Bay State Extracts
Strategic Growth in a Rapidly Evolving Hemp Market
John Nathan
Shaping Perspective on Hemp and Cannabinoid Industry
Watching the influx of manufacturers shift starkly away from pure THC options and into multi-cannabinoid broad & full spectrum formulations has been the driving force. Seeing the consumer in real time adapt and learn about targeted benefits and effects based products has pushed the cannabis industry to apply more thought and consideration into product formulation rather than seeking to simply get their customers stoned.
The harmony between marijuana and hemp was forged by the hemp industry, leading the charge on the proliferation of minor cannabinoids and ensuring their availability. While they traditionally operated in similar but parallel industries, it’s been beneficial for all sides and the end user to work in unison. They are complementary to each other. The rise in minor cannabinoid formulations has also elevated consumer knowledge and they make more educated spending decisions when selecting all products based on it.
Overcoming Regional Challenges While Advancing Industry Growth
In New England, the primary issue is the high cost of operation and unforgiving climate, coupled with downward pricing pressures. Because hemp is federally legal, there are no restrictions on interstate commerce, allowing out-of-state farmers to grow at exponentially lower costs with two growing seasons versus one here. That pricing pressure translates to unsustainable pricing on hemp biomass and disenfranchises aspiring hemp farmers.
“Seeing the consumer in real time adapt and learn about targeted benefits and effects based products has pushed the cannabis industry to apply more thought and consideration into product formulation.”
By understanding the nuances and recognizing that the word "hemp" wasn't meant to be obfuscated into a legal shield for selling experimental cannabinoids. Many of us are utilizing the low cost of hemp to do beneficial work and supplement the marijuana supply chain with pure extracts intended to bolster product formulations at low costs. There are unfortunately, many bad actors in the hemp space that have conflated the industry with nefarious products intended to skirt THC laws for a quick dollar. It has soured many who are not in tune with how broad the hemp industry is and what it encompasses.
Role of Farmer Partnerships in Supply Chains
Everything. Without a steady supply of crop, this industry does not exist outside of synthetics, which can be "legally" considered hemp in the eyes of the law. They are firmly not hemp, given that the starting material is not directly from the plant.
Finding a way to keep farmers paid well and happy while maintaining the costs expected by the buyers is a delicate balancing act. There have been many types of ebbs and flows, and we have seen a large exodus of hemp farms over the last 3 years.
Preparing for Success in the Hemp Industry
Plan for the worst. Your business plan should accomodate for extreme price fluctuations and pricing pressures. Just CBD isolate alone, I have watched launch at $20k/kg and drop to $100/kg and then rebound back up due to supply shortages. We are at the mercy of biomass availability and when farmers exit and material is horded - it creates an environment that can be stressful.
The market can be a bit chaotic and being able to weather the storm is essential. The key question I would ask is "What is the gap in the market and how am I uniquely qualified to fill it?" - it's a crowded space with a low barrier to entry. Be prepared to find ways to carve out your place.
