Why Investing in Hemp is Still the Smart Choice

Amazon’s recent decision to publicly support the legalization of cannabis has recently made waves in that industry, with many experts believing that this could be the start of some significant backing and investment for this new and emerging market.

However, cannabis is not the only industry to sit up and take note of Amazon’s announcement, hemp (the much less controversial, and at present much more legal compatriot to cannabis) has been following the pro-legalization campaign closely as well.

Ever since the passing of the Agriculture Improvement Act of 2018, (more commonly referred to as the 2018 Farm Bill), interest in hemp has been growing, and many experts see a promising future ahead if present day obstacles can be overcome.

 One of the many obstacles the industry faces is strangely down in part, to its initial popularity.

Whilst ordinarily interest in a new emerging market is cause for celebration, something strange happened in the hemp world not long after the US announced full federal legalization.

It would appear that an influx of new investors and hemp farmers, (all keen to take advantage of the opportunity) and encouraged by a huge boom in consumer desire for CBD led to an overabundance of hamp crops being grown.

This was a problem for two reasons; the first and most obvious being that supply had clearly outstripped demand, and the second was that due to the relative immaturity of manufacturing and supply chain logistics, the industry just couldn’t ship the hemp to its consumers fast enough.

This led to a massive backlog of hemp from 2019 that was then carried over to 2020, which was then further compounded by the effects of the global pandemic.

Many of the initial investors who had jumped on to ride the wave of interest in the hemp industry had presumed that it would be easy to invest and make a quick buck, this however was not to be.

These new investors and hemp farmers, many of whom who had little experience of growing this type of crop had presumed that alls they needed to do was plant a harvest and watch their money grow, not realising perhaps the meticulous and scientific nature of growing Cannabis Sativa and unprepared for the logistical and legislative problems that would hamper sales of the product.

Some of the first group of hemp farmers had little to no knowledge or experience of growing a plant like cannabis (hemp) and were unsure where to begin regarding the equipment, growing techniques or even the best type of soil for cannabis to yield the healthiest hemp crop possible.

As such many initial growers not only made a substandard product but due to the bureaucratic and logistical constraints imposed on them also made too much of it.

After such a realization many of these investors and farmers have decided to switch tack and pull away from the industry, but does that mean that all was lost for hemp?

No, in a very short period of time, these investors and farmers have been replaced and as the new industry has started to settle so many of the initial teething problems have also begun to resolve themselves.

Sales of CBD continue to grow month on month and as we emerge into a post pandemic world many industry experts are actually seeing the current state of affairs as an opportunity for investment, product diversification and industry regulation.

The reliance on CBD sales to maintain the hemp industry has long been a point of concern for many investors and to that end more and more businesses are now being introduced to the product applications of hemp and being made aware of the monetary, societal and environmental benefits of using hemp as a component of their products.

The industry has made significant gains recently in forging relationships and developing products in everything from animal and human feed (vegan, plant based meals), constructions materials, holistic medicines and manufacturing components.

One enterprising business based out of Wilmington, North Carolina has even started making prosthetic limbs out of hemp to help supply wounded veterans.

And it is this diverse range of products that hemp can create that is giving hope to investors and farmers alike that the hemp market is only going to grow.

Indeed some experts are predicting that by 2030 the licenced domestic hemp acreage will be in the region of 9 million acres, and a recent report by Facts & Factors suggests the global industrial hemp market is expected to grow to over $36 billion USD by 2026, that’s a compound annual growth rate of around 34%.

With all of this being said, and taking into account the potential “Amazon Effect”, if cannabis legalization is in the near future, it doesn’t take a fortune teller to be able to see that a fully leagalized hemp industry combining and working in tandem with a federally legal cannabis industry will undoubtedly boost profits.

One of the current main areas of concern in the hemp industry is its poor logistics, an area funnily enough in which Amazon excels, and one could imagine that further investment and backing from Amazon in the industry, could help iron out many of the logistical problems this immature sector has recently suffered from.

So while at the moment things in the hemp industry appear to be struggling, in reality in a post pandemic world, where the hemp industry is diversifying and at the same time improving their manufacturing and logics, combined with investment from a major player like Amazon, mean that the future of hemp looks bright and now is the perfect time to get on board and invest.