A brief analysis of the problems and prospects for the development of the US hemp market

The extreme interest in the supply of high-quality breeding or seed material to the US market must be realized over the next few years, otherwise this window of opportunity will close if ignored by national breeding / seed companies. It is necessary to pay close attention to the solution of the problems of American cannabis growers on the part of the US government agencies in order to use the techniques and methods of lobbying they demonstrate in the interests of Ukrainian cannabis growers both in the domestic and international markets. 

During the New Year and Christmas holidays, the editors of the specialized electronic edition of Ukrainian cannabis growers turned to our colleagues from the information and analytical platform Hemp Consulting with a request to describe the prospects for the development of the modern cannabis market and briefly focus on the problems that we will have to face in the near future and the prospects for the development of modern hemp growing in Ukraine. In our traditional style, refusing to provide information on the Ukrainian cannabis market (the analysis was carried out in the interests of customers and the data is mostly exclusive), we were provided with information from one of the international consulting companies that specializes in analyzing the problems and trends of the modern US cannabis market. 

According to Hemp Consulting specialists, some of the problems indicated below are not only relevant for the national market, but will also become the main drivers for the development of the Ukrainian hemp market in the next few years.

Therapeutically active elements of hemp

Trends: The price decline for non-drug cannabinoids (primarily cannabidiol) is expected to continue, as the US market is experiencing an overproduction of products / preparations made with these raw materials, which have the therapeutic properties of the hemp plant, following the 2020 flower crop. The emergence of a huge amount of therapeutically active hemp raw materials on the market implies a decrease in the cost of the final product produced from it, as well as an increase in the range of both the use of hemp leaves and inflorescences, and the number of goods present in each individual market segment. Those. already in 2021, products containing natural cannabinoids will be widely sold in the United States (supermarkets, pharmacies, retail outlets, as well as online retail, cosmetic stores, gas stations, etc.). In particular, already now various large American retail brands are actively preparing to include in the product line various lines of products made on the basis of the healing / medicinal properties of hemp.

Problems: the issues related to the amount of therapeutically active elements of plant origin in the final products, as well as the feasibility and safety of using their synthetic analogs, must be finally settled. For the widespread use of the medical properties of cannabis, it is necessary to carry out comprehensive studies aimed at studying the characteristics of both individual elements of the plant on the human body or domestic animals, and the effectiveness and feasibility of using the synergistic effects of leaves and inflorescences of a plant, which often demonstrate a more significant result through the “ensemble effect from the point of view of healing or treatment than the use of extracts / concentrates of separately taken therapeutically active elements of hemp. The exploitation of myths about the medicinal properties of drugs or goods containing various therapeutically active elements of the hemp plant, which have not been documented, should be prosecuted within the framework of the legislation formed in 2021.

Corn

Trends: Since 2019, there has been a trend in the American market for the gradual ousting of Canadian companies from the US grain market. In particular, according to analysts of the American hemp market, the acreage used for growing the seed and fibrous parts of the plant in the coming years will exceed the volume of cultivated hemp and in the future, the sector of modern cannabis growing focused on the use of the healing / therapeutic properties of the plant will become much more compact, given the emerging chains of added cost more cost effective than those that exist today. In addition, versatile plant varieties are actively entering the market, which can be used to produce fiber, grain or therapeutically active plant flowers. The product direction involving the use of hemp grain will rapidly develop in the coming years, with a tendency to oust imported raw materials and products from other countries from this segment of modern hemp growing.

Challenges: The dependence on the imported seed base in the US market will be felt over the next few years. Therefore, the American hemp market directs a significant amount of efforts to the formation of its own seed and breeding base, creating conditions in order not to depend on the seed and breeding material imported from abroad. The lack of formed supply chains “from the field to the end consumer” does not allow yet to compete on equal terms, first of all, with Canadian farmers, who have already not only formed them, but also found partners in the United States who work primarily in the interests of breeding or seed companies from France, Poland, Canada, China, as well as a number of other countries or international brands that specialize in the sale of end products with high added value using hemp grains in the manufactured products. It is necessary to improve the work of a number of businesses aimed at ensuring the normal activities of agricultural producers specializing in the cultivation / processing / sale of hemp grain (the credit and financial sector, the insurance industry, regulation of the possibilities for subsidizing or allocating subsidies for each of the areas of activity related to seed material, or marketable grain, etc.).

Animal feed and pet business

Trends: The nutritional and therapeutic value of various hemp ingredients makes them excellent raw materials for use in the multibillion dollar pet food market or pet business. There is no doubt that this area of ​​modern US cannabis production will receive considerable attention in the near future. In the event that in 2021 the American pet food markets, as well as the pet industry, fully open up to the use of hemp grains, this factor will make industrial hemp a much more attractive crop for growing by American agricultural producers, since it will significantly expand the overall target market and significantly will reduce the risks associated with the sale of the grown crop.

Problems: starting in 2019, scientific and educational institutions in the United States have been actively using the possibilities of using various hemp ingredients for their inclusion in the formulation of mixed feeds or grain mixtures used both for feeding pets and poultry, and in the pet industry. However, the limiting factor for the widespread use of the potential of the hemp plant in these areas of the US economy is the current federal rules, which de facto make it illegal to use hemp seeds for feeding animals raised for human consumption. In order for the grain to be officially used in animal feed, this product must be approved by the FDA's Center for Veterinary Medicine, which involves a rather long and difficult process of going through the procedures provided for by various regulations. 

The fibrous part of the plant

Trends: The US market for fibrous products is likely to evolve gradually from the simplest uses of fiber or hemp to more sophisticated uses. Those. different products made from hemp fiber will enter the market at different times as the quantity and quality of domestically produced fiber and fires increases. The first wave will include products with minimal processing requirements, such as animal bedding, absorbents, pellets or briquettes used for heating. The second is products for the production of which a larger scale or quality is required - building materials, agrofibre, fiberglass substitutes, as well as non-woven or thermal insulation materials. The next stage will be the specialization of highly specialized production processes, involving a consistently large use of hemp fiber - cellulose, industrial and consumer textiles, biocomposite materials, energy storage technologies, etc.

Problems: at the moment, production chains are only being formed in the USA, involving the primary or deep processing of the fibrous part of the hemp plant. Over the next few years, American cannabis growers need to do quite a lot in order to create production facilities, provide them with continuously supplied raw materials, with a constant opportunity to sell semi-finished products or final products to the end consumer. One of the main problems in this sector of modern US cannabis growing is the fierce competition from international, primarily Chinese companies in the domestic market, as well as blocking the exit of American enterprises specializing in this issue to the international market for high value-added products made from hemp fiber. ...

Commentary of experts of the Association "Ukrainian technical hemp"

It makes sense to reflect and interpret the trends of the American hemp market by representatives for the national cannabis industry. In particular, the extreme interest in the supply of quality breeding or seed material to the US market must be realized over the next few years, otherwise this window of opportunity will close if it is ignored by national breeding / seed companies. It is necessary to pay close attention to the solution of the problems of American cannabis growers on the part of the US government agencies in order to use the techniques and methods of lobbying they demonstrate in the interests of Ukrainian cannabis growers both in the domestic and international markets (the ability of state structures to draw attention to quality products of national cannabis growing or its promotion on the international market, as is done by diplomatic institutions, for example, in individual Baltic countries).