Daily Local News (West Chester, PA)
What is future of hemp industry in PA?
Growing a new industry isn’t as simple as having an idea.
Growing a new industry isn’t as simple as having an idea. It’s not even as simple as having a product.
An industry is bigger than a business. It’s about suppliers and manufacturers and distributors. Even with enough supply and healthy demand, if any of the cogs in the middle break down, things can go wrong in a hurry.
And welcome to hemp in 2020.
In 2019, it was a different story. Hemp was having a field day. After years of being guilty by association with its stoner cousin, marijuana, hemp was going straight.
The 2018 federal Farm Bill — passed in mid- December — legalized it for the first time in more than 60 years. Pennsylvania pulled its restrictions on how many hemp permits could be issued and how many acres could be planted. That resulted in 324 growing permits and more than 4,000 acres of hemp.
Business was open, and business was booming. Cannabinoids were hot. Signs for CBD were everywhere, and it was showing up in products from candy to lotion and everything in between, and CBD isolate is extracted from hemp.
In May 2019, a kilogram of the extract was selling for $6,000, making it an attractive business to give a try.
And that’s what everybody did. Despite CBD showing up everywhere, hemp was being grown even faster. By January, the price dropped 73%. A New Stanton processor, Commonwealth Alternative Medicinal Options, had agreements with local farmers. It has now closed its doors. A Kentucky processor also has declared bankruptcy.
A new business has a 33% failure rate in the first two years, according to magazine Entrepreneur, so one in three CBD-related businesses could find themselves short-lived. But an industry is harder to quantify — and even harder to seed from scratch the way the state has tried.
It is even harder to grow an industry overnight that has been nonexistent since the Great Depression.
That just doesn’t work. Pennsylvania and the feds both sat on hemp for years, treating it like a dangerous explosive that had to be carefully monitored, then almost simultaneously removed all their locks and chains. The bottom dropping out of the market was as predictable as a Wile E. Coyote cartoon.
Hemp still has applications. It still has uses. But the lucrative CBD market of a year ago isn’t reliable, and hemp fiber doesn’t have the same returns.
What remains to be seen is whether the people who got into a booming business will stick around to build a slower, steadier industry.