10. There Will Be Fewer Hemp Farmers
2018 was a boom for those who were early to the hemp party. Demand was skyrocketing and the supply was still quite limited. It’s amazing the difference one year can make as 2019 saw the exact opposite scenario play out as the supply increased ten fold and many farmers were left ‘holding the bag’ in the Fall. I know many farmers who are still sitting on thousands of lbs of biomass with literally no where to sell it.
And those were the farmers that made it through the growing season without losing their crop to weather, pests, or disease. Couple this with the uncertainty regarding new regulations and you have many farmers that will NOT be planting this crop again in 2020. The seeds, fertilizer, labor, and testing is not cheap and this industry is definitely not for the faint of heart.
9. Regulations Will Change The Game
As mentioned above, there will be new regulations coming about in 2020, some of which have already been implemented in several states. The big one of these will be the new USDA compliance law which states that hemp flower needs to be under 0.3% total THC and is to be tested 15 days before harvest. This differs from the 2019 federal compliance law which allowed a grower to get there crops tested three weeks after it begins to flower. This is when the plant is just starting to form little tiny buds and THC levels are very low.
Nearly ever high CBD variety on the market will be over 0.3% total THC as it nears harvest and thus these new regulations will just about eradicate all the high CBD varieties that exist today. Goodbye Lifter, Special Sauce, Hawaiian Haze, as well as our beloved Cherry Cobbler. States like Oregon have already enacted this law for 2020 and with them being the main supplier of CBD nationwide, it will be interesting to see how this effects the overall market. Lucky for us, North Carolina has said they will continue to operate under the previous compliance laws until October 31st, 2020.
8. CBG is the CBD of 2020
Similar to CBD (cannabidiol), CBG (cannabigerol) is a non-psychoactive compound found in the cannabis plant. Research is still unfolding, but there seems to be significant evidence that CBG can reduce inflammation, bacterial infections, and inhibit tumor growth. CBG began to make its way onto the market in 2019 and due to the short supply was going for a very good price (similar to CBD in 2018). I would expect this to change in 2020 as more and more growers have already begun shifting their focus to CBG. This will only be amplified by the new compliance laws as CBG strains tend to have much lower levels of THC and thus will be better suited to pass testing.
7. It Will Be Top-Shelf or Bust
In 2018 growers could get a decent price for a hemp crop that was mid-grade, 12% CBD with little to no smell or bag appeal. However with the current hemp market being absolutely saturated (see video: The Hemp Market is Flooded!), wholesale prices for top-shelf flower have come down considerably and the market for mid-grade flower is non-existent. It is definitely a buyers market with most buyers only interested in hemp flower that is high CBD (16% and up), strong smelling, and beautifully manicured.
6. 80% of the CBD Companies Will Not Be Around in 3 years
This is a bold prediction, but here’s my logic. 50% of businesses fail within their first five years of operation. Couple that with the fact this is still a very new industry with a lot of uncertainty regarding prices, consumer demand, and ever-changing regulations. In addition to this, farmers have to deal with extreme weather events and the fear of testing ‘hot,’ while retailers have to worry about things like states banning smokable flower.
I’ve been around to just about every dispensary in town and to be honest, none of them are particularly busy. This is probably due to the fact that people can buy CBD products online, typically for much less than they can from established retailers. The businesses that do find a way to survive are going to be the ones that have figured out a way to minimize their expenses while still providing great products and customer service.
5. Demand Will Continue to Increase
It’s not all doom and gloom however as I expect the demand for CBD and other hemp products to continue to grow as more and more people come to realize the wonderful benefits of this plant. The companies that are focused on providing high quality products for a fair price will be the ones that thrive over the next few years. I would expect brands that are all hype and no results to fade into obscurity as consumers become better educated and can begin to determine which brands are quality and which are just flashy marketing.
4. Prices of Biomass/Crude Oil Will Continue to Decrease
Biomass is basically what is left once the hemp plant is bucked down off the stalk and branches. Crude is what people call it once it is extracted into oil form. Most of the larger hemp farms are sitting on very large supplies of both of these and thus I expect the market to be flooded for some time. Therefore if a farm is to survive in this environment, I believe it’s imperative to focus on quality over quantity and to grow primarily for top-shelf flower. Growing for top-shelf flower requires meticulous care and quite a bit of hand labor. It is not well suited for large scale outdoor production and therefore is not nearly as flooded as the biomass/crude market.
3. Concentrates Will Become Increasingly Popular
Concentrates like wax, shatter, and crumble are rising in popularity and will only continue to do so as consumers look for more immediate relief without having to smoke an entire joint. Concentrates are made through various extraction methods that ‘concentrate’ the cannabinoids into a substance that can then be vaporized and inhaled. If we look at the cannabis market out West, concentrates have been gaining in popularity for several years now and I would expect this trend to continue as more people become acquainted with these products.
2. The Industry Will Receive Banking Regulations
This might not seem like the most exciting development, but it’s effects cannot be understated. Once banking regulations are in place, people within the hemp industry will likely be allowed to take advantage of the various financial instruments that every other business has access to. Things like payment processing, access to capital, tax credits, as well as greater access to insurance. Currently many companies are ‘cash only,’ which a) makes them a target for criminals and b) offers little oversight in regards to tax evasion. The U.S. House of Representatives has already passed the SAFE banking act in September of 2019 and I would expect the Senate to follow suit sometime in early 2020.
1. Federal Legalization of Cannabis
This is another bold prediction and one that I believe has a 50% chance of coming true–here’s why. The U.S. House Judiciary Committee has already passed a bill that would remove cannabis from its schedule I status and make it federally legal. It is likely to pass the House of Representatives, after which it would then find its way to the Senate floor. Now with the Senate being controlled by a Republican majority it may encounter a bit of resistance, however many of these Senators represent states that are pro-legalization and so the issue may not be as partisan as originally thought. Furthermore, if Bernie Sanders were to win in the general election come November he has already stated that he would legalize cannabis via executive order on his first day in office.
As far as what the cannabis landscape looks like post-legalization is anyone’s guess, but I would expect the federal government to leave the issue of implementation up to the states. This is similar to how liquor is regulated which is why in states like North Carolina, you can only buy hard liquor from a state-run ABC store. Whether or not this makes it so that only big farms can have a seat at the table remains to be seen and although these are my predictions for this year, there are many moving parts and it is truly anybody’s guess. However, this is what we do you know. Cannabis will become more and more accessible to people who need it. The quality will go up, prices will go down and eventually the market will find an equilibrium and those that are in it for the right reasons will be best suited to ride out the turbulent times ahead.
Written by Rand Gifford
Have a thought on the subject? Leave a comment down below!