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The value of U.S. hemp production in 2021 reached $824 million according to The U.S. Department of Agriculture’s National Hemp Report. If estimates from the National Industrial Hemp Council are accurate, the value of U.S. hemp production will grow to more than $10 billion by 2025. Based on those numbers, it seems like the future of the hemp industry will be all about skyrocketing growth despite recent oversupply problems and dropping prices.
While the hemp market may not reach that $10 billion prediction within three years, growth is practically guaranteed. It will take time for hemp production to normalize and for laws to modernize, but we’ll get there soon. In the meantime, there are many opportunities open for license holders and ancillary businesses.
Together, the number of hemp retailer and cultivator licenses grew the most in 2021 based on data from the Cannabiz Media License Database. Of course, the number of licenses and the types of licenses in each state depends on the laws of that state.
With that in mind, Florida approved the most licenses by far in 2021 with a total of 4,400 new retailer, 211 new distributor, and 195 new processor licenses as well as one new testing license. For perspective, the state that approved the second most new hemp licenses in 2021 was Louisiana with 902 new licenses (614 retailer, 64 distributor/retailer, 26 event, 21 processor, 16 distributor, and nine hemp seed).
More licenses will be approved in the coming years opening more opportunities for businesses across the supply chain to stake a claim in the hemp industry. We’re still in the very early stages of the hemp industry in the United States.
The USDA tracks hemp crop production, harvesting, sales, and pricing for the National Hemp Report as “under protection” (indoors or in greenhouses) or “in the open” (outdoors, which is separated by flower, grain, fiber, and seed). As mentioned above, the total value of industrial hemp in 2021 was $824 broken down as follows:
In recent years, cultivators and processors focused heavily on growing for the booming CBD market, but future opportunities will be found in emerging and high-growth markets such as textiles, fuel, and more. In time, more acreage will be allocated for harvesting grain and fiber to make new products and replace old materials with new ones (e.g., plastic and petroleum).
In addition, opportunities to improve technology in order to meet the needs of emerging hemp markets will abound. Savvy entrepreneurs and investors are already watching for opportunities to open up as the supply chains for hemp fiber and grain production continue to develop.
Data from Grand View Research provides the following ranking of global industrial hemp market share by application (from largest share to smallest):
The textiles category accounted for nearly 25% of global revenue while personal care, food and beverages, and animal care account for approximately 16% each. Together, textiles, personal care, food and beverages, and animal care hold nearly 75% of the global industrial hemp market with all other applications accounting for the remaining 25%.
Based on the market share breakdown, it’s clear that there are significant opportunities to monitor consumer preferences and leverage purchasing trends in order to carve out larger chunks of market share. It will take some time to replace what manufacturers and consumers are already using with hemp-derived materials and products, but consumer behavior trends show people are willing to do so.
For example, Patagonia worked with Colorado regulators, Colorado State University, and local growers to launch a hemp fiber project in recent years. The goal of the project was to determine if Patagonia could source hemp used to manufacture its products from the United States rather than China.
As the hemp market grows in the U.S. and supply chains develop, more companies could shift their hemp sourcing from China, Canada, and other countries to U.S. suppliers, which means there will be even more opportunities in the industry.
It’s also important to watch what global brands are doing as it relates to the hemp industry. For example, not only have companies released a variety of CBD drinks in recent years, but this year, PepsiCo launched a new hemp-infused drink, Rockstar Unplugged, in an effort to attract new customers to the Rockstar Energy brand and to the energy drink category in general.
Rather than infusing CBD into the drink, which has been so popular in recent years, PepsiCo infused hemp seed oil. This is just one more example of how innovation will create even more opportunities in the hemp market in years to come.
The future of the hemp industry is all about growth, but supply chains must develop, product innovation needs to speed up, and consumer demand has to increase. All of these things will happen as hemp normalizes, and they’ll happen faster when U.S. hemp industry regulations become more standardized from seed to sale.
In the near term, expect to see hemp research increase, grower and processor focus to shift from quantity to quality, and demand to catch up to (and eventually pass) supply as consumers and businesses become more educated about the safety and uses for industrial hemp, including all parts of the plant.
To keep track of hemp and cannabis licenses in the U.S. and international markets and to connect with hemp and cannabis license holders across the supply chain, subscribe to the Cannabiz Media License Database. Schedule a demo to see how you can use it to grow your business.