Business Opportunities are Blooming for the United States’ Hemp Industry
The 2018 Farm Bill rolled out on January 1, 2019. It legalized the cultivation of hemp across the United States. This ended the 50-year ban against industrial hemp as a controlled substance. Earlier, hemp was designated in the same category as recreational marijuana and hard drugs like heroin and LSD. This, despite hemp being already declared by the Federal government as having a “high” produced by less than 0.3 percent of the tetrahydrocannabinol (THC) it contained.
Now that growing hemp is 100% legal, there are big business opportunities for entrepreneurs and farmers alike. You could say the industry is blooming. In fact, it may even revive the nation’s ailing farm industry.
Major hemp-based businesses are spread across all sectors of the industry. This includes CBD, food, personal care, supplements, industry/construction, and even fashion, among many others. As a diverse crop, hemp is used for a wide range of applications. This makes the availability of products a cost-effective way for small business entrepreneurs to break into the industry that’s estimated to hit $23 billion by 2022.
If you are an entrepreneur looking for new ideas and opportunities, you should consider the following niches in the hemp industry:
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Food:
This niche makes use of the various parts of the cannabis plant as a direct food source or as an ingredient for food products. This category includes popular items like hemp seed, oil, nut, and meal. Not surprisingly, hemp seeds are much like popular “healthy” seeds like Chia seeds and Flax seeds. They are a great source of protein and can be easily digested. Meanwhile, Hemp oil contains 3 essential nutrients: 56% Omega 6 or Linoleic Acid (LA), 20% Omega 3 or Alpha Linoleic Acid (ALA), and 3% gamma linoleic acid (GLA). Subsequently, the leftover hemp meal from making hemp seed oil has been used as a protein powder like the one used by bodybuilders.
Hemp seeds have even infiltrated the kitchen of homes and restaurants (along with TV cooking shows). For example, recipes that call for breadcrumbs can use the seeds much like toasted sesame seeds are used to coat and flavor all sorts of dishes. They’re especially popular with folks who are allergic to nuts. Also included in this category is hemp seed milk, which is a great alternative if you are lactose intolerant.
As a result, hemp food products are flourishing in health foods stores for their numerous benefits.
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CBD:
Cannabidiol (CBD oil) is a niche by itself. It is the most popular one thanks to its many applications from food products (health drinks, beer, chocolate, gummies, granola bars, peanut butter, etc.) to pharmaceutical products (used as medicine for pain, seizure, anxiety, nausea, etc.). In fact, a lucrative group in this market are pet owners. It’s so lucrative that omni-entrepreneur and household name Martha Stewart is launching her own line of pet and pet owner CBD goodies too. As a category, its sales estimate is upwards of $646 million by 2022 just on its own, some of which can be yours (and Martha’s, of course).
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Industrial and Commercial Products:
This niche includes hemp-based products like paper products, textile, clothing, shoes, bioplastic, insulation, and biofuel, among many others. While much of this category is already established in an $820 million industry that even predates 2019’s legalization, new hemp products continue to enter the market. For example, hempcrete is a construction material like its namesake concrete but more fire resistant, energy efficient, and altogether cost-efficient. Other hemp product innovations include supercapacitors (made from hemp) that support batteries with short bursts of high power. Entrepreneur/inventors will especially thrive in this market.
Finally, the legalization of hemp is helping the U.S. agricultural industry get back on its feet. This is following a slump due to the failing tobacco and dairy sectors as well as the growing threat of climate change and global warming. There is also the more recent tariff issues with China that’s caused challenges in exporting soybeans.
Since farmers can now grow hemp, they have a more sustainable domestic crop. There were 77,000 acres of hemp cultivated in 2018, a number expected to grow this year as the Farm Bill takes effect. Farmers can now include hemp into their crop rotations as other agricultural products are being eliminated due to major changes in other industries. Hemp farmers can also apply for crop insurance, interstate travel, and basic banking services.
As a result, the way is paved for ancillary service providers from many outside industries like banking, insurance, finance, merchant processing, packaging, labeling, distribution, and more. So, if you aren’t a hemp farmer yourself, you can still have a profitable business doing their books or designing their packaging.
If you’re still wondering where you fit into the blossoming hemp industry, just think of it as having two parts: plant-touching and ancillary.
Plant-touching: As the name suggests, businesses involved in plan-touching handle the plant itself. They cultivate, distribute, process, and sell it. All these methods likewise involve many other businesses and individuals such as quality control, laboratory testing, harvesting, cutting, sorting, packaging, etc.
Breeders develop high-quality cannabis seeds. They create different cannabis strains and resilient plants with higher yields. They can also create a strain that can produce hemp cannabis with high fiber content.
Cultivators grow the plant itself. They are required to grow cannabis indoors by many state regulations. Their position may include managing the full cycle from growth to sale.
Extractors use the cannabis raw plant material to turn into concentrates such as oil with emphasis on either THC or CBD. They need to invest in the right machinery type and have experience in the process involved in extracting cannabinoids.
Manufacturers turn cannabis flowers and concentrates into the different products available in the market. They need to invest in facilities and equipment to produce products at scale. They must be aware of their state’s regulations on handling hemp.
Ancillary: This even larger group includes businesses that support all the above positions and processes to ensure success. Other small businesses that fall on this list are data platforms, ag-tech companies, point-of-sale systems, payment processors, digital marketers, lawyers, accountants, and much more.
Now, which part of the hemp industry, do you think your big opportunity lies in?