THE

U.S. Hemp
Market Landscape
C A NN AB I N O I D S , GRAIN & F IB ER

A division of: New Frontier Data

In partnership with:

Sponsored by:

© 2 0 1 4 -2 02 1 N E W F R O N T I E R DATA . A L L R I G H T S R E S E R V E D.
Contents
3L E T T ER F R O M
T H E P U B L I S H ER 22 24
C B D & OT H ER
CANNABINOIDS

CBD ConsumerTrends

4
28
E X EC U T I V E Snapshot: Minor Cannabinoids
SUMM ARY

8ABOUT
N E W F R O N T I ER DATA
30 F I B ER

10 M E T H O D O LO G Y
41 S EED &
GRAIN

15 T H E U. S . H E M P M A R K E T
R EG U L ATO R Y L A N D S C A P E
48 48
KE Y
TA K E AWAY S

Cannabinoids
49

18
Fiber
S U P P LY C H A I N 49
Seed & Grain
& C U LT I VAT I O N 50
Explanations & Technical Terms

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 2

 letter from the
Publisher
D E S P I T E T H E CH A L L EN G E S of 2020, will find information vital to investors who either have or are
the hemp industry remains poised for strong considering entering this sector, regulators who are setting and
growth in 2021 and the years ahead, as evaluating compliance requirements, and operators who need to
cannabinoids continue to gain widespread understand the competitive landscape of the hemp market and
acceptance among consumers, and as its sub-industries.
non-cannabinoid applications continue to de-
velop into mainstream products. With a new administration perceived as pro-cannabis by many in-
dustry operators, coupled with widespread regulatory ambiguity,
To provide a better understanding of the it is more important than ever to understand the implications of
major business developments in the hemp the regulatory landscape on key factors such as cultivation and
industry, we have synthesized the factors im- CBD in food and beverage. This report also provides a supply
pacting the evolution and growth of the three chain analysis and examines the impact of oversupply on volatility
hemp subindustries in our latest report, The in the processing market.
U.S. Hemp Market Landscape: Cannabinoids,
Grain & Fiber. New Frontier Data’s mission to inform policy and commercial
activity for the global legal cannabis industry. As with all reports
Leveraging data drawn across all areas of the available through New Frontier Data’s online intelligence portal
cannabis industry, this report includes insight Equio™, we trust that readers will benefit from this report’s find-
and analysis from a wide range of sources, ings, our unbiased insights, and actionable business intelligence,
including operator interviews, government to assess, understand, engage and transact with the cannabis
agencies, and consumer surveys. Here you industry and its consumers.

Giadha A. DeCarcer
Founder and CEO,
New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 3

 executive
Summary
Key Factors Shaping the
Evolution of the Hemp
Market in the U.S.
The year 2020 was tumultuous in many as-
pects, and the development of the nascent U.S. f 2020 Hemp Acreage by Use

��
hemp industry was not spared from disruptions.
In the second year of legal hemp production, 5%
cannabidiol (CBD) entered the national con- 10%
versation with an unanticipated rise in popularity
and use. However, the subsequent amount of
hemp grown across the country – propelled by
overall sentiment and popularity – greatly sur-
passed the industry’s capacity to process it,
leading to a drastic decrease in biomass prices,
€ Cannabinoids 85%
€ Grain
€ Fiber Source: Hemp Benchmarks®

2020 Licensed Hemp Acreage by State

1%
2%
2%
6% 2% 6%
3%

1% 5% 2%
1% 2%
12% 2% 4% 6%
6% 3%
10%
7% 8%

1%
3%

Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 4

EXECUTIVE SUMMARY

f Do You Have Friends or leaving millions of pounds of hemp unsold while posing severe financial
Family that Consume CBD? challenges to extractors and farmers alike. Total licensed acreage sur-
passed 420,000 acres in 20201, although only an estimated 157,000

���
acres were actually planted during the year. CBD remained the dom-
inant product choice behind hemp cultivation, with 85% of total
Yes,
many 6% U.S. hemp acreage dedicated to cannabinoid production in 2020.
Total consumer spending on CBD is estimated to have reached

���
$3.83 billion in 2020, and is projected to reach $6.26 billion by

Yes,
21%
51%
of Americans
2025, a 5-year combined annual growth rate (CAGR) of 12.16%

a few Despite a lack of clear regulations from the FDA, thousands of

have friends
or family that
CBD brands remain vying for market share in a crowded subsector.

���
consume CBD
The crash of biomass prices – while bad for farmers and extractors
– has led to cheaper and more widely available CBD products for
Yes, one
or two 23% consumers, which in turn has attracted more consumers into the
market. Indeed, as detailed in New Frontier Data’s U.S. CBD

���
Consumer Report: Archetypes and Preferences, Vol. 1 (2020), 51%
of Americans report having friends or family who use CBD.
None that
I know of 49%
With a new administration that is perceived by many industry op-
erators as pro-cannabis, CBD brands can rest a bit more easily about
the direction of the industry, but should closely watch regulatory
Source: New Frontier Data, U.S. CBD Consumer
movements in 2021 to best position themselves for future growth.
Report: Archetypes and Preferences, Vol. 1 (2020)

f Projected U.S. Retail CBD Spending

(2020-2025) 12.1%
CAGR 2020-2025

$8B
$8B $7.2B
$6.5B $6.3B
$5.9B $5.7B
$6B $5.4B $5.1B
$4.9B
$4.7B
$4.2B
$3.8B
$4B $4.6B
$4.1B
$3.4B $3.7B
$2B $2.8B $3.1B

$0B
2020 2021 2022 2023 2024 2025

Source: New Frontier Data

€ Low € Medium € High
1.  Hemp Benchmarks®

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 5

EXECUTIVE SUMMARY

FIBER

In the emerging hemp fiber industry, Amer- production capacity was only 15% of Canada’s, great potential
ican firms have begun building out supply exists in the space. Still, the industry at large is marked by a lack
chains and setting ambitious goals for growth. of primary processing capacity, and by manufacturers who are
While only a handful of firms were actually either hesitant or unaware of the possibilities for incorporating
operational in 2020, hopes are high for in- hemp fiber into their product lines. The year 2021 will be a crit-
dustrywide operational expansion in 2021. ical one for the young sector, as companies race to develop a
As the Biden administration moves for- robust supply chain and bring products to market.
ward with its $2 trillion investment to boost
clean energy and rebuild infrastructure with GRAIN
support from Democratic Party allies in Con-
gress, hemp advocates are pointing to hemp U.S. consumer demand for hemp grain in 2020 was projected
fiber’s potential role toward decarbonizing at $67.1 million USD, and is expected to increase at a CAGR
the economy, and the many thousands of of 12% over the next five years. Although U.S. imports of hemp
environmentally friendly products that can seed reached a record 191 million pounds, American farmers
be made from the plant. Although U.S.

