Something unexpected is happening in Oregon.
In an effort to make more money from medical marijuana, they have stopped growing marijuana.
Instead, they’re growing its nonintoxicating cousin, hemp.
Good old boring hemp, mostly known for being used to make ropes, textiles, and paper.
So what gives? Why abandon producing recreational drugs to ship to trendy, bougie Portland shops in favor of a plant that gets turned into rope that costs $0.50 per foot on Amazon?
A couple factors are at play here, but the underlying reason is simple: It’s all about profit.
And as the marijuana sector, especially medical marijuana sales, continues to grow and mature, we will be seeing more marijuana growers in more states transitioning to hemp in the near future.
Why Oregon?
Oregon is swimming in marijuana and the glut of production is driving marijuana prices sharply down in the state.
According to the Oregon Office of Economic Analysis, the price per gram of marijuana has fallen 50%, from $14 to $7, since 2015.
Unlike other states, Oregon did not cap the number of growing licenses it issued. Yet growers are unable to export marijuana without running afoul of federal law.
Roughly 1 million pounds of flower, and 350,000 pounds of extracts, edibles, and tinctures were produced last year.
That is far more than the state will consume, and growers are being pinched by the low prices and difficulty selling everything they produce into the market.
As Trey Willison, a marijuana grower who switched his operation to hemp this season, told AP News:
“Now we’re starting to look at drastic means, like destroying product. At some point, there’s no more storage for it. Whoever would have thought we’d get to the point of destroying pounds of marijuana?”
The New Hot Product
In Oregon, the number of hemp licenses increased from 12 in 2015 to 353 as of last week.
Growers are chasing the kinds of returns they expected going into the business, and hemp’s potential for out-of-state sales is supporting prices in one of the most promising aspects of medical marijuana.
Hemp is just as good, if not better, for an extract called cannabidiol, or CBD. And while the marijuana is being used to produce some of it, CBD from hemp has a distinct advantage.
Growing industrial hemp is legal under federal law, and CBD production can drive sales from growing hemp to over $100,000 per acre, with each kilogram of CBD selling for thousands of dollars.
Mr. Willison, quoted above, extracts the CBD from his own hemp and can sell it for up to $13,000 per kilogram.
Compare that to $7,000 per kilogram of marijuana at retail, a price that growers receive a fraction of, and you can see why the change is underway.
At this point it is estimated that 50% of the hemp grown nationwide is being used to produce CBD.
That CBD is popping up on a long list of consumer products, from edibles, bottled water, and pet treats to cosmetics, skin creams, and transdermal patches.
Medical Marijuana (kind of) For Everyone
The reasons for soaring CBD consumer demand are pretty straightforward. You can get many of the benefits of medical marijuana without the accompanying high that marijuana is known for.
Hemp contains virtually no THC, the intoxicating chemical that marijuana crops have largely been designed to maximize.
While CBD extracted from marijuana will contain virtually no THC, it still puts many in a quandary.
Some people operate vehicles or machinery for a living, or their employment contracts strictly forbid drug use, or they simply don’t want to support recreational marijuana use.
Then there are more specialized concerns. CBD greatly reduces epileptic seizures, especially for a rare form called Dravet syndrome that affects young children, causing development delays, neurological damage, and 20% of sufferers to die before they are 20.
Parents may not like the idea of giving their children medical marijuana, but a hemp extract is far more palatable.
Pre-clinical studies of CBD have shown promise for treatment of chronic pain, neuroinflammation, anxiety, addiction, Multiple Sclerosis, PTSD, cancer and cancer medication side effects, Alzheimer’s, Crohn’s disease, and it shows anti-psychotic effects.
Of all of those symptoms, chronic pain management is clearly the elephant in the room, with all the problems it has caused in recent years and the $635 billion in pharmaceutical sales it drives.
With the ongoing opioid crisis in the U.S., we desperately need effective alternatives that reduce prescriptions while lessening the risk of addiction and harmful side effects.
CBD fits the bill, and as its popularity grows, there is no clearer target for CBD producers than the $635 billion pain industry.
Demand is soaring, and CBD production from hemp is as well. Now is the time to grab your share of the profits.
