The Hawaii hemp industry’s outlook is grim due to overly restrictive and expensive regulations on production and processing, with pioneers of the latent hemp industry selling off land, laying off staff and no longer planting as Hawaii farmers become non-competitive in their own market. Since 1999, the early adopters of hemp farming hoped for less restrictions through Senate Bill 2986, which would have addressed “access to the local market through processing and online sales, easing three-day notice periods for crop transport, testing and inspection.” (Civil Beat Article)
Hawaii became one of the first states in the country to show an interest in hemp cultivation, with the state passing a law calling for “a study on the economic potential, problems, and other related matters of growing non-psychoactive industrial cannabis hemp as an agricultural product in Hawaii.” Following that study, in the early 2000’s, Hawaii passed laws defining hemp and opening opportunities for privately funded hemp research. Hawaii was one of nine states who enacted legislation to legalize industrial hemp production and sales in their 1999 legislature. (link)
SB2986 SD1 HD2 CD1, or the Agriculture Improvement Act of 2018 (a.k.a. 2018 Farm Bill) legalized hemp by removing hemp from the definition of “marijuana” contained in the federal Controlled Substance Act. No longer classified as an illegal drug, USDA established regulations in October 2019 that empowered states to monitor and regulate hemp production. There are those of the opinion that reform should occur on both federal and state levels. Legislation is committed and wants to see interested parties and agencies continue efforts to arrive at an appropriate balance in governing regulations. Hence, SB2986’s repeal scheduled for June 30, 2022 being extended to July 1, 2025. (link)
The final version of the bill ensured hemp remains legal in Hawaii until 2025, but maintains the restrictive and expensive regulations. The early adopters struggle to access Hawaii’s cannabinoid and cannabidiol market, valued approximately between $32,000,000 and $54,000,000. The issue is that “most of that money goes to hemp producers outside of the State” with prohibitions banning Hawaii farmers from making and selling these products in the State. (SB2986)
Hawaii hemp farmers continue to await significant changes that will help them break entry barriers into their own market. In general, many Hawaii farms subsidize food production with non-farming income or jobs to survive. For example, Ali`i Kula Lavender Farm in Maui not only offers lavender plant harvests, but they offer curated experiences and a whole product line selling lotion, shampoo, and soap. They also operate a farm tour and concession shop. With all things considered, hemp farming offers farm-based income to farmers for stability and growth in their business because of the crop’s high propensity to be a valuable commodity with a wide range of products such as animal feed, food, and as soluble added to beverages. (link)
The online publication www.cannabisbusinesstimes.com, reflected on Hawaii’s struggle due to restrictive and expensive regulations in the state. Hemp growers were in their second year of operating in 2020 under the state’s department of agriculture’s hemp pilot program, and for many, it was their first official cultivation season. Many hit roadblocks like the inability to transfer hemp biomass off farms, which was coupled by complicated reporting, more stringent than the federal level reporting requirements. (link)
At the same time, the USDA announced the availability of crop insurance programs for 2020, including Whole-Farm Revenue Protection and Multi-Peril Crop Insurance (MPCI) with some restrictions. The Whole-Farm Revenue Protection program provides coverage to all revenue for commodities produced on a farm valued up to $8.5 million. The Multi-Peril Crop Insurance (MPCI) is a pilot insurance program providing APH (Actual Production History) coverage for eligible producers in certain counties in Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, Virginia, and Wisconsin. Hawaii is excluded from the covered eligible producers. (link)
The 2021 stimulus package was more apparent for hemp growers asking for financial aid through the EIDL (Economic Injury Disaster Loan) or the PPP (Paycheck Protection Program). There were ambiguities and challenges for hemp businesses as many were selling and promoting products that violated the Food and Drug Administration regulations and the Food, Drug, and Cosmetic Act. (link)
The January 2022 publication of the Whitney Economics U.S. Cannabis Business Conditions Survey Report delivers a comminuted perspective of how constituents in the hemp industry are feeling. The census of the survey consists of 396 licensed cannabis businesses or ancillary businesses to the cannabis industry across 20 states in the USA. The report was supposed to “establish a baseline of data, and identify the successes and the challenges that operators in the industry are facing,” studying the policy, regulatory issues, industry successes, and overall industry sentiment. The survey showed a few key trends: a) only 42% of respondents are turning a profit, b) 72% indicated that access to banking and other financial services was the top issue and c) the concerns about the industry outweigh the successes. (link)
It seems clear that consolidation is in store for the industry unless advancements are seen in several key areas from access to the financial system to reduced regulatory restrictions.