A Thumbnail Review of Hemp in 2020
Despite disease and disruptions in 2020, it proved to be a landmark year for the burgeoning hemp industry.
CBD’s explosive growth sparked international conversations, with more than 60% of Americans confident of the cannabinoid’s medical applications. As consumers become increasingly familiar with CBD, national CPG brands are waiting in the wings for 2021 to launch or acquire their own CBD brands.
In Europe and Latin America, the prevalence of CBD has been spurred by low prices caused by massive oversupply of hemp material grown in 2020. Since between 40%-60% of 2019’s crop has remained unsold, tens of millions of pounds’ worth of excess biomass have markedly depressed prices.
Despite hemp’s popularity with consumers, the failure of government agencies to create unambiguous, sensible regulations for hemp products has stifled growth. By the end of the year, whirlwinds around legislation, proposed regulations, and the USDA’s interim final rule created a volatile environment making business planning virtually impossible, and thereby threatening the economic viability of many hemp processors. Still, many companies are holding out hope for the new year, primarily that a positive regulatory ruling from the FDA under the incoming Biden administration will spur a new cycle of expansion.
Non-CBD hemp applications also grew in 2020. U.S. imports of hempseed are expected to reach record highs for the year at $97.7 million dollars, as changing consumer tastes have fueled growth in health foods.
Hemp fiber – and its corresponding industrial applications – struggled to get off the ground given the unexpected capital crunch left by the COVID-19 pandemic. Nevertheless, the hemp fiber industry laid a foundation for future growth, as some of the first true U.S. decortication facilities broke ground with expectations of starting operations in 2021.
As 2020 comes to a close, hemp remains a bright spot in an economy battered by the global pandemic.
There are reasons to be bullish for the future: Growth in consumer demand for CBD shows no signs of stopping, increasing demand for plant-based proteins is bolstering the grain market, and the incoming Biden administration’s climate action proposals could catalyze industrial cannabis applications. Still, the lessons of 2020 serve to remind how some contingencies cannot be planned for, and that operators in the sector both must build businesses that can cope amid uncertainties, and adapt quickly to a rapidly shifting business landscape.