As we pointed out in our last blog post, when the 2018 farm bill legalized the production and interstate transfer of hemp, it helped make hemp-based CBD—or, cannabidiol—products extremely popular. Hemp Business Journal estimates that industrial hemp can be used in approximately 50,000 different products, from cosmetics to clothing to automobiles.
It’s no surprise that hemp farming is now surging. In their 2017 U.S. Hemp Crop Report, hemp advocacy group Vote Hemp noted that 23,343 acres of hemp were cultivated in the U.S that year. In 2018, that number expanded to 77,000 acres.
In states across the country—like Tennessee, which is currently processing 1,000 2019 hemp farming permits—farmers are switching to industrial hemp. It’s easier to grow (by experienced farmers) and makes them more money.
In spite of this surge in hemp farming, is supply meeting demand?
Seeking A Consistent Supply Chain
The biggest concern we hear from our clients is that they need a consistent supply chain. Whether they’re having trouble finding quality biomass, available labs with adequate capacity or they just want the end product—THC-free distillate or CBD isolate—there just isn’t enough to go around.
The problem is exacerbated by a lack of transparency in the hemp industry. Sadly, many hemp processors are misrepresenting their actual capacity for storage and processing, their inventory or they are simply booked out several years.
What’s slowing down the supply chain?
State regulators are paying extra attention to hemp.
Hemp is genetically related to cannabis but has much less, if any, THC—the psychoactive compound in cannabis. When President Trump signed the 2018 Farm Bill into law, industrial hemp was made Federally legal. However, CBD is still a schedule one substance and as such, it’s expected to be closely regulated by state governments, which could affect not only the supply chain but product development.
Another factor to consider is prescription drug use. Take for example anti-seizure drug Epidiolex, the first FDA-approved medication to contain a purified extract from the cannabis plant. In September 2018, the FDA classified the drug as a schedule five controlled substance, which is the least restrictive classification.
Once CBD is used in a prescription drug, the FDA considers it a controlled substance. Many big consumer brands want to infuse CBD into popular products such as Coca-Cola; however, once it’s introduced into prescription drugs it’s off limits for over-the-counter products. If the FDA changes its ruling or CBD is “de-scheduled,” that could set a new precedent and open the floodgates for wider CBD product usage.
Hemp supply-chain analysts also believe that genetics data and other information will need to be recorded every step of the way. “Even highly processed products will be required to have full traceability back to the farm level,” said Colton Griffin, CEO of Flourish Software, which specializes in hemp supply chain management, in an interview with Supply Chain Dive.
Consumers and retailers support traceability as well. Businesses have begun focusing on new technology to trace food sources in the event of contamination. Companies like IBM and Walmart have developed blockchain systems for tracing where their food products come from in the event of an outbreak. Many consumers want to know where their food and consumer products come from, and marketers see this transparency as a way to build trust with their customer base.
What We’re Doing to Help Meet Demand
As the Tennessean wisely points out, “ideally, hemp farmers should be contracted by a hemp processing company before they plant hemp, otherwise they run the risk of having nowhere to sell their harvest.”
Rather than re-inventing the wheel, Paragon chooses to take a tried-and-true approach with farmers. We work in-step with hemp growers by providing seamless integration from field to product. This relationship-building process can ease supply chain issues by helping farmers:
- Develop best practices
- Record adequate genetics data, and
- Map full traceability of their biomass.
It’s our goal to establish trust and transparency in the hemp processing industry.
Work With Us
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