Geographically, the hemp market hubs are already naturally gravitating towards the areas mentioned above that are ripe for an increase in hemp production.Hemp production in the United States has increased exponentially over the past few years as U.S. acres planted has grown from 9,770 in 2016, to 78,176 in 2018. Hemp was cultivated in 24 states during the 2018 crop year with the most concentrated production originating from Colorado, Oregon, Montana, Kentucky, Tennessee, and North Carolina representing over 80% of the nation’s output.
New markets always face the problem of opacity, with price discovery systems not yet developed and disconnected markets not yet eliminating arbitrage opportunities. But hemp faces extra headwinds because, with hemp being previously illegal and having a close connection to marijuana, many of the players from the market are on the fringes of legality.
And because hemp was illegal on a national level prior to the 2018 farm bill, banks and payment processors could not get involved, turning the market into a cash-based business.
Discrepancies within hemp quality, particularly with CBD and THC content, the use of agrochemicals in the growing process, the content of heavy metals and foreign organic materials, and even the way biomass is harvested and shipped are headwinds for the standardization of the emerging commodity. On the downstream side of the market, differences in manufacturing processes of oils and distillates have made industry wide standardization a challenge.
The PanXchange team is working with market participants across the entire supply chain to address these issues and more to create a system that adds value for all stakeholders. If you would like to learn more about this project, or would like to get involved, please contact the PanXchange staff: