MJ Biz: Federal hemp rules threaten 225,000 jobs and $8.9 billion in wages

A federal ban on intoxicating hemp products expected to take effect Dec. 11 threatens to reduce retail revenue by $28.3 billion.

The U.S. hemp industry could record as much as $38.7 billion in sales this year, according to a new report from Whitney Economics released Wednesday.

That’s a 36% increase since Whitney’s last industry analysis in 2023, when the hemp sector was worth $28.4 billion.

But the closure of the 2018 Farm Bill “loophole” that’s seen intoxicating hemp-derived products proliferate across the country – currently scheduled to take effect Dec. 11 – coupled with new restrictive state laws across the country puts all that at risk.

If most hemp-derived cannabinoid products lose federal protections, hemp retail revenue could decline by $28.3 billion. And 225,000 people could be put out of work, according to the report.

“The U.S. hemp industry is generally healthy, robust and growing,” economist and report author Beau Whitney said in a statement.

“But strict and unrealistic regulations passed this year threaten to effectively put three-quarters of its operators out of business.”

How healthy is the hemp industry now?

The report draws on a national survey of 496 operators in 35 states conducted in June and July.

The survey found:

An estimated 35,000 to 67,000 hemp cannabinoid retailers are operating in the U.S., with the report putting the midpoint at about 45,000.
The industry employs more than 350,000 workers, an increase of 23,000 since 2023, who earn more than $13.8 billion.
The supply chain of up to 76,000 hemp-related businesses generates an additional $18.8 billion in business revenue, not counting cultivation.
Average retail revenue per company rose to $859,000 per year, up from $815,000 in 2023.

Despite pressure from Congress and state legislatures, most companies report they’re making money.

The survey found 82.9% of hemp businesses are profitable, with another 9.1% breaking even.

Only 8.1% reported losses.

What happens to the hemp industry if the December ban isn’t avoided?

Hemp operators are deeply nervous about the future.

Half of businesses expect sales to decline over the next six months.

Just 8.2% hold a positive outlook for the next 12 months, while 51.7% doubt they’ll stay in business.

A bill signed into law by President Donald Trump drastically revised the federal definition of hemp.

Finished products with more than 0.4 milligrams of THC are due to become controlled substances.

That was initially supposed to go into effect in November, but Congress earlier this month agreed to a monthlong reprieve while a more permanent solution can be found.

Several bills have been introduced, including one proposal to allow hemp THC beverages to continue to be sold, but none have been called for a hearing.

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