The 2021 hemp season is underway, with planting across the United States beginning in May in some parts of the country and continuing into June. Due to a variety of factors – including low prices, a continuing glut of biomass and extracted CBD, extreme weather conditions, regulatory uncertainties, and the lure of better money to be made by farming mainstream crops – the amount of hemp being grown and processed this year is expected to be significantly lower than in 2020; and likely at its lowest level since the national legalization of hemp in 2018.
As of the end of June, Hemp Benchmarks documented the following hemp production licensing and acreage data for 2021:
The 2021 data above was compiled from 27 states that have been responsive to Hemp Benchmarks’ inquiries in recent months, as well as a handful of reports from outside sources (cited in full in our June Hemp Spot Price Index Report and in prior monthly reports); the June 2020 data accounted for licensing and acreage information from 24 states. While not all states are represented in the data above, it nevertheless indicates that growers are “pulling back across the country,” as Sam Burney – National Sales Manager for Royale Botanicals, a large-scale clone supplier based in Larkspur, Colorado – told Hemp Benchmarks in early June.
Burney noted that numerous inquiries fielded by his company this year were for smaller orders, with growers taking a more “craft” approach, as opposed to large-scale farming of biomass. Current licensing and acreage data supports those assertions, with registered acreage contracting by a significantly greater proportion than the number of licenses issued, indicating that farmers are planning smaller plots, on average, compared to last year.
Additionally, Burney noted strong interest in producing smokable CBD flower from those who are growing hemp this year. Licensing and production capacity data also contains signals indicating increased interest in smokable flower production. As of June 2021, the number of square feet registered for indoor or greenhouse hemp production – which is typically for the purpose of producing smokable CBD flower – is up significantly relative to last year. As of this writing, Hemp Benchmarks has documented over 168.2 million square feet registered for indoor or greenhouse production. This figure is up 328% compared to over 39.5 million square feet recorded in June 2020 and up 85% from over 90.8 million square feet ultimately documented by the end of last year.
Based on licensing data compiled thus far this year, it appears that U.S. hemp farmers are largely moving away from farming the crop outdoors for biomass due to low prices and lack of buyers, and instead are emphasizing smokable flower production. Since the second half of last year, we have documented that smokable CBD Flower has maintained its value in the U.S. hemp wholesale market better than perhaps any other hemp-CBD product. Flower grown indoors or in greenhouses also typically commands a premium price compared to that cultivated outdoors.
It should also be noted that portions of the acreage licensed for outdoor hemp production are being devoted solely to smokable flower. A member of Hemp Benchmarks’ Price Contributor Network in Vermont recently told this outlet, “We are planting 15 acres for flower. None for biomass.” Burney of Royale Botanicals also stated that his company had filled some orders for large numbers of clones for outdoor growers intending to produce smokable flower.
Whether planned production indicated by the licensing data comes to fruition remains to be seen. Information from state agriculture officials compiled in previous reports has in numerous cases revealed that relatively small proportions of indoor and greenhouse capacity licensed for production was actually planted. We have also ascertained over the course of the last two growing seasons that a relatively small proportion of licensed outdoor acreage is ultimately harvested successfully. However, if the significant pullback in biomass farming in favor of smokable flower production suggested by the data above is borne out, then we may see prices for the former continue to stabilize and possibly recover as the current surplus continues to make its way through the supply chain, while smokable flower could face downward price pressure later this year.
In addition to a pullback in outdoor acreage registered for hemp production, many who are growing this year are facing tough conditions from the outset of the season. The historic drought taking place across the U.S. is impacting planting in numerous parts of the country. While drought is most widespread and severe in the West, reports received in June from state agriculture officials in New England, Iowa, Minnesota, and North Carolina told of excessively dry conditions that have affected farmers.
In Oregon, which was ravaged by wildfires last season, the drought has created crisis conditions for many hemp growers. Brandon Dessart – owner of the Tip of the Triangle hemp farm in southern Oregon and Chief Operating Officer with the National Industrial Hemp Coalition – told Hemp Benchmarks his local irrigation district cut back water for all farms this year to 20,000 acre feet, compared to the 50,000 acre feet used in an average year.
The result, Dessart said, “is not even remotely sustainable” for local hemp farmers. “Earlier this season, Oregon came out and said we were allowed to use water from various other sources, including city water,” he noted. As of mid-June, however, Dessart said the state, as well as local water districts, announced they were not going to allow hemp farmers to use any other water beyond their current irrigation sources, starting in mid-July.
“I think anybody who is smart already saw [the drought] coming and had a plan,” he said. “Anybody who … is negligent and kind of foolhardy and just goes with the flow is likely going to be hosed. Farming takes diligence, and a lot of people aren’t diligent.”
Many hemp farmers in the region are also letting their fields lie fallow this year. Dessart estimated that 80% to 90% of hemp farmers in southern Oregon are opting out of growing this season, while those who are have cut back dramatically. For his part, Dessart is only growing 500 hemp plants on a quarter-acre of land, compared to the 50,000 plants he grew last year on 17 acres.