalize recreational marijuana. It is looking like this year’s vote will have more support and is likely to pass.

RESULT: PASSED

Montana

Montana definitely isn’t a state that comes to mind when people think of states voting on legal cannabis, but Montana actually has two different initiatives on the ballot.

CI-118 or “Allow for a Legal Age for Marijuana Amendment” would make 21 the legal age to purchase cannabis for recreational use. In other words it would amend the Montana Constitution to authorize the state to set 21 years of age as the minimum legal age for marijuana consumption.

I-190 would be the actual regulated industry proposal that CI-118 would allow for. According to Ballotpedia, the measure would legalize the possession and use of one ounce or less or 8 grams or less of marijuana concentrate by people at least 21.

It also puts a 20% tax on legalized marijuana that would flow into the state’s general fund. But that’s not all. In fact, I-90 is actually quite comprehensive. In addition to the above, I-90 would also:

  • Direct the Montana Department of Revenue to license and regulate the cultivation, transportation, and sale of marijuana and marijuana-infused products and to inspect premises where marijuana is cultivated and sold.
  • Require licensed laboratories to test marijuana and marijuana-infused products for potency and contaminants.
  • Allocate 10.5% of the tax revenue to the state’s general fund, with the remainder dedicated to accounts for conservation programs, substance abuse treatment, veterans’ services, healthcare programs, and local governments where marijuana is sold.
  • Allow an individual currently serving a sentence for a prior low-level marijuana offense to apply for resentencing or an expungement of the conviction.
  • Prohibit advertising of marijuana and related products.
  • Strictly regulate the packaging and labeling of marijuana products to prevent accidental ingestion and access by children.
  • Require that marijuana provider licenses only be issued to Montana residents.
  • Permit localities to regulate, ban, or restrict marijuana businesses within their jurisdiction.

RESULT: PASSED

New Jersey

Question No. 1 on the ballot would make pot legal for adults 21 and older. Medical marijuana is already legal in New Jersey, and the group that oversees the regulation of medicinal cannabis would also regulate recreational pot.

The constitutional amendment would take effect on January 1 and would make New Jersey the first state in the Mid-Atlantic to legalize marijuana.

Because of the economic impact expected to be brought in by residents of neighboring states, it’s believed passage in New Jersey could put pressure on other states in the region to pass similar measures. Unfortunately, Question No. 1 is very short and vague, which likely implies while cannabis could be legal on January 1, 2021, it might be some time before a regulated industry is operating in the state.

RESULT: PASSED

South Dakota

The state will be voting on both medicinal and recreational marijuana during the general election.

Amendment A would legalize recreational cannabis for anyone 21 or older. The measure would also require state lawmakers to pass laws that create a medical marijuana program by early 2022.

Measure 26 would only allow for the sale of medical marijuana to people with “debilitating medical conditions.” Patients cleared for the program could possess up to 3 ounces of marijuana and grow plants in their homes.

While strict, South Dakota is one of the most conservative states when it comes to cannabis, being one of the only in the nation to still not have passed any legislation regarding cannabis. For these same reasons many are unhopeful that Measure 26 or Amendment A will pass.

RESULT: PASSED