f Projected Wholesale Value of Processed U.S. Hemp Fiber

(2020-2025)
10.5%
CAGR 2020-2025

$77.71M

$69.57M
$62.62M
$56.67M
$60M $51.56M
$47.15M

$40M

$20M

$0M
2020 2021 2022 2023 2024 2025

Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 6

EXECUTIVE SUMMARY

f 2020 U.S. Hemp Seed Market Retail Sales f 2020 U.S. Hemp Seed Market
by Product Category by Market Share

���
8%
2%
9% 3%
13%

8%
58%
17%

83%
€ Seed € Manitoba € Navitas € Nature's
€ Oil Harvest Organics Earthly Choice
€ Seedcake € Nutiva € Bob's Red Mill € Other

Source: New Frontier Data

are beginning to cultivate hemp for grain

at scale, and to supplant imports from
f Projected U.S. Hemp Grain
Wholesale Market 16.5%
CAGR 2020-2025
long-established Canadian farmers.
Growth in the market is being fueled by
changing consumer preferences, includ- $57.6
ing increased demand for plant-based $140M $43.3
proteins, and consumer concerns about $120M $31.8
the environmental impacts of their $22.8
$100M
food choices. The popularity of edible $15.6
$80M $10.1
hemp seeds has soared in recent years, $80.4
$86.4
$60M $74.3
in part thanks to the increased visibility $68.3
$62.6
$57.1
of hemp products resulting from CBD’s $40M
rise to prominence. Companies looking $20M
to grow in the sector need to focus on
$0M
consumer education, regulatory out-
reach, and product development to 2020 2021 2022 2023 2024 2025

achieve success in 2021.

€ Imports € Domestic Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 7

 About
New Frontier Data

N E W F R O N T I E R D A T A is the Core Values

premier data, analytics and technology firm ˜ Honesty
specializing in the global cannabis industry,
˜ Respect
delivering solutions that enable investors, op-
erators, advertisers, brands, researchers and ˜ Understanding
policy makers to assess, understand, engage
and transact with the cannabis industry and its Vision
consumers. New Frontier Data’s global reach We strive to be the nexus of data for the global cannabis industry.
and reputation is evidenced by research and
analysis citations in more than 85 countries. Commitment to Our Clients
Founded in 2014, New Frontier Data is head- The trusted one-stop shop for cannabis business intelligence,
quartered in Washington, D.C. with a presence New Frontier Data provides individuals and organizations op-
in Europe, Latin America and Africa. erating, researching, or investing in the cannabis industry with
unparalleled access to actionable industry intelligence and in-
Mission sight, helping them leverage the power of big data to succeed
New Frontier Data’s mission is to inform in a fast-paced and dynamic market. We are committed to the
policy and commercial activity for the highest standards and most rigorous protocols in data collection,
global legal cannabis industry. We maintain analysis, and reporting, protecting all IP and sources, as we con-
a neutral position on the merits of canna- tinue to improve transparency into the global cannabis industry.
bis legalization through comprehensive
and transparent data analysis and projec-
For more information about New Frontier Data, please visit:
tions that shape industry trends, dynamics,
NewFrontierData.com.
demand and opportunity drivers.

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ABOUT NEW FRONTIER DATA

Report Additional
Contributors Contributors

PUBLISHER New Leaf Data Services, LLC (Hemp Benchmarks®)

Giadha A. DeCarcer, Founder & Chief Bastcore
Executive Officer, New Frontier Data David Mitlin

EDITOR
Victory Hemp Foods

John Kagia, Chief Knowledge Officer, OG Hemp

New Frontier Data Groff North America
Jan Slaski
AU T H O R S
Cynthia Petrone-Hudock
Trevor Yahn-Grode, Industry Analyst,
Canadian Rockies Hemp
New Frontier Data
Bast Fibre Technology
Kacey Morrissey, Senior Director,
Industry Analytics, New Frontier Data Biocomposites Group
Dr. Molly McCann, Director, Industry Andrea Herman
Analytics, New Frontier Data Robert Ziner
U.S. Heritage Group
COPY EDITOR
Hemp Traders
J.J. McCoy, Senior Managing Editor,
New Frontier Data The U.S. Hemp Building Authority
Ryan Doherty
DAT E P U B L I S H E D
HempWood
March 2021
Hempitechture
Dr. Ron Kander
Thomas Dermody

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 9

Methodology
Data Overview
The forecasts presented in this report lever- PA R T N E R S H I P W I T H
age data drawn from all areas of the emerging N E W L E A F DATA S E R V I C E S , L L C

cannabis industry, and include insights gained

from a wide variety of data inputs. The term Through a partnership with Hemp Benchmarks® (New Leaf Data
"hemp" in this report refers to low-THC Services, LLC) New Frontier Data acquired detailed survey in-
cannabis plant and its derivative products, formation from a range of hemp cultivation, extraction, and
including those used for medical, recreation- processing operations. This data was instrumental in the predic-
al, and industrial purposes, as well as in food tion methodology used to size markets and estimate demand.
products. The data used for modeling and
forecasting was drawn from a wide range of CONSUMER SURVE YS
sources, including:
In a census-adjusted survey of the general population of the
O P E R AT O R I N T E R V I E W S United States, New Frontier Data gathered information about
the uses, purchasing habits, beliefs, and attitudes about the
In the service of this report, New Frontier Data cannabinoid CBD and products containing it. Survey themes
conducted 62 interviews with leading indus- included CBD use, purchasing behavior, decision influencers,
try executives, trade group leaders, and plant product preferences, expenditures, beliefs about CBD, and
scientists for their insights about areas includ- policy attitudes.
ing market sizing, pricing, regulatory concerns,
and other industry-disrupting events. The in-
terviews were conducted in the 10 months
2020 U.S. CBD
between January-November 2020. Consumer Survey Stats

G OV E R N M E N T AG E N C I E S SA MPLE SIZE M ARGIN OF ERROR

Data from federal and state government

4,074 ±1.38%
agencies including respective state depart-
ments of agriculture, the U.S. Census Bureau,
F I E L D I N G D AT E S M E T H O D O LO G Y
the U.S. Food & Drug Administration (FDA),
and the U.S. Drug Enforcement Agency
March 18-24, 2020 Online Survey
(DEA) were used in the construction of New
Frontier Data’s economic growth models.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 10

