2018 Farm Bill and The Trickle Down

Like decathlon runners who can see the finish line for the first time in days cannabis advocates are finally seeing a silver lining on the gray cloud of prohibition.  It’s official, it’s documented and at time of writing this is approximately one week away from being enacted.  The 2018 Farm Bill represents almost a century of progress and gives the cannabis industry a relieving breath of fresh air.  It will legalize agricultural production of hemp and at the same time would allow hemp farmers to potentially receive federally subsidized crop insurance.

According to Hempbizjournal in 2017 hemp was an $820 million market.  To give you an idea on who’s buying what the largest sectors in that market were hemp-derived CBD, personal care, industrial applications and food combining for a total 80% of the pie.  You may find it interesting that three out of those four products are B2C while only one is B2B.  Implying this is truly what the people want and that the demand already exists for what’s currently believed to be an underserved market limited by federal restriction.  The people want to buy, it’s just a matter of who will supply the demand.

Naturally if consumers will be buying more, then businesses will have to rise to the occasion and meet the demand – one of the best problems a business can have.  It’s no secret there’s money to be made with cannabis but who will make it and how?  Your best bet will most likely be ancillary businesses.  That’s right, for every hemp farm that pops up there will be additional need for farming equipment, security, nutrients and a slew of other related items.  Yes, hemp farmers will have a chance to claim their slice of the $820 million pie but the more lucrative play by far will be the supporting industries whom hemp will rely on. So to look at the bigger picture the ancillary market is the backbone of the hemp market making it all happen in the background.  And the hemp market is the supplier tasked with meeting the increased demand of the consumer.

And if consumers are spending more and more businesses are spending more, then this creates the perfect storm that attracts investors.  $820 million in 2017 is up from approximately $590 million in 2015 boasting a 40% gain in just 2 years!  And now that the Farm Bill is expected to loosen federal reach perhaps we can see some big plays from otherwise absentee players.

With mainstream acceptance of anything there’s always the possibility of corporate presence.  Cannabis was once a private closely-kept craft but may now attract mass market players.  We’ve seen Phillip Morris making plays and it wouldn’t come as a surprise to see others rushing in like banks, insurance companies and even the government.  Some wonder if the mass market presence will reduce quality or perhaps pave the way for unique craft brands the same way we have craft breweries now.  Currently America seems to be happy with what it’s getting and hopefully additional reform will pave the way for an even brighter future for cannabis in America whatever that may bring.