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The Growing Power of California Hemp

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As hemp production increases, Californian legislators have extended the duration of thousands of cannabis cultivation licenses to support the state's thriving industry.

The Land of Mass Licensing

The past year has seen substantial growth in the Californian hemp industry, and with that growth came challenges for the state's governing bodies. The state is home to one of the largest legalized recreational cannabis markets in the world, and Californian authorities have reportedly issued over 10,000 licenses to producers, processors, and retailers involved in the cannabis industry. This includes those working with hemp, a nonpsychotropic form of cannabis, and CBD, a chemical derived from hemp.

The swift growth of the state's industry almost triggered a crisis this spring, as thousands of temporary licenses were set to expire before authorities had time to process permanent licenses. The state senate stepped in to extend the duration of temporary licenses and protect law-abiding business owners from a bureaucracy struggling to keep up with demand.

The legal move to extend the licenses may indicate the state's political attitude toward the industry and holds promise for companies working in California.

The Hemp Revolution

The situation in California appears to reflect a much wider pattern in the hemp industry, across the United States and beyond.

Ten years ago, hemp was barely even mentioned in conversations about business. As a source of useful materials, its use had fallen out of fashion with the end of the age of sail, during which it had provided fibers for ropes and canvas. But then a shift came, as companies in the cannabis space looked for other options they could market. As a nonpsychoactive ingredient, CBD could be sold in markets where cannabis itself couldn't. And hemp offered a rich source of CBD without many of the complications surrounding the rest of cannabis.

Since then, demand for CBD has rocketed. The component is used in a wide range of products including cosmetics, health foods, and vaping liquids. Companies have emerged specifically to cater to the hemp market, and those companies have turned to the likes of Sugarmade for the equipment they need.

The popularity of CBD among consumers has also rocketed, leading to shortfalls in supply. The 2018 Farm Bill, which legalized the hemp trade at the federal level in the United States, will help with meeting this demand in the long term. But the bill is no magic bullet, and companies need time to gear up in the new commercial environment that has been created.

This gearing up has led to increased demand for cultivation equipment, creating shortages in that area. Cultivators have bought everything that Sugarmade can provide, as hydroponics companies see a boom in sales alongside the hemp companies they serve.

Space for Growth

With customer demand firmly outstripping supply, the hemp sector is creating a space in which a wide range of businesses can flourish.

One of the most important is Canadian company Canopy Growth Corporation, which was the largest cannabis company in the world by market capitalization as of April this year. Like Sugarmade, Canopy Growth Corporation has taken big steps to continue expanding and claim a larger share of the hemp and related markets. The company has increased its production capacity through a mixture of acquisitions and ongoing work to increase its existing licensed production facilities. Acquisitions have also featured in its work further down the supply chain, such as acquiring hemp skin care company This Works.

Like Sugarmade, Cronos Group Inc. is looking to new technology to support its expansion. The company recently announced the creation of an R&D facility, which has the potential to provide new products for a curious and often experimental customer base. To support such innovations, the company is also acquiring a state-of-the-art fermentation and manufacturing facility, which will allow Cronos to produce cultured cannabinoids.

Green Organic Dutchman has focused on a specific sector of the customer base, setting itself up as a source of organic and sustainably grown products. The creation of two new production facilities will allow the company to tap into rising demand, increasing its growing capacity from 156,000kg to 202,500kg. And with the growing popularity of hemp-CBD products, the company is setting up a global strategic hemp division to give it greater global  reach in an important part of the sector.

GW Pharmaceuticals Plc is applying the power of cannabidiol to tackle otherwise untreatable diseases. The company's 20 years of experience in the sector is currently being applied to seizures associated with tubular sclerosis complex, for which one of its drugs recently underwent successful clinical trials. GW has become a world leader in cannabinoid medicines, whose value is increasingly widely recognized.

With hemp and related sectors growing so fast, California's senators appear to have made a wise decision to smooth the way for local cultivators. Both customers and businesses in the state and beyond may see the benefits.

 

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