METHODOLOGY

Note on New Frontier Data

Archetype Clustering
Methodology
In general, algorithmic clustering is a tech-
nique used to automatically organize objects New Frontier Data has developed proprietary models for esti-
into groups that are similar in some aspect. mating the size of the wholesale market for hemp cannabinoids,
The result is a collection of objects which are grain, and fiber. These models are continually refined based
like each other, yet different from those in on new data inputs, regulatory changes, and other market-
other collections. New Frontier Data previ- disrupting events.
ously used unsupervised clustering algorithms
to mathematically explore the consumer and The market size and growth projections for the wholesale
non-consumer archetypes (groups) defining market for hemp fiber and grain were developed based on
U.S. and EU CBD markets. The data used analysis of key inputs including:
in the algorithms was sourced from key vari-
˜ Number of licensed hemp processors
ables relating to respondent behavior, beliefs,
attitudes, and exposure to CBD. Important- ˜ Number and processing capacity of
ly, such techniques ascertain the inherent operational decortication facilities
divisions within CBD consumer and non-con-
sumer groups, as opposed to predefining (or ˜ Wholesale pricing information for grain, fiber, and hurd
guessing) the qualities of each group. In the ˜ Acreage data reported by state agriculture departments
current analysis, New Frontier Data uses
the same cluster centroids as defined in our ˜ Historical import/export data
previous reporting of CBD archetypes, and
˜ Time between the passage of the 2018 Farm
classified the newest respondents as the ar-
Bill and the launch of processing facilities
chetype centroid closest to it. In effect, that
allows us not only to determine the share of ˜ Analysis of the national, state, and tribal regulations
each archetype in the current market envi-
˜ Analysis of growth rates for industries that have the
ronment, but also to analyze how the size of
greatest use for the application of hemp fiber and grain
the archetypes change over time. This is a
critical datapoint in understanding evolution
of the CBD market. Based on these inputs, an economic growth model was applied
to project the growth of the wholesale hemp markets for fiber
and grain.

N OT E: The market size projections for hemp fiber and grain cover
only the wholesale market, and do not include not retail sales, as
prices paid for fiber are exceedingly volatile and retail markets have
yet to develop.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 11

METHODOLOGY

The market size and growth projections for

N OT E: Differences between the market projections included within
the retail market for CBD was developed
this report and previous NFD estimates for the size of the CBD
based on analysis of key inputs including:
market are largely due to a wholesale change in the NFD methodol-
˜ Historical pricing for hemp biomass ogy following the addition of new data sources.
(via Hemp Benchmarks®)
The new methodology considers only CBD products that were pro-
˜ Aggregated acreage license data duced from hemp grown in the U.S. (and thus accounted for in the
from state agriculture departments regulated supply chain), while previous methodologies considered
survey-reported spending on all CBD products regardless of source.
˜ Interviews with farmers and extractors
cultivating hemp for CBD CBD market estimates released in the past have relied on a con-
sumer-survey methodology for estimating monthly and annual usage
˜ Contemporary wholesale
rates, consumption volumes, and spending on CBD-only products.
CBD pricing data
Survey-based estimates for legal CBD spending carry larger margins
˜ Growth in legal medical cannabis of error, and have proven to be artificially inflated in the CBD space
use for ailments commonly in particular, due to self-reported consumption/spending on unreg-
treated with CBD products ulated, untested, and sometimes completely fake (no CBD content)
CBD products.
Based on these inputs, we applied an eco-
nomic growth model to project the value of
annual retail consumer spending on U.S.-
produced CBD products through 2025.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 12

 COM I NG I N A P RI L

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 the U.S. hemp market
Regulatory Landscape
The Evolution of USDA Plans harvest at a DEA-certified facility. For crops testing above the
Will Impact Cultivation 0.3% legal threshold for the psychoactive compound, farmers
would have been required to use a DEA-approved "reverse dis-
The 2018 Farm Bill placed jurisdiction over tributor" to dispose of the crops. However, no clear definition of
hemp cultivation squarely in the hands of the what constituted a reverse distributor was provided.
U.S. Department of Agriculture (USDA),
which released its interim final rule (IFR) for The rules not only significantly complicated the cultivation
the hemp industry in October 2019. The orig- process, but also fueled concerns about the limited number
inal requirements were controversial among of DEA-certified labs nationwide (several states do not have
hemp industry operators, and least popu- any certified facility). While the USDA agreed to waive both
lar were mandates that farmers had to test of those requirements for the 2020 growing season, it remains
their crops for THC potency 15 days before unclear whether they will reemerge in 2021.

States Divided on 2014 Rules vs. Interim Final Rules for 2020 Season

€ States operating under 2014 pilot

rules for 2020 season
€ States with approved plan under
interim final rule
€ No state plan, will operate under
USDA rules
€ Under review by USDA
€ Drafting a plan for USDA review
€ Hemp production currently illegal
€ Unknown

Source: New Frontier Data, Hemp Industry Daily

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 15

HEMP REGUL ATORY L ANDSCAPE

The IFR also requires states to develop their f States' Stances on CBD
own hemp rules, which can vary significantly
between markets. Despite that, the USDA’s
in Food Products*
16 states
late announcement of the IFR, combined explicitly allow CBD
in food products
with most farmers’ lack of previous hemp cul-
tivation experience, convinced many states to
continue operating under the original 2014
Pilot Program rules for the purposes of the
2020 growing season. In response to wide-
spread criticism from industry stakeholders
and calls from influential politicians (including
new Senate Majority Leader Chuck Schum-
er), the USDA extended the option for states
to operate under the 2014 Pilot Program
rules for another year, with the USDA rules
not becoming mandatory until October 2021.

The development of USDA-approved state

hemp rules, along with specific choices made
by legislators regarding THC testing meth-
odology, treatment of "hot" crops (i.e., those
exceeding 0.3% THC), and penalties for neg- € Explicitly allow
ligent farmers, will have serious and lasting € Ambiguous stance
€ Explicitly forbid
impacts on grower operations, and the market
competitiveness of individual states.
* Vermont allows CBD in food under strict limitation, New Mexico
allows CBD in food but is actively legislating a ban, and Wisconsin
requires that any CBD-infused food be produced in-state.

FDA on CBD in Source: New Frontier Data

Food & Beverage

As of March 2021, the U.S. Food & Drug has released no plans for a quick resolution to the question of
Administration (FDA) maintains that it is CBD regulations. The policy stance has serious implications for
unlawful to use CBD as an additive in any CBD companies. So long as the FDA maintains that CBD is an
products intended for human ingestion – illegal food additive, leading national brands will be unwilling to
including food and beverages – or to market launch product lines containing the cannabinoid, and any com-
it as a dietary supplement. Despite indus- panies that sell CBD in food and beverage products will be doing
try hopes to the contrary, the FDA remains so in violation of federal rules, which may curb their ability to uti-
distracted by the coronavirus pandemic, and lize banking services, limit their access to institutional capital, and
despite the new presidential administration render them ineligible for product safety insurance. More than

