By Geoffrey Taylor, MA, Hemp Contributor, Valley Ag Voice
The California cannabis and hemp markets have seen a whirlwind year in 2020 which has created as many new solutions as new problems at the local, state and federal levels. As producers statewide have likely completed their full season harvests in both marketplaces, growers are reeling from the variety of regulations, legislation and changes they’ve experienced so far this year.
While this year has left many growers and industry operators reeling, it sets the stage for yet another year of change to occur at the local, state and federal levels to hopefully improve the state of both California’s cannabis industry and the state’s steadily declining hemp industry.
“I foresee the real profits hitting in the 2021-22 market area, “said Travis Copeland of Unico Ag, a locally based agricultural consulting firm. “The hemp industry is a race to the bottom, but with that, we hope there are more industry-wide best practices that can emerge.”
Nationwide, 2020 has produced a glut in the hemp marketplace that resulted in a crash in prices and steep declines in production acreage from 511,000 acres in 2019 to just 465,787 acres in 2020. Plus, with an oversupply of hemp from across the country, California growers often struggled to compete due to higher costs of operation, greater regulatory challenges and the fallout of the hemp/CBD marketplace following Covid-19 related shutdowns in March.
Prices for hemp biomass remained steady through 2019 and dropped to around $10 per pound of biomass moving in May of 2020, reflecting a sharp decrease from the year prior. Even Kern County is struggling to maintain a robust hemp production environment as production acreage has dropped by two-thirds from 2019 to 2020 with around 2,000 acres being produced in the county this year. As of September 2019, there were roughly 7,000 acres of hemp being produced across the county.
“As new hemp genetics emerge and all the craze of CBD begins to level out, more consumers will start using CBD as a daily nutritional supplement,” said Copeland. “But we need to focus on making the hemp marketplace a cleaner marketplace for true brands to grow and establish themselves and a more standardized B2B climate begins to solidify.”
With hemp farmers across the state being hindered by excessive regulation on the crop, there was some progress this week at the federal level to loosen the 0.3% THC limit on hemp crops which a Senate report states “creates roadblocks for farmers” and could allow for a 0.5% negligence threshold that would spare many farmers from having to destroy an entire crop for noncompliance. This regulatory shift should help to “ensure a fair and reasonable” regulatory framework for hemp producers nationwide if approved by the Senate and adopted by the USDA as policy.
In contrast to the decline of the hemp market, California cannabis operators have much to celebrate this year. In yet another win for California cannabis growers, the California legislature approved SB 67, a new bill aimed at protecting the terroir of regionalized cannabis growers producing full-sun crops, similar in nature to the terroir-based appellation protections afforded to California’s massive wine grape and wine production industries. Though this impacts areas of the state better known for their outlaw past of cannabis production, it does open the door for future opportunities for Kern growers if the county were to ever allow outdoor cannabis cultivation.
Another benefit for local cannabis market operators was an October 2020 announcement from the California Bureau of Cannabis Control and California Department of Tax and Fee Administration indicating a commitment to freezing current tax rates on industry operators through the 2021 fiscal year. By keeping taxes at their current rate, cannabis industry operators in Kern County and beyond may find themselves in a position to advocate and lobby for lower taxes moving forward from 2021 to 2022.
“As these industries gain more knowledge with time and experience, more consumers will gain confidence in spending their money on these products,” said Copeland. “But the industry has to secure its footing first before it can expand and remain profitable for all involved.”