Since the passage of the Farm Bill in December 2018 that legalized hemp on a federal level, the industry has grown rapidly. According to a report from the data analytics firm New Frontier Data, hemp sales in the US topped $390 million in 2018 and are set to grow to $1.3 billion by 2022.
Much of this growth is due to the sale of hemp-derived cannabidiol (CBD) products; however, recent layoffs from major companies, overproduction of hemp crops, and uncertainty over federal regulation and guidelines have raised concerns around the sustainability of its growth.
GenCanna, a large hemp producer headquartered in Winchester, Kentucky, had to let go 60 employees this past December. The company released a statement concerning the recent layoffs, saying that “Hemp market conditions have led GenCanna to responsibly resize our staffing levels as we move our company into the future. Regretfully, we have to say goodbye to a number of valued members of our team. GenCanna remains committed to the hemp industry with more than 200 employees across the Commonwealth.”
Additionally, a series of lawsuits and construction delays on their new state-of-the-art production facility forced GenCanna to file for Chapter 11 bankruptcy on February 5th. According to GenCanna CEO Mangone-Miranda, “Hemp and CBD are trapped in a regulatory purgatory that does not fully allow CBD to be used as a supplement or food yet. With more work and time, the market will correct and eventually expand to meet its potential.” GenCanna president Steve Bevan argued that the FDA’s stance on CBD was partially to blame for the company’s struggles. The result, Bevan claimed, is that big investors are staying away from hemp until the uncertainty surrounding CBD regulations is cleared—and it’s not just GenCanna that’s feeling the pressure.
Bluhen Botanicals, a fast-growing Tennessee-based hemp retailer, announced that it too will also be facing layoffs and cutbacks. The owners blamed a massive over-production of hemp and lack of guidance from the FDA surrounding CBD consumer products. States like Kentucky and Tennessee saw a large influx of hemp growers who rushed in to capitalize on the opportunity the new legislation provided.
Research group Vote Hemp reported that over half a million acres were licensed for hemp production in 2019, an increase of 455% over 2018. Unfortunately, hemp processors have not been able to keep pace with the surplus of hemp production, leaving producers with products they are unable to sell.
The hemp industry certainly has a bright future, but for now, it unfortunately may continue to struggle through the growing pains of uncertainty over federal regulation and oversupply issues.