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 16

HEMP REGUL ATORY L ANDSCAPE

any other federal policy or law, the FDA’s 31% having tried CBD foods, according to New Frontier Data’s
stance on CBD in food and beverage has sti- U.S. CBD Consumer Report: Archetypes and Preferences, Vol. 1
fled the industry. A positive ruling from the (2020). Several states have passed legislation explicitly allowing
FDA on CBD and other cannabinoids’ po- the production and sale of CBD food and beverage products.
tential to be used as food ingredients would At the time of this report, 16 states have passed such legislation.
have an immediate and positive impact on the
growth of the CBD market. The disparate stances between federal and state regulators
regarding CBD products are setting stages for legal battles.
Despite the FDA’s stance, CBD food and States cannot continue to flout federal regulations indefinitely,
beverage products have gained widespread meaning that either a change in the FDA’s regulations or leg-
market traction, with 10% of consumers islative action from Congress is inevitable.
surveyed having tried CBD beverages, and

Uses for Hemp

Industrial Textiles Paper Building Materials Foods (Oils) Industrial Products
- Twine & Rope - Printing Paper - Fiberboard - Salad Oil - Car Parts
- Nets - Fine/Specialty Paper - Insulation - Margarine - Bio-Plastics
- Canvas & Tarps - Filter Paper - Fiberglass Substitute - Food Supplements - Scooters
- Caulk - Newsprint - Cement (Vitamins) - Semiconductors
- Carpets - Cardboard/ Packaging - Stucco & Mortar - Cooking Oils - Oil Paints & Varnishes
- Brake/clutch Linings - Printing Inks
- Argo-fiber Composite - Fuel
& Molded Parts Bast Fibers Hurds (Pulp) Extracts Hempseed Oil - Solvents
- Geo-textiles -Lubricants
- Animal Bedding - Oils
-Putty
- Mulch &Compost - Isolates
Consumer Textiles -Coatings
- Distillates
- Apparel Personal Hygiene
- Diapers STALK L EAVES FLOWER SEED
- Fabrics - Soap
- Denim - Shampoo
- Fine Fabrics - Bath Gels
- Handbags - Cosmetics
- Shoes - Lotions
- Balms
Entire Plant Cell Fluid Foods (Seed & Seedcake)

- Boiler Fuel - Abrasive - Granola - Animal Feed

- Pyrolysis Chemicals - Birdseed -Protein-rich
Feedstock - Cereal Fiber
HEMP - Bars
PLANT - Protein Powder

Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 17

 supply chain &
Cultivation
Supply Chain f 2019/2020 U.S. Planted Hemp Acreage (Est.)

Analysis
Cultivation & Harvest Report

Survey data that New Frontier Data has

recieved through a partnership with Hemp
Benchmarks® indicates that, only between 35
and 40% of the nation’s registered acres were 2019 2020
actually planted in 2020. That marked the 230,000 acres 157,082 acres
first decrease in total harvested U.S. acreage
for the first time since the beginning of state Source: New Frontier Data
hemp pilot programs in 2014. Despite that
drop, the number of growing licenses given
to farmers increased 27% between 2019 f How Many Years Have You Been Growing Hemp?
and 2020. A significant portion (~33%) of
the licenses were given to first-year growers,
while only 20% of producers had been grow- First Year Growing

ing hemp for three or more years.1

Second Year Growing

The simultaneous decrease in acreage de-
spite the increase in growers is likely due to
farmers’ planting smaller crops in response
Third Year Growing
the tumultuous 2019 growing season, in
which states like Arizona saw upwards of 40%
of their crops go unsold. Despite some
More than 3 Years
repor ts of genetics growing unusably
hot in southern climates, the vast majori-
ty of planted hemp was harvested without 0% 10% 20% 30% 40%

Source: Hemp Benchmarks®, 2020

1.  Hemp Benchmarks®

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 18

S U P P LY C H A I N & C U LT I VAT I O N

issue, with less than 10% of farm- f Did your crop have any issues f Did your crop meet the
ers reporting an inability to meet THC with pests/mold/disease? 0.3% THC requirement?
limit requirements. However, hemp’s
reputation as being especially resis-

��� � ���
��
tant to disease, mold, and pests seem 42.5% 9.1%
to have been overblown, with 42%
of farmers reporting issues – weeds,
powdery mildew, and botryis ranked
among the most common complaints.

The nascency of the hemp canna-

binoid market can be noticed most € Yes
obviously in the lack of sophistica-
57.5% € No 90.9%
tion regarding current harvesting and
drying methods. More than 75% of Hemp Benchmarks® Cultivator Survey, 2020
respondents reported harvesting their
crop by hand, as only 20% used ma- f 2020 U.S. Hemp Growing/Processing Licenses

100!5544!
chinery to assist in the drying process.
The lack of sophistication in these 21k
areas indicates that the increased 20,000 17k
use of automation and machinery in 15,000
harvesting hemp crops could further
10,000
decrease the cost of production for
5,000 4k
cannabinoid biomass as small labor- 1k 1k
intensive producers are displaced by 0
2016 2017 2018 2019 2020
large, heavily automated ones, which
could enable farmers to still make a
profit notwithstanding the dramatic f 2020 U.S. Estimated National Planted Hemp Acreage
price compression for biomass be-
tween Spring of 2019 through the end 230k
of 2020.
200,000
157k
150,000
100,000 78k
50,000 26k
10k
0
2016 2017 2018 2019 2020

Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 19

S U P P LY C H A I N & C U LT I VAT I O N

f How did you harvest your crops? f How are you drying your crops?

���
Hang-Dry 67%

77% Hand
Machine-Dry 19%

Field-Dry 5%

���
Hand & Machine Dry 3%
Machine

23% Other 5%

0% 10% 20% 30% 40% 50% 60%

Source: Hemp Benchmarks®

Volatility in Processing Market of farmers made arrangements to sell their output to a proces-
Fueled by Oversupply sor ahead of harvest time), 3 a good portion is due to deliberate
strategies by major industry operators.
Between 2016 and 2020 the number of hemp
licenses distributed by states increased by 25x Anticipating a positive ruling from the FDA under the Biden
– from 817 in 2016, to 21,496 in 2020. administration regarding the use of CBD in food and beverages,
many industry operators have been stockpiling huge inventories
As expected, the number of hemp farm- of isolate and distillate for what they see as an inevitable surge
ers grew far more quickly than the number of in demand. To date, the FDA’s stance that CBD is an illegal
hemp processors, and increased competition food & beverage additive is the main factor preventing national
among farmers without a matching increase in brands and major retailers from fully embracing CBD products.
processing capacity has led to a sustained de- Should legal product pathways for CBD food and beverages be
crease in raw biomass prices, with the average created, that barrier would be removed, undoubtedly resulting
price of 0.57 $ / %CBD / pound of biomass.2 in a surge of demand.

