Hemp Joins The Consumer “Big Boys”
Fun fact: Henry Ford’s first Model-T was constructed from hemp fibers and built to run on hemp gasoline.
As Ford himself said: “Why use up the forests which were centuries in the making and the mines which required ages to lay down, if we can get the equivalent of forest and mineral products in the annual growth of the hemp fields?”
Growing industrial hemp became illegal in the 1970s when the federal government strengthened the criminal code on marijuana and related products. Hemp got caught up in the “war on drugs,” but it contains very little of the psychoactive component tetrahydrocannabinol (THC) found in marijuana that makes people high. For decades, hemp has gotten a bum rap.
But these days, hemp is legal (thanks to the 2018 Farm Bill) and corporate America is finally following Mr. Ford’s advice. Hemp is entering the consumer mainstream, in a very big way, which in turn is opening up investment possibilities in the plant.
Latest case in point: The hemp industry was included last Friday on a key federal committee that’s driven by some of the best-known global names in the food and beverage business.
The U.S. Department of Agriculture and Office of the U.S. Trade Representative on July 17 appointed a hemp industry advocate to a federal trade advisory committee, where he will serve alongside representatives from Kraft Heinz (NDSQ: KHC), PepsiCo, (NSDQ: PEP), Campbell Soup (NSDQ: CPB), the Brewers Association, the Wine Institute, and the National Association of State Departments of Agriculture.
Kevin Latner, vice president of marketing for the National Industrial Hemp Council, will serve as a member of a panel focused on worldwide trade in processed foods. This development marks the first time a hemp market advisor has been appointed to officially create federal policy since hemp was legalized under the 2018 Farm Bill.
The panel is designed to support export marketing by providing input into government policies on trade agreements and foreign import standards. U.S. exports of industrial hemp and hemp products are relatively new, but they’re growing exponentially.
The federal government and the increasingly powerful hemp industry believe it’s important to insert hemp into existing multinational trade agreements. On the committee, Latner will represent hemp farmers, producers and product manufacturers.
Billions of dollars are at stake. Before I explain why, let’s first, let’s get our terminology straight. Readers sometimes express confusion about the difference between hemp, cannabis and marijuana.
“Cannabis” is a genus of flowering plants that includes the primary species cannabis sativa. Put in simple terms, both hemp and marijuana are strains of the cannabis sativa species.
Cannabis the drug and hemp the industrial product both contain THC, but they are distinct strains with unique chemical compositions and uses.
Hemp is naturally high in cannabidiol (CBD) and low in THC; the reverse is true of cannabis (see infographic).
Hemp is the strongest natural fiber in the world and boasts up to 50,000 uses, many of them in the industrial sector.
Hemp also conveys a multitude of health benefits. The plant is a copious source of omega-3 and omega-6, proteins, and amino acids, nutrients that assist with cardiac function, mood stability, insulin balance, and skin and joint health.
Companies in the consumer foods, health services, and cosmetics industries are increasingly infusing their products with hemp. The plant is quickly becoming a nationwide health fad, with the help of a federal government that once banned it.
According to the research firm Research and Markets, the global industrial hemp market is projected to grow from USD 4.6 billion in 2019 to USD 26.6 billion by 2025, posting a compound annual growth rate of 34%.
The U.S. farm bill represented an inflection point. The legalization of the cultivation of hemp is a boon for major agricultural companies but also for the smaller entrepreneurial outfits that are devising new uses for hemp. These research and development efforts are leveraging hemp seed and hemp seed oil for applicability in a wide range of industries.
Hence the involvement on the federal hemp committee of iconic names such as Kraft Heinz, PepsiCo, and Campbell. These brands enjoy durable name recognition and customer loyalty. Their long-term strategic plans are to enhance efficiency, cut costs and expand into new markets. Among those markets is hemp.
We’re witnessing the same dynamic in the marijuana industry. Deep-pocketed consumer brand giants are acquiring marijuana companies to integrate pot edibles and beverages into their vast retail infrastructures. These consumer segments also tend to be recession-resistant, an important consideration during the coronavirus-induced economic contraction.
Many investors ignore hemp and focus on marijuana. That’s a lucky break for the contrarian investor. I’ll be keeping an eye on hemp, as investment opportunities emerge in the industry.
In the meantime, for our latest report on hidden opportunities in cannabis, click here now.
John Persinos is the editor-in-chief of Marijuana Investing Daily. You can reach him at: email@example.com