Before the coronavirus struck, the hemp industry was already wary about 2020 as oversupply problems and bankruptcies hit businesses in the new sector early in the year.
Now, the nascent industry is facing an economic downturn along with the rest of the nation. But experts say there are some bright spots for the businesses that can survive.
Since hemp’s legalization in the 2018 Farm Bill, companies have struggled to find their footing amid the industry’s rapid expansion. Problems with overproduction and a series of bankruptcies had already made this year’s outlook somewhat grim, according to Eric Steenstra, president of hemp advocacy group Vote Hemp.
“It’s kind of like this perfect storm,” Steenstra said. “Overproduction of hemp. There’s more processors than you could possibly need. We’ve got thousands of brands. How many brands do we need?”
They can’t all survive, Steenstra said.
But the businesses that can ride it out may actually see some benefits from the pandemic’s fallout. Access to government loans through the coronavirus bailout programs, delays in regulatory action and the potential for a new market are all possible because of the outbreak, experts said.
The Hemp Bailout
As restaurants, bars and boutiques are ordered to close, hemp has been spared from much of the shutdown.
Farming hasn’t been shut down, according to Jonathan Miller, general counsel for the U.S. Hemp Roundtable, although other experts saw the potential for delays. [Read More @ Law360]