Though much of the oversupply present in Following the tumultuous 2019 growing season, total licensed
the market could be explained by the gold hemp acreage decreased in 2020 for the first time since le-
rush mentality of new entrants (e.g., only 35% galization – from 580,180 to 420,810 acres, a 30%4 decrease

2. 3. 4.  Hemp Benchmarks®

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 20

S U P P LY C H A I N & C U LT I VAT I O N

from 2019. It is important to note that actual CBD f What technique do you use for
acreage decreased even more, as grain and fiber culti- THC remediation or removal?
vars have increased significantly in acreage while being
simply classified as hemp.
Supercritical
CO2
E X T R AC T I O N M A R K E T Chromatography

The U.S. market is currently characterized by a dozen High

or so industrial scale processors that are capable of pro- Pressure
Liquid
cessing hundreds of pounds of biomass per month, as Chromatography
well as many smaller firms, with most of them using
cryo-ethanol and supercritical CO2 extraction methods
to produce crude CBD oil from hemp biomass. Flash
Chromatography

A little less than half (~42%)5 of extractors performed

remediation services in-house, with the rest outsourcing
to third parties. Numerous remediation methodologies Rotary
Chromatography
are present in the market, but the dominant method
due to its relative efficiency is high-performance liquid
chromatography (HPLC). 0% 10% 20% 30% 40%

Source: Hemp Benchmarks®

In what state or U.S. territory are you located?

Tennessee Virgina
Pennsylvania Wisconsin
Oregon
North Carolina
4%
6%

3%
3%

Illinois
11%

Florida Other
5%
3%

3% %
Colorado 43
14%

California
5%
5.  Hemp Benchmarks® Source: Hemp Benchmarks®

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 21

 CBD & other
Cannabinoids
T WO YE ARS AF TER THE FEDER AL Annual CBD Market Spending Estimates
legalization of hemp via the 2018 Farm Bill,
CBD has reached nearly universal recognition Annual spending on CBD in the U.S. is expected to total an es-
by the American public. A surveyed 86% of timated $4.87 billion (mid-range) for 2020, and is projected to
Americans are familiar with CBD, with a self-re- grow at a 12.1% CAGR to reach $8.62 billion by 2025. Per-capita
ported 18% (including 23% among adults aged annual spending on CBD among U.S. consumers in 2020 is esti-
18-34, 21% of ages 35-54, and 14% of adults mated at $318.88, and the total cumulative spending represents
55 and older) having tried the substance.6 a potential $40 billion opportunity over six years.

From a business perspective, the U.S. CBD Though CBD derived from hemp is chemically identical to CBD
industry has been categorized by intense derived from high-THC cannabis, the latter remains illegal under
competition among many producers selling federal law. Because of the lessened legal risks associated with
near-commoditized products. The industry growing hemp versus high-THC cannabis, and the lower cost of
has been plagued by oversupply and rapidly producing hemp at scale, hemp has become the dominant source
falling prices paid to producers. of supply for the burgeoning U.S. CBD industry.

12.1%
f U.S. Retail CBD Spending
(2020-2025)

��
CAGR 2020-2025

$8B
$8B $7.2B
$6.5B $6.3B
$5.9B $5.7B
$6B $5.4B
$4.9B $5.1B
$4.7B
$4.2B
$3.8B
$4B $4.6B
$4.1B
$3.7B
$3.4B
$3.1B
$2B $2.8B

$0B
2020 2021 2022 2023 2024 2025

€ Low € Medium € High Source: New Frontier Data

6.  New Frontier Data, U.S. CBD Consumer

Report Series: Archetypes & Preferences

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 22

CBD & OTHER CANNABINOIDS

However, the failure among federal regulato- f Quarterly Revenue of the Four Largest
ry agencies to provide transparent guidelines Publicly Traded CBD Companies
for the legal manufacture and distribution
of CBD-infused products maintains an air $25
$25M
of uncertainty over the future of the in- $21.7
dustry, with significant implications for the $20.7
$20M
short-term outlook.
$16.9
$14.9
$15M
Despite industry optimism that a friendly reg-
ulatory environment will eventually arise, the $11
recent refusal by the U.S. to support a World $10M
$7.9
Health Organization proposal to remove CBD
$5.4
extracts with less than 0.2% THC from inter- $5M
national drug control is indication that CBD
will face significant legal and regulatory chal- $0M
lenges throughout the foreseeable future. Medical CV Sciences Charlottes Web Elixinol
Marijuana Inc.

The rapid proliferation of CBD manufactur-

€ Q2 2019 € Q2 2020
ing capacity from 2018 to 2020, combined
Source: Yahoo! Finance
with the drastic drop in biomass prices over the
same period, has created an environment of
intense competition among CBD vendors who prominent processors were acquired in distress sales, including
consequently have seen significant declines in Mile High Labs acquired by John Paul DeJoria, founder of Paul
revenue. The four largest publicly traded CBD Mitchell. And Ecogen, acquired by Kadenwood Brands).
companies saw an average decline in revenue
of 44% from the second quarter of 2019 to The string of hemp-related bankruptcies mirrors difficulties in
the second quarter of 2020. the marijuana industry, where several of the largest Canadian
licensed producers (LPs) including Aurora and Tilray laid off
Falling prices and increased competition sizable percentages of their workforces in the face of lackluster
have also affected private enterprises. These financial performances, marking a more challenging climate for
factors, combined with an oversupply of pro- operations and investment throughout the cannabis industry.
cessing capacity resulted in the bankruptcy of
a number of prominent processors, includ- With the level of competitiveness in the processing market reach-
ing: GenCanna, acquired by its lender MGG, ing new heights, existing processors should focus on maximizing
Atolo Holdings, acquired by Entoura (AVF the efficiency of their manufacturing processes, minimizing vari-
CBD LLC); and Elemental Processing, which able costs, and developing strategic partnerships to establish a
was liquidated. In addition, another group of defensible position in the market.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 23

CBD & OTHER CANNABINOIDS

f Top 10 Hemp Products That Consumers

Report They Are Likely to Purchase
CBD in the Next Year

Consumer Clothing 17%

Trends Hair products 16%

Skin care/soaps 15%

A self-reported 13% of consumers purchased a hemp
Bags/backpacks/accessories 13%
product during the last two years. The leading hemp
products among consumers tend to fall into either Shoes 13%
the textile/clothing or cosmetic/body care categories,
Paper products 12%
which both are top-of-mind for consumers for histor-
ical and potential future purchases, perhaps owing to Sheets/blankets/curtains/towels 10%
their status as established product categories.
Hemp-based protein bars/powder
or other protein supplement 7%

Hemp seed oil 7%

Cosmetics 7%

f Top 10 Hemp Products Consumers Report f Top 10 Hemp Products for Which
Purchasing in the Previous Two Years Consumers Report They Would Pay
10% More for a Hemp Alternative

Skin care/soaps 37% Bags/backpacks/accessories 19%

Bags/backpacks/accessories 22% Clothing 19%

Clothing 20% Hair products 17%

Hair products 20% Sheets/blankets/curtains/towels 16%

Hemp seed oil 16% Skin care/soaps 16%

Hemp seeds 14% Paper products 15%

Hemp-based protein bars/powder
or other protein supplement 12% Shoes 14%
Hemp-based protein bars/powder
Shoes 11% or other protein supplement 11%

