How Hemp-Hangups Hamper Hegemony

By Noah Tomares, Research Analyst, New Frontier Data

In the wake of the global economic slowdown caused by COVID-19, cannabis has presented countries with respectively unique opportunities to supplement massive shortfalls in tax revenues.

In the United States, many states have declared cannabis dispensaries as essential businesses and therefore not subject to some of the lockdown measures which have shuttered other retail businesses to prevent spread of the virus. Meanwhile in Europe, increased cannabis demand has driven increased traffic to unregulated markets. While the pandemic may hamper legalization efforts across Europe, the European Industrial Hemp Association (EIHA) sees the current crisis as an opportunity to highlight hemp’s positive economic and environmental externalities.

Besides having a strong processing infrastructure and finished-goods industry, Europe also has a rich history of hemp production. In its Hemp Manifesto, EIHA argues that the plant — with its multiple applications — can ultimately help deliver long-term sustainable growth and create highly skilled jobs across Europe. For instance, industrial hemp is already being used to make car dashboards and door panels in Volvo’s new “vegan” interiors.

Hemp is also a carbon sink: The plant’s deep roots help to capture CO2 in the soil. Citing such benefits, the EIHA posits that if regulations are re-evaluated to incentivize sustainability, hemp could help Europe move towards a zero-emissions, bio-based and sustainable economy. With those goals in mind, EIHA identified 10 proposals:

  1. Public policies should promote hemp use in food, feed, and manufactured products, and finance further development of sustainable value chains.
  2. The hemp plant’s contribution so the environment should be recognized, and the use of hemp for carbon farming encouraged.
  3. Member states should not apply drug-control legislations to (industrial) hemp or its derived products, so long as the limits established for THC content are respected.
  4. The maximum THC level allowed on the field should be restored to 0.3% or perhaps higher.
  5. Operators should be allowed to harvest and produce from all parts of the plant – including flowers and leaves – and market any end of product, while maintaining compliance with the THC content limits.
  6. Hemp and hemp preparations containing a naturally occurring cannabinoid content should not be considered as novel food.
  7. Reasonable guidance values for THC in food and feed should be established.
  8. All hemp-derived raw materials should be permitted as ingredients for cosmetics.
  9. The EU should value and promote the use of hemp fibers to produce both short and long fiber for textiles, and favor the establishment of sustainable value chains.
  10. The use of hemp-based construction and other materials should be incentivized in both the public and private sectors, with clear goals for the total or partial substitution of the other less sustainable alternatives.

These proposals highlight a few key hurdles which hinder the broader EU hemp market. Several proposals emphasize that products produced from various components of the hemp plant are either not allowed or not incentivized. For example, some EU countries forbid the use and marketing of hemp leaves and flowers. Hemp flowers can be utilized for extracts, distillates, and isolates, whereas leaves and stems have myriad applications, from building materials and animal bedding to mulch and compost. While economies of scale favor established processes and likely make hemp-based alternatives more expensive to produce in the short term, those seeking sustainability in their supply chain might find that hemp is a desirable substitute.

Another major issue is the lingering inconsistency regarding hemp’s maximum allowable THC level. The EU limits production of hemp to those strains with 0.2% THC or less, whereas the United States, Canada, and China each set the limit slightly higher at 0.3%. Not only does the difference hamper European farmers’ capacity to compete internationally, but it also potentially weakens the gene pool for the hemp which can be legally cultivated. These discrepancies can result in difficulty aligning with international standards and moving products between markets. New Frontier Data has previously shared how only 13% of EU respondents claimed to have purchased a hemp product in the previous two years. A broader, consistent market for those products could help bolster user adoption and awareness.

For a detailed dive into each of proposals above, check out EIHA’s Hemp Manifesto.