US Farmers Expand Hemp Acreage, Many Switching from Marijuana Production

Following the passage of the 2018 Farm Bill, the production of hemp (or industrial hemp) is legal nationwide, and hemp is removed from the Controlled Substances Act. Marijuana, on the other hand, remains illegal at the federal level.

• Farmers in the US are quickly expanding hemp acreage to take advantage of the booming demand for CBD compounds used in therapeutic medical treatments and foods and beverages.
• In states where marijuana prices have plunged due to a flood of new entrants and oversupply issues, a significant number of outdoor marijuana growers are switching to hemp production.

Consequently, the majority of additional cannabis capacity in the near term will be dedicated to hemp production. The study Cannabis Growing Market discusses the regulatory environment, production of marijuana and hemp, demand for consumables and growing equipment, and trends by state. 

Analyst Carolyn Zulandt writes, “Demand for equipment used in cannabis growing applications is expected to reach $2.7 billion in 2019 and expand 10% annually to $3.9 billion by 2023.”

Growth will be driven by:

• new entrants in the cannabis industry, as they must make the initial capital investments necessary to compete with other growers
• cultivators with existing operations who will continuously need to replace light bulbs and parts, and/or upgrade to new equipment
• expansions in canopy size that will prompt new equipment purchases by established cultivators

Water tanks, irrigation equipment, and hydroponic systems – relatively high-cost items and a major expense for indoor marijuana operations – will account for the largest portion of sales in 2019. Fans and HVAC equipment – important for indoor operations and for outdoor growers of marijuana and hemp that also maintain on-site greenhouses – will represent the second largest equipment segment. Security equipment, lighting systems, and replacement bulbs are also major expenses for cultivators.

More information regarding the Cannabis Growing Market study is here: https://www.freedoniagroup.com/industry-study/cannabis-growing-market-3749.htm

Additional studies covering outdoor living and landscaping trends are available from Freedonia’s Consumer Goods research group.