Cosmetics 11% Hemp seed oil 11%

Jewelry 10% Cosmetics 8%

Source: New Frontier Data 2020 U.S. CBD Survey

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 24

CBD & OTHER CANNABINOIDS

f Do You Have Friends or CBD IS MAINSTREAM

Family that Consume CBD?
New Frontier Data’s latest consumer research shows deepening

���
U.S. interest in and engagement with CBD.
Yes,
many 6% Nearly 9 in 10 (86%) Americans have heard of CBD, 73% of
whom have reportedly had a conversation about it. Those con-

���
versations tend to view CBD in a positive light, and over 3 in 5

Yes,
21%
51%
of Americans
(61%) of Americans believe CBD to have valid medical uses.
a few
have friends
SOCIAL INFLUENCES DRIVE
or family that

���
consume CBD C B D AT T I T U D E S A N D B E H AV I O R S

Yes, one CBD consumers collectively play a major role in shaping their
or two 23% networks’ perceptions and uses of the cannabinoid. More than
half (56%) of CBD consumers have recommended CBD to

���
someone they know, and 54% take friend or family recommen-
None that dations into account when deciding which CBD products to buy.
I know of 49% Nearly 2 in 5 consumers (39%) have ever sourced CBD from a
friend or family member, and over one-quarter (27%) say that a
personal connection remains their primary source of CBD.

f Have Had a Conversation f Friends & Family Are Leading CBD

About CBD Sources Among Consumers

96%

73% 12% 10%

67%

10%

7%

27% 28% 19% 6%

CBD All Personal Online

Smoke
Drugstore/Pharmacy
Nonconsumers Connection Shop
Consumers Respondents

€ Primary Source of CBD € Ever Sourced CBD From

All charts, source: New Frontier Data, U.S. CBD Consumer

Report Series: Archetypes & Preferences

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 25

 ���
CBD & OTHER CANNABINOIDS

M U LT I P L E M O T I V E S
DRIVE CBD USE f Primary Reason for Using CBD

Nearly 1 in 5 Americans (18%) have consumed

CBD. Part of the cannabinoid’s widespread Medical

adoption is the broad range of reasons for

people to use the cannabinoid. The primary in-
9%
General
tentions for CBD use are pain management Pain
Wellness
(41%), unwinding (33%, ranging among those 18% 41%
seeking relaxation, to relieve stress, or reduce
anxiety), promoting general wellness (18%, in-
cluding to aid sleep or boost one’s mood), and
33%
medical reasons (9%, among those treating a
condition, managing side effects, or mitigating Unwinding
costs of other medicines). Overall, most CBD
consumers report using it for multiple reasons.

CBD USE AND INTEREST f Ever Used Form

VA R Y AC R O S S AG E S

18-34 35-54 55+

While younger Americans are more likely than
older Americans to have tried CBD (23% of Oil/Tincture 64% 61% 64%
18–34-year-olds, and 21% of 35–54-year-
olds, versus 14% of those aged 55 and older) Topicals 35% 38% 35%
and are generally more interested in learning
about CBD, older consumers in fact general-
Food 40% 31% 23%
ly use CBD more frequently than do younger
consumers. That suggests that while they may
be slower to adopt the products, older con- Vape Pen 28% 14% 5%

sumers are more likely to become regimented

in their use. Pills/Capsules 16% 16% 13%

Younger consumers have tried a much broad- Flower 16% 14% 8%

er range of CBD product types (e.g., vape
pens, infused foods and drinks), whereas older
Drinks 16% 13% 2%
cohorts are more likely to primarily use CBD
oils/tinctures.

Among those who have ever used CBD.

Source: New Frontier Data, U.S. CBD Consumer Report Series: Archetypes & Preferences, 2020

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 26

CBD & OTHER CANNABINOIDS

f CBD Use Frequency by Age

27%
26% 26%
23%
22% 22%
21%
20%
19%
18%
17% 17%
15%
14%
12%

Ages 18-34 Ages 35-54 Ages 55+

€ At least once a day € Once to a few € Once to a couple € A few times € Only tried CBD
times per week times per month per year or less once or twice

HABITS ARE STILL CHANGING f Likelihood of Purchasing CBD in the Next 6 Months

The American CBD market is young and

evolving, and consumers’ routines and pref- 72%

erences remain unsettled. More than 4 in 10

(41%) consumers surveyed first used CBD in 54%
the previous six months preceding the survey, 47%

and about 7 in 10 (68%) began consuming it

within less than the previous year. Three-quar- 26%
29%
24%
ters (75%) of CBD purchasers regularly use 21%
14% 14%
unfamiliar brands, including 25% of consumers
who rarely know what brands they are purchas-
ing. While behaviors are changing, it seems
Current CBD Current
All Respondents
evident that Americans will continue to pur- Purchasers Nonpurchasers
chase CBD in the near future; 3 in 10 (29%)
of those surveyed expected to buy CBD in
€ Likely € Neither Likely € Unlikely
the following six months, including both 72% nor Unlikely
of previous CBD purchasers, but also 21% of Among those who have ever used CBD.
those who had not previously bought CBD. Source: New Frontier Data, U.S. CBD Consumer Report
Series: Archetypes & Preferences, 2020

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 27

Snapshot:
Minor Cannabinoids

With overproduction and an associated drop in prices for CBD,

FOR NOW, CONSUMER
some producers have turned to cannabinol (CBN) – which
AWARENESS about has sedative properties and may improve immune health – or
minor cannabinoids is low, cannabigerol (CBG) – which shows strong potential in fight-
but (regulations permitting) ing inflammation, pain, and nausea. Among other available
the market will grow rapidly, minor cannabinoids are cannabichromene (CBC), cannabidi-
varin (CBDV), cannabichrovarin (CBCV), and cannabigerovarin
building on the framework
(CBGV) in hemp, along with tetrahydrocannabivarin (THCV)
that consumers have learned and Delta-8 THC on the high-THC side of the market.
about CBD. THC and CBD
will likely remain the most Many industry operators find minor cannabinoids particularly
well-known and widely used compelling for representing an untapped medical arsenal with
early research suggesting their having as much or more poten-
cannabinoids, but other minor
tial in nutrition and wellness as THC or CBD. Recent scientific
cannabinoids are already research has indicated that both cannabinoids and terpenes may
reaching informed consumers. have use as antiviral drugs.

f Delta-8 THC Percent Price Change

from August 2020

0%
0% -1%
-10%

-20% -14%

-30%
-31%
-33%
-40% -45%

-50%

Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021

Source: Hemp Benchmarks®

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 28

SNAPSHOT: MINOR CANNABINOIDS

CBC, reportedly nonpsychoactive, may play roles in

neurogenesis (brain function), and seems to have many
of the same properties as CBD in regard to reducing or
controlling inflammation, or potentially battling some Given the size of the
forms of cancer. Though CBDV (discovered in 1969) was market opportunity, there
among the first identified cannabinoids, its commer-
cialization has been slow. CBDV has been anecdotally
should be room in the
linked to alleviating many conditions, including epilepsy market for synthetic and
and muscular dystrophy. THCV has been nicknamed
naturally derived
the "diet cannabinoid". Beyond potentially curbing one’s
appetite (with important applications in the weight-loss cannabinoids to coexist.
market), THCV has been linked with promise in treating
both Alzheimer’s and Parkinson’s diseases.

