Industrial Hemp

INDUSTRIAL HEMP MARKET CHALLENGES

GATHERING INFORMATION

Industrial hemp is a very versatile product with many potential uses for the plant fiber and seeds. Industrial hemp producers should carefully identify which industrial hemp product(s) and sales channels are available before starting production, secure any necessary permits prior to production, and ensure that production is done in accordance with state and federal laws. The policy situation is fluid and expected to change at the state and federal levels over the coming years. The difficulty in finding current market information on sale prices and demand makes any projections of the long-term profitability of industrial hemp a real challenge for potential growers.

DOMESTIC AND GLOBAL COMPETITION

There is domestic and global competition in the industrial hemp marketplace. Domestically, several states have already researched the economic impact of industrial hemp and have examined the resources required to develop supply chains for industrial hemp, creating a foothold in the marketplace ahead of Pennsylvania. For example, the State of New York incentivized industrial hemp production in 2017 by creating a multiyear $5 million fund to kick start the industry. Other states with industrial hemp programs include Kentucky, Oregon, and Colorado. Canada and China have long-established networks of producers, supply chains, and manufacturing facilities in place to deliver products from field to market.

SUPPLY CHAINS

Due to the longstanding federal policies that made the cultivation of industrial hemp illegal, the supply chains and processing and manufacturing facilities necessary to create market-ready products need to be established in the United States. Industrial hemp producers in Virginia will need to carefully consider the cost of transporting fiber or grain when evaluating the potential profitability of industrial hemp. The creation of supply chains and processing facilities is closely tied to policy and the current low level of domestic production. As with any business, a potential industrial hemp producer should carefully research the markets, costs, laws, and necessary supply chain partners before beginning production.

Information Courtesy Penn State Extension