Is Hemp Industry the Commodity of the Future
We don’t have to look too far into our past to realize that hemp can be the valuable industrial commodity it once was.
Hemp Industry was widely used throughout America and the rest of the world before the Marihuana Stamp Act of 1937, a bill that began a tedious road of prohibition around the globe. But as far back as 10,000 years, researchers indicate what they believe is to be the oldest known relic of any industrial commodity; a little bit of hemp fiber.
Hemp vs. Marijuana
In order to understand the role hemp plays as an industrialized commodity, it’s important to understand the differences between federally illegal marijuana, also known as cannabis, and federally legal hemp. Similarities between hemp and marijuana are numerous because they are essentially the same plant, but there is one key difference.
Hemp is a non-psychoactive plant used for making clothing, homeopathic remedies, CBD production and more, though it contains less than .3% of the psychoactive compound THC. Marijuana has all those same attributes, but the THC levels are typically between 8 to 35% and what many people seek for medical and recreational purposes.
How is a Commodity Defined?
A commodity is defined by the dictionary as a raw material or primary agricultural product that can be bought and sold. Julie Lerner of Panexchange tells Brian Hoben of the Hoben Law Firm in his podcast, The Hoben Minute, that “when you’re dealing with natural resources, the word commodity is a misnomer.”
Especially with hemp, Lerner says, that with numerous fluctuating variables and no industry standard, it is hard to put a price on hemp.“Hemp is a commodity in its infancy,” she says, also adding that marijuana is not a commodity and she doesn’t think it will become one.
Hoben further explains in his podcast his theory that you don’t need cannabis when the marijuana plant is commoditized as industrial hemp since he says hemp can fulfill all the global needs that the cannabis plant can do. Furthermore, he emphasizes that by making hemp a commodity, farmers and the industry as a whole can flourish by having a sense of stability, and as Lerner added, the liquidity of commoditizing which allows for market maturation.
A Brief History of Hemp as a Commodity
Civilizations have been using hemp as a commodity for as far back as the earliest known man, from Egypt to India and here in North America. From that small piece of hemp fiber that archeologists found, to the sails that brought ships to North America containing hemp seeds from India that later flourished in the fertile soil.
For centuries and up until the early 1900s, the hemp industry was booming with high demand for the raw material to make into other goods. Our first presidents, including George Washington, were known to grow hemp on their own personal farms. It was later law of the land that all farmers had to grow hemp, or face consequences. The first American flag was made of hemp fiber, and the Declaration of Independence and Constitution were written on hemp paper.
Standards in the Hemp Industry
President Nixon officially declared the War on Drugs by signing into law the Controlled Substances Act of 1970. And in an instant, hemp was banned right along with heroin and cocaine despite having zero psychoactive effect. Because of this, hemp became illegal to use even in an industrial capacity.
Thankfully, the 2008 Farm Bill removed hemp from the controlled substances list. Since then, the agriculture industry has seen sharp increases in demand for growing hemp. But without standards, the hemp industry cannot depend on pricing or demand to be predictable enough to provide insight in how it will be traded on the stock market.
Since hemp is currently unregulated, there are huge variants from one product to the next, and some companies have even been known to produce fraudulent products with little to no active ingredients they claim on their labeling. Yet despite being legal, it is still up to independent laboratories to come up with and adhere to self-imposed standards. The Committee D37 on Cannabis was formed in 2017 to develop these industry standards in regards to the plant’s product and processes.
The Hemp Exchange
Other companies, like CMTREX out of Israel, say they are poised to “facilitate the emergence of a transparent and efficient trading ecosystem for the global legal cannabis and hemp markets” according to the website. Not to mention Julie Lerner’s company, Panexchange, which specializes in a trading platform and price discovery capabilities that brings greater efficiency to otherwise inefficient markets in which to operate.
These companies are positioned to lead the hemp industry as the market slowly but surely matures by creating a stable market where the federal government has otherwise failed to do so.
How is Hemp Shaping the Future of Industry?
Today you can find countless products with hemp as a main ingredient. From bath bombs with CBD and skin care products, to smokable dried ‘buds’ and pre-rolled hemp cigarettes, to candy and everything in between. As more and more states legalize cannabis too, only time will tell how long before the federal government comes around.
But it is demand for access to secure banking and to be free from the anxiety of federal raids or disruptions of shipping that are what really drive the need for standards that later affect the retail and sales side of the industry.
The one thing standing in the way of hemp being the future leader of commodities, is current legislation. But even conservative politicians like John Boehner and Mitch McConnell have begun to realize there’s money to be made in the hemp industry, beyond the prison industrial complex, and significantly more profitable.