With increased production, consumer awareness

should broaden, and demand subsequently increase. Many minor cannabinoids, due to their low concen-
Currently, any cannabinoids other than Delta-9 THC trations in cannabis plants, will likely be synthesized (e.g.,
that are derived from hemp are legally considered from yeast or CBD), rather than derived from plants. Dr.
hemp, and therefore permitted under federal law. That Raphael Mechoulam – who discovered the endocanna-
legal definition has led to the rise of Delta-8 THC—a binoid system – recently announced the development
cannabinoid with similar—if slightly weaker—effects to of CBDA methyl ester: a stable, synthetic cannabinoid
the better-known Delta-9 THC. with reportedly higher efficacy than plant-derived can-
nabinoids. The ester may compete with pharmaceutical
Delta-8 THC has gained popularity as a legal means treatments, since (like other synthetics) it does not
for obtaining a high in markets with no or limited come with the attendant legal challenges of plant-de-
legal access to cannabis with Delta-9 THC. Although rived cannabinoids.
Delta-8 THC is technically not a controlled substance
and was initially considered legal under the 2018 Farm Given the size of the market opportunity, there should
Bill, legal posturing has emerged in the wake of the be room in the market for synthetic and naturally de-
DEA’s interim final rule, with the agency arguing rived cannabinoids to coexist. Their opportunities will
that "all synthetically derived tetrahydrocannabinols hinge on the intended application, with marketing
remain schedule I controlled substances", including focused on a product’s provenance (e.g., whether or-
Delta-8 THC. At the time of publishing, legal chal- ganic or lab-designed, etc.).
lenges to Delta-8 THC are ongoing.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 29

Fiber
Opportunity
Hemp Fiber’s that strength makes hemp fiber particularly well suited for man-
Competitive Advantages ufacturing composite materials (such as bioplastics and textiles)
which reward lightweight durability.
Hemp is among the most versatile fiber crops
in the world, boasting more than 25,000 One of hemp fiber's most important competitive advantages
potential uses. Its versatility makes hemp an is its low environmental impact. Each acre of hemp sequesters
efficient and potentially waste-free material, roughly 11 tons of CO2 from the atmosphere, opening the door
as every component of the plant – bast fibers, to a range of carbon-neutral and carbon-negative products. That
hurd, etc. – can be used to manufacture a makes hemp fiber a promising replacement material for com-
highly diversified variety of products. panies looking to reduce their carbon footprints, and makes it
a potentially strong candidate crop within the emerging carbon
Hemp fiber is recognized as the strongest of credits market.
all natural, plant-based fibers. For centuries,
its strength made hemp important in the pro- Hemp has low water requirements compared to other natural
duction of textiles, papers, and oils. Today, fiber crops, and its fast growth cycle (e.g., ~100 days from seed
to harvest, compared to 150-180 days for cotton) effectively
crowds out weeds and pests early, leading to lower pesticide re-
quirements. Furthermore, hemp’s superior yields and capacity for
phytoremediation (i.e., nutrative soil revitalization) versus other
New Frontier Data fiber crops make it attractive to farmers as a rotation crop.

predicts the Hemp fiber’s strength, sustainability, and versatility make it

wholesale value of uniquely well suited to take market share from other natural
and synthetic fibers as companies seek to keep up with rising
hemp fiber to demand for sustainable products without sacrificing quality and/
expand to $77.7 or functionality.

million by 2025. New Frontier Data predicts the wholesale value of U.S. processed
hemp fiber to reach $47.1 million dollars in 2020, and expand to
$77.7 million by 2025, a CAGR of 10.53%.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 30

FIBER

Growth Potential z In February 2020, paper and pulp giant Georgia

Pacific signed a global licensing agreement with
E A R LY I N V E S TM E N T British Columbia-based Bast Fibre Technologies
FROM INDUSTRY GIANTS to develop, market, and process sanitary wipes and
other personal care products made from hemp.
Ultimately, manufacturers are the gatekeepers of the
industry. The willingness of large manufacturers to in- Such high-profile adopters of hemp fiber are laying the
corporate hemp to their product lines is essential for groundwork for more widespread market adoption by
the long-term growth of the hemp fiber market. Early fine-tuning production methods, and developing IP
reports seem promising, especially as the environmen- suites which can be utilized by future companies adopt-
tal benefits of hemp as a raw material – and its potential ing hemp in their product lines.
to create American manufacturing jobs – have earned
considerable interest. Most notably: Investment in hemp-based innovation by industry-
leading companies also sends an important signal to the
z Multiple auto manufacturers have been utilizing market about the perceived potential for hemp, and will
hemp-based composites in their vehicles. Most visibly, likely drive more companies to explore the plant’s appli-
BMW has begun implementing hemp composites in cations, while also elevating general public awareness of
their i3 electric car, citing the benefits of reduced its emergence in the consumer economy.
weight and a less impactful carbon footprint relative
to conventional plastics used in vehicle interiors.7 E U R O P E A S A N E S TA B L I S H E D M O D E L

z In September 2019, Levi Strauss & Co. launched The European hemp fiber industry has been growing
a collaboration with lifestyle brand Outerknown, uninterrupted for more than 20 years, and is much fur-
unveiling their development of a proprietary ther developed than its North American counterparts.
"cottonization" process for softening hemp textiles. In the mid-1990s hemp fiber – the popularity of which
The company publicized its intentions "to take had been waning in Europe– underwent a revitalization.
[hemp] to the core of the line, to blend it into the Large, vertically integrated processors such as Hemp-
line, to make this a part of the Levi’s portfolio."8 Flax and DunAgro emerged, finding various niches for
hemp fiber in industries such as automotive compo-
z Environmental trendsetter Patagonia – which has nents, insulation, and industrial textiles.
offered legally sourced hemp fiber in its product
lines since 19979 – likewise advertised intentions to Investment in research & development and the mod-
use more hemp, pledging: "we hope soon to have ernization of farming methods completely changed the
domestic supplies of hemp to draw upon...[t]here’s dynamics within Europe’s hemp fiber market. What had
potential here to create new American jobs." once been characterized by small, independent farm-
ers selling their crops directly to specialty papermaking
operations became dominated by a few large, vertically
7.  Nationalhempassociation.org/bmws-new-
electric-car-sheds-weight-with-hemp integrated conglomerates developing broad product lines
8.  Intelligentliving.co/levis-hemp-feel-like-cotton as they exerted control over large parts of the supply
9.  Patagonia.com/stories/hemp-is-back/story-72340

