Back in April, in its National Hemp Report, the U.S. Department of Agriculture (USDA) announced that the value of domestic hemp production totaled $238 million last year, down 71% from 2021. Despite the severe decline, however, not all the news from America’s hemp industry has been so dramatic. Hemp Benchmarks reached out to hemp program officials at several state agriculture departments around the country in regions where hemp production still has a strong presence. We found optimism that the industry will continue to make gains, as well as the sentiment that the U.S. hemp sector’s toughest years may be behind us.
According to Brian Koontz, Colorado’s Hemp Program Manager, hemp acreage in his state is currently down 20% from last year and has declined more than 50% compared to 2021. Colorado farmers planted roughly 1,600 acres of hemp in 2022, according to USDA data, the fourth-highest total in the country last year.
“Our producers took advantage of some of the flexibilities we offered them,” Koontz told Hemp Benchmarks. “These include several successful crop remediations, allowing research registrations for private companies, and participating in performance-based sampling.” Those changes, he added, have reduced the testing burden for hemp producers using certified seed and conducting research, which in turn has led to the consistent production of low-THC hemp.
In Kentucky, Hemp Program Manager Doris Hamilton said her state saw a 28% decline in hemp production from 2021 to 2022. Kentucky was home to the U.S.’s sixth-largest hemp crop in 2022, at about 1,350 acres planted, according to USDA. The state was also the second-largest CBD hemp producer in the country last year, behind only Oregon. Hamilton told Hemp Benchmarks that while Kentucky’s hemp sector experienced the downward trend seen across most of the nation, its situation is not as drastic. She also expects the state’s hemp production acreage for this season “to be equal to or slightly greater than 2022.”
“Kentucky’s growers and processors are more experienced and established in the market than their counterparts in many of the other newer states,” she added, “because we have been growing hemp since 2014. This experience is perhaps what helped lessen the decline.”
In South Dakota, “we currently have about 4,100 acres registered for 2023, including several research hemp trials in eastern South Dakota,” Brian Walsh, Public Affairs Director for the state’s Department of Agriculture and Natural Resources, told Hemp Benchmarks. “We expect our harvested acres to be up this year allowing us to once again be one of the largest industrial hemp producing states in the nation.”
USDA data shows that South Dakota’s planted acreage increased from about 1,850 acres in 2021 to nearly 2,550 acres in 2022, the second highest total in the country last year after Montana. South Dakota led the U.S. in grain hemp production last year, with almost 2,150 acres planted with such varieties.
While cannabinoid crops continue to make up the majority of hemp grown in some of the larger hemp-cultivating states, those percentages are changing in some regions. Brian Koontz noted that while Colorado’s hemp production is currently about 70% CBD, 10% seed, 6% fiber, and 2% grain for intended use, “the fiber infrastructure is expanding with a projected production of up to 5,000 acres [in 2023].”
Last year, according to Doris Hamilton, 87% of the hemp acreage in Kentucky was planted for floral (or cannabinoid) production, with 10% for fiber and 3% for grain. “Like all other states, Kentucky is seeing an increase in intoxicating hemp consumables,” she said. “We are also seeing an increase in the demand for fiber crops as our primary fiber processor, HempWood, continues to expand.”
Brian Walsh in South Dakota said his state remains focused on hemp grain and fiber, which currently accounts for 99% of all local hemp production. “Some South Dakota farmers who grow corn, beans, wheat, alfalfa, and sunflowers see the value in fiber and grain hemp production and are adding it into their crop rotations,” he said.
Walsh also noted that South Dakota has “a small but dedicated group of hemp fiber processors and seedmen who are very active. Their efforts, which have contributed to an increase in industrial hemp acres, include conducting grower meetings and working with farmers to contract acres throughout the state.”
In a statement released following the USDA’s hemp report, the U.S. Hemp Roundtable (USHRT), an industry advocacy group, criticized inaction by the U.S. Food and Drug Administration (FDA) on hemp-derived CBD regulation, calling it the “chief culprit” in stifling economic opportunity for the domestic hemp industry.
The Tennessee Department of Agriculture (TDA), in an email to Hemp Benchmarks, noted that establishing an industry such as the hemp sector “takes time and requires collaboration among stakeholders and regulators.” Tennessee, it added, has developed its own strategy for moving its hemp sector forward, including an increase in development programs at local universities, along with work with extension programs, entrepreneurs, and others, “to educate farmers, provide regulatory guidance, and offer funding opportunities for citizens working to advance the hemp industry.” Tennessee farmers notched the third-highest planted acreage total in the country in both 2021 and 2022, according to USDA and TDA data, with over 2,100 acres planted last year.
According to Brian Koontz, Colorado’s Agricultural Commission has its own set of initiatives intended to foster a more favorable regulatory environment – including the use of hemp as livestock feed and working to amend the federal definition of the crop to increase the allowed total THC concentration to 1% from the current 0.3%.
Koontz also noted that the National Hemp Association is advocating for the Grain and Fiber Hemp Exemption in the 2023 Farm Bill, which would eliminate background checks and THC compliance testing when hemp is grown exclusively for grain and / or fiber. “Hemp is not to be feared,” he said. “This initiative is meant to unburden farmers and regulators while not removing any information from law enforcement.”
Other state hemp officials we spoke with, however, felt the USHRT’s assessment regarding the FDA and hemp is correct. “We agree that inaction from the FDA is stifling the hemp cannabinoid market,” said Kentucky’s Doris Hamilton. “The grain and fiber markets are developing more slowly than many had hoped, but it takes time to develop economically viable products and build consumer demand.”
There are also signs, according to the officials contacted, that their hemp programs are expanding and becoming normalized. As an example, Brian Koontz pointed to the Colorado Hemp Networking Directory created by his state’s agriculture department as a site where Colorado hemp growers, manufacturers, processors, and consumers can connect and collaborate. He also mentioned that the state is recruiting organizations to help implement the STAR (Saving Tomorrow’s Agricultural Resources) program, selected for funding via the USDA, as well as its soil health program.
“Kentucky hemp is here to stay,” said Doris Hamilton. “After the massive overproduction of 2019, we believe the national industry has now retracted to the level where supply is at the realistic level to meet demand. We expect the production of floral material will remain steady, while fiber and grain begin a slow increase over the next several years as those industry segments develop.”