According to new research, the U.S. Department of Agriculture is undervaluing hemp and relying too heavily on market analysis. This could “inadvertently harm the farmers that they’re trying to regulate.”
Whitney Economics, a research company that specializes in economics and statistics, released a report Thursday identifying faulty data collection methods for cannabis crops. This “contributes to misperceptions” You can also find out more about us here. Farmers aren’t profiting from the growth of the cannabinoid-derived hemp industry.”
USDA began annually surveying all hemp farmers in the United States shortly after it was legalized by the federal government under the Farm Bill 2018. While the value of hemp rose from 2023-2024, stakeholders in the industry have consistently pointed out that the average price of grain, fibre, and cannabinoids has been lower than expected due to inadequate regulatory policies.
Beau Whitney of Whitney Economics said that “the lower value of this crop makes it difficult for farmers raise money. It inhibits infrastructure development and slows down market growth.” The USDA’s mistakes also discourage farmers from including hemp in their crop rotation.
He said that farmers who grow hemp benefit more from their contributions than those growing corn and soy.
While USDA collects data from hemp farmers in much the same way as other commercial crops—soliciting information about total yields and the purpose of the production, for example—Whitney said the department is not accurately accounting for the unique value of floral hemp in the marketplace. It instead assesses the value of floral hemp based on a “blended average of the sale of biomass and flower”.
According to him, this “undervalues” crops by a large margin.
The method used to determine the value of the cultivated floral output has a significant flaw, as the output can be used in multiple ways and its value varies significantly.
The market value for floral hemp in the United States was $330 on average per pound last year, while biomass was only $2 per pound. Using USDA’s method, however, the value of floral hemp in 2024 (20,8 million pounds) is $386,000,000. Whitney stated that in fact, only 1.2 million pounds would be needed to achieve this value.
According to the report, “by undervaluing this crop, investors are not getting a true picture of its market potential.” This means that “farmers will be less likely to include the crop in their rotation or plant it, while policymakers may use inaccurate data when making decisions.”
A recent congressional hearing heard a senator, who was pushing to restrict the hemp industry, say that the farmers earn less than 1% of the money they make from selling their crops. The USDA value for floral hemp is $330 per pound. This would mean that last year, 20.8 millions pounds were produced, translating to about $6.9billion in wholesale value, or 24.2 percent.
The report states that hemp is a much better crop for farmers than corn (15%) or soy (7.9%).
Whitney added that “highlighting how farmers benefit from hemp cultivation will also influence policy at the federal levels.” The USDA’s error has a significant impact on the hemp market and needs to be addressed immediately. Otherwise, the market growth and hemp production will suffer.
In the midst of a heated debate about federal laws governing intoxication hemp products, researchers from Congress recently released a document outlining existing policies and options that lawmakers can use to address outstanding questions related to an upcoming THC ban.
CRS separately released a report in June stating that the legislation would “effectively” prohibit hemp-derived cannabinoid products. CRS originally stated that a similar ban would also prevent CBD sales, but it was later updated to remove that statement.
—
MEDCAN24 has been tracking the hundreds of bills relating to cannabis, psychedelics or drug policies that have passed through state legislatures as well as Congress in this past year. Patreon members who pledge at least $25/month gain access to interactive maps, charts, and hearing schedules so that they do not miss anything.
Discover more about the marijuana bills tracker. Become a patron on Patreon and you will have access.
—
Meanwhile, Sen. Rand Paul (R-KY) recently said he has plans to meet with House lawmakers to “reach a compromise” on an approach to regulate hemp in light of his opposition to a proposal in Congress to ban products with any “quantifiable” amount of THC.
While Sen. Mitch McConnell (R-KY) has contested the idea that the legislation he sponsored would “completely destroy” the market, as Paul and industry stakeholders have insisted, he ultimately agreed to pull the language from the agriculture bill following Paul’s procedural protest. The Senate passed the underlying legislation earlier this month.
Separately, Paul recently filed a standalone bill that would go in the opposite direction of the hemp ban, proposing to triple the concentration of THC that the crop could legally contain, while addressing multiple other concerns the industry has expressed about federal regulations.
He introduced legislation in June entitled the Hemp Economic Mobilization Plan Act. It mirrors versions he’s sponsored over the last several sessions.
Hemp stakeholders protested this proposal. An earlier version was included last year in the base legislation from the subcommittee. It’s virtually identical to a provision of the 2024 Farm Bill that was attached by a separate committee last May via an amendment from Rep. Mary Miller (R-IL), which was also not enacted into law.
A leading alcohol industry association, meanwhile, has called on Congress to dial back language in the House spending bill that would ban most consumable hemp products, instead proposing to maintain the legalization of naturally derived cannabinoids from the crop and only prohibit synthetic items.
Wine & Spirits Wholesalers of America (WSWA) President and CEO Francis Creighton said in a press release that “proponents and opponents alike have agreed that this language amounts to a ban.”
Separately, key GOP congressional lawmakers—including one member who supports marijuana legalization—don’t seem especially concerned about provisions in the bill despite concern from stakeholders that it would put much of the hemp industry in jeopardy by banning most consumable products derived from the plant.
Jonathan Miller, general counsel at the U.S. Hemp Roundtable, told congressional lawmakers in April that the market is “begging” for federal regulations around cannabis products.
Rep. James Comer, R-KY, also asked about FDA’s inaction on regulations. He sarcastically asked if “a gazillion of bureaucrats who work at home” would be required to regulate CBD and other cannabinoids.
A report from Bloomberg Intelligence (BI) last year called cannabis a “significant threat” to the alcohol industry, citing survey data that suggests more people are using cannabis as a substitute for alcoholic beverages such a beer and wine.
Last November, meanwhile, a beer industry trade group put out a statement of guiding principles to address what it called “the proliferation of largely unregulated intoxicating hemp and cannabis products,” warning of risks to consumers and communities resulting from THC consumption.
MEDCAN24 would not be possible without the support of readers. Please consider making a Patreon monthly pledge if you depend on our cannabis journalism for information.
