The U.S. hemp industry is poised for growth, but there are serious financial, regulatory and agronomic risks that farmers must understand. A report by Rabo AgriFinance says the market is “highly fragmented,” and there is no reliable source for pricing and production data. The report notes that the 2018 Farm Bill set off a process to completely overhaul hemp industry regulations, including the legalization of hemp and hemp-derived products. USDA plans to release its new rules in the fall, but new regulations won’t take effect until the 2020 planting season, and hemp production is not legal in all 50 states.
The report says hemp will not be treated like other commodities. Growing hemp requires a lot of paperwork and careful record keeping, and regulatory infractions could result in the seizure and destruction of a hemp crop. Finally, the report says the U.S. may soon face an oversupply of hemp grown for CBD extraction, which could result in major losses for farmers once prices adjust.