The legalization of hemp was a modern day gold rush. Seemingly overnight, farmers began converting their fields to hemp and America saw the growth of a burgeoning new industry. In the beginning, it seemed as though everyone wanted in on the hemp-derived CBD market. Larger investors had plans for vertically integrated farms and hemp-derived products, while individuals had visions of becoming resellers of brand name and white labeled products. Soon everything was a blur of hemp. With things having settled down by now, you might be wondering if hemp farming is a good investment. And is it? Let’s explore.
Economics of Hemp
In order to best answer any questions about investing in the hemp industry, we need to first consider a basic principle of economics: supply and demand. There was quickly a rush to grow hemp to cash in on the market. However, with all of the farmers eager to supply hemp, the supply ended up outpacing the demand. Farmers also faced other challenges that a new agricultural crop naturally faces, like quality and supply-chain issues. It didn’t take long before farmers were forced to face the fact that their costs to grow hemp outweighed their selling price, which meant that they were growing hemp at a loss.
Some economic experts point out that the relevance of hemp in the consumer market has a long way to go before it could remotely compete with other mainstay crops, such as corn. All of this coupled with specific ongoing regulations have caused hemp farmers to reassess their strategy for growing hemp, and whether or not they should grow it at all.
No Hemp Leaf Left Unturned
This situation is not exclusive to medicinal hemp, which is the type of hemp grown for its CBD and other cannabinoid rich flowers. Industrial hemp, which is grown for its fibers, is also facing a questionable future. This is not to say that hemp doesn’t have a future, just to say that we don’t know exactly what that future looks like just yet. There is a lot that has to work itself out in terms of processing, supplying, as well as further state and federal regulations. From an economic perspective, things need to mature a bit before we can confidently and definitively answer if hemp farming is a good investment.
Hemp Without the Farming
Despite the hemp industry having seen its struggles, experts predict that hemp will recover, and appropriately, grow. The diversity of the plant has opened a door for investors, entrepreneurs, and innovators to make their unique investment in hemp. When considering how to get into the hemp industry, many have looked to new ways to use hemp fibers and other hemp-derived products in everything from fabrication to animal feed. Day by day, investors are finding new ways to use hemp to fill the needs of other markets.
There are countless other ways those interested in investing in the hemp industry can enter the market and help it become more stable. Some help to create a solid foundation for the supply chain shortcomings the hemp industry experienced in its infancy. Ancillary businesses are equally as important as an investment directly in the hemp industry, and somewhat change the question from, “is hemp farming a good investment?” to “is the hemp industry a good investment?”
A Boutique Hemp Market
Other economic experts are pointing out that a boutique hemp market may play a part in the hemp industry’s recovery. The high-end, exclusive product line featuring hemp’s diverse cannabinoid line-up is spearheading this market. Hemp has long been touted as medicinal by its advocates, and now science is beginning to catch up. While research still doesn’t know exactly how the cannabinoid compounds in hemp function, preliminary research is showing that CBD, hemp’s most abundant cannabinoid, may help with inflammation. This alone has major promise for the industry.
Specially formulated CBD products, which keep an eye on the most current research which tailor their products carefully, could very well be the way to more confidently answer if hemp farming is a good investment. Products being produced from the highest quality hemp crops may very well carve out their own specific market and reinvigorate the hemp industry.
There are a variety of ways to go about investing in the hemp industry. Whether you should invest or not requires you to do some in-depth research. While hemp farming may be faced with its challenges at this time, those investing in the hemp industry through the peripheral use of hemp fibers and other derivatives, are helping new investors interested in how to get into the hemp industry generate new ideas and opportunities. Take Tom’s Tumbler™, for example. Our products are an essential part of the post-harvest process. We have a variety of products to help farmers grow their business. If you’re interested in learning more about Tom’s Tumble Trimmer and how we uniquely fit into the industry, don’t hesitate to call to talk to a grower.