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The U.S. hemp-derived cannabinoid market has swelled in total value, but the industry continues to face serious threats from a messy patchwork of state bans and regulations that are stunting growth and pushing production overseas, according to a leading cannabis economist.

“All this hysteria over cannabinoids is having a profound effect on the fiber and grain environment,” said Beau Whitney, founder of Whitney Economics, told Green Market Report in an interview.

Whitney’s analysis shows the hemp market, including CBD, THC, CBN, CBG and related compounds, has grown into a robust industry that now rivals legal marijuana markets. Two years ago, his firm calculated the total market for hemp-derived cannabinoids ranged from $21.3 billion to $35.8 billion, with a midpoint of $28.4 billion.

Of that total market, Whitney noted that “about $21 billion was available on the legal side and then about $7 billion was on the illicit side.”

Recent surveys conducted by Whitney in states, including Arizona, Illinois, Tennessee and Texas, validated these projections. “In states where I could get data and states that allowed for the sales, that’s where (the data is) really solid,” Whitney said. “They’re being confirmed as being conservative.”

While it isn’t an apples-to-apples comparison, since Whitney’s measuring total market potential for hemp against only legal sales in the marijuana world, the economist said it’s becoming nearly impossible to measure legal hemp sales accurately as state regulations constantly shift.

“Every time I turn around, a different state has a different proposal to ban all of this,” Whitney said.

As a result, Whitney’s firm focuses on measuring total market potential rather than solely legal sales. Still, he sees potential growth beyond current projections, especially with hemp-derived cannabis beverages making a splashy entrance to the market.

“Hemp-derived cannabis beverages, Delta-9 beverages, are coming on in a big way,” he said, noting these products are breaking out of traditional CBD shops and into “bars, liquor stores, restaurants and grocery stores.”

According to Whitney, legislative approaches to hemp cannabinoids have had unintended consequences across the broader hemp industry. The confusion also affects hemp fiber and grain sectors that have nothing to do with intoxicating products.

“Banks are debanking hemp fiber and hemp grain companies,” Whitney claimed. “Investors are pulling back on investment into the infrastructure.”

Whitney calculated that “the lost economic potential because of these legislatures was between $20 (billion) and $25 billion dollars.” He added that he’s “taken (his) acreage forecast through 2030 down by over 4 million acres.”

Whitney estimated “an impact to farmers of between $1 (billion) and $3.5 billion in revenue” in lost opportunities.

Licensed hemp acreage plummeted from 525,000 acres in 2019 to just 30,000 acres last year. That decline means there isn’t enough domestic acreage to support the hemp cannabinoid industry, potentially pushing manufacturing overseas.

“It’s driving manufacturers to China and to South America and Canada and anywhere else that can get CBD or CBD biomass,” Whitney said, which creates additional public safety risks as “Chinese CBD is laden with heavy metals.”

He said that the irony is that policies ostensibly designed to protect public safety might actually be increasing risks. “The whole legislative goal of having increased public safety … all their policies are running against that, and they’re actually increasing the public safety risk rather than decreasing it.”

Whitney has long advocated for product-level regulation rather than wholesale bans, suggesting age restrictions, testing requirements and proper labeling would be sufficient, “if it’s intoxicating.”

“That’s all you need to do,” he said.

Additionally, current regulatory approaches, he argued, are creating a false binary.

“The dispensary model for marijuana is failed. It’s an abject failure because it’s limiting people’s access,” he said. “Not everybody wants to go in there.”

Whitney also noted that declining commodity prices for corn, wheat, soybeans and other staple crops have driven farmers to seek higher-revenue alternatives. Hemp represents not only potential increased revenue per acre but also agricultural benefits – if the industry is actually allowed to develop.

“Hemp is a great rotational crop because it helps with the soil, it restores certain aspects of the soil, and it takes impurities out of the soil,” Whitney explained. He added that using hemp in rotation can increase output for subsequent soybean crops “on a significant per bushel level.”

Despite the challenges, Whitney still forecasts potential growth, projecting “a million acres in 2030, which is twice the size of it at its peak.”

Many have attributed much of the regulatory confusion to federal inaction, particularly from the FDA, which has taken a hands-off approach and created much of the uncertainty. Whitney expressed hope that the upcoming farm bill might provide greater clarity, though he noted the legislation “has been pushed out a number of times.”

