The confirmation that the federal government has fully legalized hemp is potentially massive news for an industry that had previously struggled to grow.
The decision overturns more than 80 years of prohibition and permits the cultivation of and interstate commerce involving hemp and associated products.
The 2018 Farm Bill, signed into law by President Donald Trump, opens the door for a massive boom in the sector, with experts predicting the industry could be worth over $22 billion by 2022.
Read on as we take a closer look at the emergence of hemp based businesses.
A brief history
Hemp was outlawed in the United States in 1937 when Congress passed the Marijuana Tax Act. Most states legalised hemp in some form since then, but interstate commerce involving the plant and its derivative products remained illegal.
The Hemp Industries Association challenged the Drug Enforcement Agency (DEA) on its rules, culminating in the 2014 Farm Bill establishing pilot programs in which universities and state agencies could grow industrial hemp containing less than 0.3 percent tetrahydrocannabinol (THC) for research purposes.
Fast forward to 2018 and Trump’s signing of the Farm Bill ended the Schedule I status of industrial hemp under the Controlled Substances Act (CSA), which categorised the plant as a potentially addictive substance with no medical uses alongside drugs like heroin and ecstasy.
What does it mean for the industry?
Legalisation of hemp means that farmers will now be able to grow the crop, while existing companies will be able to massively expand their operations.
The decision removes trading barriers, potentially making the hemp-derived cannabidiol (CBD) market alone worth around $22bn by 2022.
With the entire cannabis industry projected to generate approximately $23bn in 2022 prior to hemp being legalised, the new rules create a huge opportunity for the industry.
Hemp has a wide range of applications, including in textiles, nutrition and biofuels. It can also be used within the health industry and is commonly used for anxiety as well as numerous other conditions.
What is the difference between hemp and marijuana?
Hemp and marijuana come from the same plant species – cannabis sativa. Both contain THC and CBD, but each has its own unique strain of cannabis.
Hemp was previously grown almost entirely for industrial uses like manufacturing. As a result, hemp plants today have very low amounts of THC, the psychoactive chemical responsible for marijuana’s high.
Hemp plants are often higher in CBD, which is now thought to be responsible for several of the therapeutic effects of cannabis.
However, unlike THC, CBD is not psychoactive and does not get you “high”.
What are the benefits?
CBD oil is made by extracting CBD from the cannabis plant, then diluting it with a carrier oil like coconut or hemp seed oil.
Some studies have shown it can help treat a variety of ailments such as arthritis. CBD and THC has also been shown to be effective in treating the pain related to multiple sclerosis.
CBD has shown promise in treating both depression and anxiety, to help alleviate cancer-related symptoms and even as an acne treatment.
Epilepsy, heart conditions and diabetes are other areas of health where hemp based products have been found to have a positive effect.
The hemp based business boom
Investors have taken the legalisation of hemp as a positive signal for the market, with many lining up to get a piece of the action.
Some companies are already well-placed to take advantage, with the likes of CW Hemp Inc, Isodiol International Inc and CV Sciences all benefiting from significant rises in their share prices.
According to Brightfield, via Inc.com, Florida-based Green Roads is the largest private company specialising in hemp-derived CBD, currently cornering around six percent of the market.
The company sells CBD-infused products such as tinctures and balms, online and in 6,000 stores and 2,000 doctors’ offices.
It now has about 100 employees, and co-founder Arby Barroso estimated 2018 revenue was in the region of $45 million.
That figure is expected to rise significantly in the next few years and future collaborations with global organisations are not beyond the realms of possibility.
With vast financial growth expected in the hemp based market over the next few years, it is inevitable that’s some of the world’s biggest companies have been tipped to join the revolution.
Industry experts have already predicted that the likes of Coca-Cola and PepsiCo will start producing CBD beverages in the future.
Coca-Cola was linked last year with a Canadian company, Aurora Cannabis, with a view to launching CBD beverages.
CEO James Quincy later played down the reports, saying the company has “no plans” to get into the sector, but Coca-Cola tend not to be the type of firm to miss out on opportunities to make a financial killing. With the prospect of securing a share of a potential $22bn industry, it appears inevitable that a major global company will jump on the hemp bandwagon sooner rather than later.