Report predicts 2.3 million acres of hemp in US by 2023, up from 78,000 in 2018

By Hank Schultz

- Last updated on GMT

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Related tags Cbd Hemp

Hemp cultivation will ramp up markedly according to a new report, raising questions of whether the supply cart is getting ahead of the processing horse.

Brightfield Group, a CBD market research firm, recently released a report called the Hemp Cultivation Landscape. The report states that the United States is now the global leader in hemp cultivation, with 285,000 acres having been planted this year.

Virginia Lee, research manager at Brightfield Group, said the company did the report to see if there was a disconnect between the soaring demand for hemp/CBD products and the supply of the raw material.

“We wanted to know if there is an undersupply of US-grown hemp.  We found there is plenty of supply and we are projecting strong growth in hemp cultivation in the US,”​ Lee told NutraIngredients-USA.

Mismatch between supply, processing capability

But the question has now become whether there is too much supply.  During a CBD education session connected to the recent SupplySide West trade show in Las Vegas, NV, some panelists  and attendees said some hemp crops have gone begging for buyers, either because processing capacity was insufficient or the quality of the crops themselves was below par.

Lee said that while Brightfield’s report was focused on the raw material supply, the company did hear some of the same things when talking to growers.

“There is an undersupply of hemp processors currently and that does make it difficult for hemp cultivators in certain regions.  There is a mismatch and many of the hemp cultivators had said that they had not yet found a buyer for their hemp,” ​she said.

Lee also said that as hemp is a new crop for many cultivators and is being grown in many different regions, there is still a high degree of variability in the crops.  For processors looking to concentrate CBD, either as a ‘broad spectrum’ extract or as an isolate, the CBD content of the raw material is a key factor. Some cultivators have been able to deliver on that promise while others have fallen short.

“Processors would rather process industrial hemp with the highest CBD content,”​ Lee said.

Strong growth predicted

Lee said whatever challenges the processing capacity/supply mismatch might present, many more cultivators are planning to get into the game.  Hemp acreage in the US went from 78,000 acres in 2018 to 285,000 this year.  Brightfield Group is projecting that as many as 741,000 acres will be planted to the crop in 2020.  By 2023 the report forecasts that number will grow to 2.3 million acres.

Lee said that growth is being driven by the explosion of sales of hemp and CBD products on the shelf, with a resulting strong demand for oils and isolates to go into those products.  And even with a continuing lack of insurance for this crop, the benefits outweigh the risks for some farmers.  The report stated that an acre of hemp could potentially bring in $40,000 in revenue, as opposed an average of less than $1,000 for corn.

The report found that 87% of the hemp grown in the US was planted for purposes of CBD extraction.  

Hemp cultivation is now fully legal in 32 states. A further 12 states have pilot programs, two states are allowing cultivation on a ‘research’ basis, and only four states still prohibit outright the growing of hemp. 

Colorado to remain early leader

Colorado, which was an early cannabis adopter, leads all states with 48,000 acres under cultivation. According to the report other leaders are Oregon (30,000 acres), Montana (29,000), Tennessee (20,000), and Arizona (18,000). The report postulates that by 2023, while Colorado and Montana will maintain their leads, California will become a major player in the acreage game, jumping from 8th place on the 2019 list to third. Acreage is expected to increase significantly in Kentucky as well.

Among individual companies involved in hemp cultivation the report found Lilu’s Gardens was the leader with 75,000 acres under contract, followed by Eureka 93 (19,000 acres), Integrated Ag (10,000), Elixinol (4,942) and Crop Infrastructure Corp (2,115).

Lee said even with the negative experiences of some first time cultivators who might suffer a loss with unsold crops, the boom mentality will still be on for some time to come.  Some cultivators will drop out of the field but Lee said she expects many more to take their place.

“Given that the commodity prices for corn wheat and soy, farmers are barely making money. Growing industrial hemp for the purpose of CBD extraction, while there is no guarantee of success, farmers can make much more money than they could growing corn, wheat or soy or being involved in the dairy industry,”​ she said.

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