As Hemp Industry Matures, Kentucky Farmers Hedge Bets While Waiting for FDA Guidance

By William Sumner, Hemp Content Manager, New Frontier Data

Kentucky Agriculture Commissioner Dr. Ryan Quarles is urging hemp cultivators in the state to proceed with caution as they enter the 2020 growing season. Late last month, Quarles announced that for the first time since federal legalization, Kentucky had issued fewer hemp licenses than in the previous year.

In 2019, Kentucky issued 978 cultivation licenses and 200 processing licenses. For this year, the Bluegrass State has issued approximately 960 hemp cultivation licenses, representing 32,000 acres and 4.6 million square feet of greenhouse space despite the 1.8% decrease in permits.

Around 150 hemp processors have been licensed as well, with another 60 processing applications pending review. In an unprecedented move, 157 cultivators have not requested growing sites, but intend instead to store and sell the hemp they produced in 2019.

While the differences between 2019 and the 2020 may seem small at first glance, it is worth noting that Kentucky significantly extended its application window for the growing season from November 2019 to March 2020.

While Kentucky may be one of the largest hemp-producing states in the U.S., it has also experienced its share of setbacks, including several high-profile bankruptcies as well as a class-action lawsuit from farmers alleging that they were never paid for their work.

In addition to licensing numbers, the Kentucky Department of Agriculture (KDA) announced economic data from 2019 as provided by licensed hemp processors. Last year, processors reported $193.9 million in gross product sales, compared to $57.75 million in 2018. Processors also spent $207.3 million on capital investment projects in 2019, compared to $23.4 million in 2018.

Hemp processors paid Kentucky farmers around $51.3 million for harvested hemp materials in 2019, up 188% from $17.8 million in 2018. Processors also employed around 1,304 people.

Though the numbers show considerable year-over-year growth, Quarles reminded that they do not reflect the level of uncertainty and volatility that continues to roil the market. According to Quarles, a significant share of the uncertainty stems from the Food and Drug Administration (FDA)’s struggle to regulated cannabidiol (CBD).

“The nation’s hemp industry is reacting to a market which is evolving in the face of supply chain issues and the uncertain future of cannabidiol products after the FDA’s years-long struggle to provide a regulatory framework for nutraceutical or food products,” said Quarles. “We will continue to work with our Cabinet for Economic Development to draw new investment for every sector of the hemp economy — including fiber and grain — into our state.”