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Missouri cannabis regulators revoked 25 more microbusiness licenses after concluding the operations wouldn’t be genuinely controlled by the disadvantaged entrepreneurs the program was designed to help, the Missouri Independent reported.

The action brings to 34 the number of licenses canceled by the state since the social equity program launched in 2023, representing more than a third of the 96 permits issued through the lottery system, according to a news release from the Missouri Division of Cannabis Regulation on Monday.

The microbusiness program was created to provide cannabis business opportunities for individuals who might otherwise lack access to the industry. However, regulators found evidence that well-connected investors and consultants were recruiting eligible individuals to apply but then arranging deals that limited their control and profits.

“It is not sustainable to keep going through rounds of license issuance and then having to do rounds of revocations,” Amy Moore, director of the state’s cannabis regulatory division, said at a February town hall meeting, according to the Independent. “We’re never going to get this market fully built out.”

The Independent, which has investigated the program for more than a year, reports that Arizona-based cannabis investor Michael Halow is connected to 22 of the revoked licenses, including 16 canceled Monday. Halow reportedly was associated with more than 700 of the approximately 3,600 applications submitted since the program began.

In an email to the outlet, Halow disputed the state’s decision and plans to appeal. He defended his company’s approach, saying they help “people without generational wealth or experience as an entrepreneur” who open “businesses in neighborhoods in need of jobs and economic opportunity.”

Four licenses connected to cannabis consultants David Brodsky and Scott Wootton were also revoked Monday. Regulators cited “false or misleading information” in their agreements that effectively transferred “ownership and operational control to another entity,” according to division documents referenced by the Independent. Brodsky and Wootton declined to comment to the outlet.

The division announced new proposed rules in December aimed at preventing what it called “predatory arrangements in microbusiness licensing.” The state is currently reviewing public comments on these draft regulations before deciding when to submit finalized rules to the Missouri Secretary of State.

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President Donald Trump’s on again, off again tariffs have rattled many industries, including the regulated cannabis industry that will be affected as vape hardware and packaging prices get hit with tariffs in shipments from Asia. But according to a new report from Whitney Economics, one segment could actually benefit: hemp beverages.

While hemp beverages are sold in aluminum cans and will face increases in container costs from the tariffs, other parts of the supply chain are less affected by tariffs and the products are sold domestically. Add to that the surging popularity of the products, and you have a winning formula.

Hemp drinks have hit the beverage industry by storm. Major distributors are stocking them even as states look to ban intoxicating hemp products. Some states are even carving out exceptions for the beverages in those proposed bans.

Another advantage, according to Whitney Economics analyst Beau Whitney, is that all of this is happening as the craft beer business struggles. Alcohol consumption has been experiencing declines in sales, and the once-hot trend of craft beers is already looking like the moment is fading. The Brewers Association recorded 399 closures in 2024 compared to 335 new breweries, indicating a shift in the industry’s trajectory. The latest tariffs are adding another headache for those brewers.

In addition to the aluminum used in cans, Whitney noted that beer companies also face tariffs on stainless steel, which is used in brewing equipment. Beer businesses are also dependent on hops, which are also tariffed.

“On the other hand, the Trump tariffs could represent a significant upside opportunity for the hemp beverage industry, which has been experiencing strong growth for several years now,” wrote Whitney. “As alcohol and beer sales decline, hemp beverages have filled in the gaps in demand. The popularity of hemp cannabinoid beverages is just at the beginning of its ramp.”

Whitney Economics noted that the hemp beverage sector has come on strong, especially since the market opened up in Minnesota in 2022.

“Recent surveys in Texas, Illinois and Tennessee indicate that hemp beverages are capturing an increasing amount of market share among hemp retailers, distributors and manufacturers,” Whitney wrote in a recent newsletter.

Hemp beverages tend to be more expensive than craft beers. A four-pack of infused seltzer can range from $9.99 to $16, while a 12-pack of craft beers often runs $20 or less. If the craft beer makers raise their prices in response to the increased expenses from tariffs, hemp beverages no longer look quite so expensive.

So, while hemp beverages are fighting in various states to keep from getting banned, at least the group gets one gift in the form of avoiding most tariffs.

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