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 31

FIBER

chain. While Europe is not perfectly analo- f Which fiber applications have the
most 5-year growth potential?
gous to North America, the development and
% of Respondents
evolution of hemp fiber product lines on the
continent can serve as a useful guide.
Construction Materials
In Europe, the lowest-hanging fruit – applica-
tions requiring the least amount of processing Automotive

and R&D – took earliest hold with prod-

Bioplastics
ucts like paper and pulp, animal bedding,
and mulch still representing a majority of
Non-woven Textiles
today’s industry revenue. While those mar-
kets offered the growing fiber industry steady Consumer Textiles
revenue streams, innovations in processing
technology and R&D eventually allowed for Paper & Pulp
higher-tech, higher-margin products such as
bio composites and insulation to gain a foot- Other
hold in their respective markets.
0% 5% 10% 15% 20%
W H AT P R O D U C T S
WILL COME FIRST ?
Source: New Frontier Data, 2020

As seen in Europe, it is likely that products

requiring the least amount of processing and construction materials – and HempWood – manufacturer of a
calibration will be the first to achieve market hemp-based wood alternative – have taken early leads in popu-
viability in the U.S. and Canada. High-vol- larizing the use of hemp in construction but face uphill regulatory
ume, low-margin products include mulch, battles against notoriously cautious international standards or-
animal bedding, and animal litter, along with ganizations, and in expanding municipal building codes.
pulp and paper. As the industry matures,
ever more lucrative fiber applications will Hemp-based automotive components offer auto manufactur-
become viable. A New Frontier Data poll of ers a means to simultaneously reduce their vehicles' weights
fiber processors found them expecting the and their carbon footprints. While the stability of the European
best 5-year growth potential for construc- hemp market has enabled automakers to integrate its materi-
tion materials, automotive parts, bioplastics, als into their manufacturing processes, however, the immaturity
and non-woven textiles, respectively. of North American markets has slowed progress toward sim-
ilar integration among U.S. automakers. As the U.S. market
Construction materials, particularly, have evolves, knowledge transfer within companies having European
attracted significant attention from hemp and North American operations will help to streamline deploy-
stakeholders. Companies such as Hempitecture ment of hemp in North American-made vehicles as the materials
– which designs and builds homes using hemp become widely available.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 32

FIBER

Government Climate
Action Initiatives Challenges to Growth

Efforts by governments worldwide to combat Despite its significant long-term market potential, the North
climate change represent a major shifting American hemp fiber market is yet in its infancy. From cultiva-
within the global economy. Hemp’s reputation tion, to processing, to transportation, an underdeveloped supply
as a versatile yet carbon-friendly resource chain restricts growth at every level.
puts it in a particularly advantageous position
to benefit from the push to reduce emissions. Primary barriers to market development include:

In Europe, the European Industrial Hemp PRICE COMPE TITIVENESS

Association (EIHA) published a "Hemp Man-
ifesto for a Green Recovery", which called on Hemp fiber currently used in North American manufacturing
EU governments to include hemp in the Eu- comes almost exclusively from Europe and China, with the U.S.
ropean Green Deal, citing the "huge potential importing roughly 53 million pounds since 2000. Already at a
of the European hemp sector in speeding up disadvantage due to the market’s relatively small scale, costs of
the transition towards a zero-emission, bio- shipping low-density hemp fiber and hurd across the Atlantic has
based, and sustainable economy" and the further eroded hemp’s attractiveness as a raw material.
plant’s ability to "deliver long-term sustainable
growth and create highly skilled jobs".
f U.S. Hemp Fiber Imports (lbs.)
In the U.S., the Biden administration has
announced a $1.7 trillion plan to achieve
100% clean energy and net-zero emissions 24.1M

by 2050. The proposal includes major in- 21.2M

vestment into infrastructure and retrofitting 20M
buildings to meet emissions standards. As
15.4M 15.7M
efforts to reduce emissions gain steam, hemp 14.4M
15M
fiber could play a meaningful role toward
decarbonizing the economy. 10.8M
10M

5M

0M
2015 2016 2017 2018 2019 2020
(Projected)

Source: U.S. Census Bureau

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 33

FIBER

f 2020 U.S. Fiber Production Volume Beale, CEO of Alabama-based fiber pro-
(millions lbs.)
cessor Bastcore: "[t]here seems to be an
9,092M ever-growing awareness that there is a huge
[primary] processing bottleneck. When the
8,000M Farm Bill was passed, all of the capital flowed
into the CBD market. It’s going to take a mas-
sive capital investment to ultimately bring the
6,000M supply chain up to speed. We're looking at
years, not months."

S U P P LY & S TA N DA R D I Z AT I O N
4,000M

2,799M Manufacturers looking to adopt hemp fiber

in their existing product lines will require a
2,000M
1,312M high degree of standardization in fiber length
and quality. Discrepancies for both can be
27.8M mechanical (arising from intricacies in the
0M
decortication process) or genetic (given the
Nylon Polyester Cotton Hemp
several distinct fiber cultivars from China,
Source: New Frontier Data Europe, and Canada all produced at scale).
As the new industry grows and develops in-
ternal standards and best practices, it should
Hemp fiber competes directly with other natural fibers – e.g., look to the accomplished European market
cotton, flax, and jute – along with synthetic fibers like rayon and for guidance about how to achieve unified
nylon. By a significant margin, processed hemp fiber currently is fiber standards.
more expensive than those materials, slowing adoption by main-
stream manufacturers. Fortunately for hemp, however, much of C A P I TA L I N V E S TM E N T
the price discrepancy is due both to the small scale of hemp fiber
production and a dearth of genetic research, which can be relieved Access to investment and operating capital will
by scaling domestic production and investing in plant research and be critical to scaling the hemp fiber industry.
genetics development. Until there is a consistent domestic supply The prospect of a global economic downturn
of quality hemp fiber in North America, however, manufacturers threatens to seriously delay development of
will see little incentive to utilize it for their products. the capital-starved supply chain. Further-
more, continued reluctance among investors
L AC K O F P R O C E S S I N G FAC I L I T I E S and some financial institutions toward bank-
ing hemp businesses due to the association
Decortication – the separation of raw hemp stalks into their with cannabis (despite hemp now being legal),
component parts – is among the most underdeveloped and is slowing capital ingress into the market, and
critical parts of the supply chain. According to B. Coleman raising the cost of capital for borrowers.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 34

FIBER

SCALE
Industry Overview
Simply put, some fiber and hurd applications
will not be sufficiently commercially viable Supply Chain
for economy-spanning deployment until the
supply chain has reached a critical volume of C U LT I VAT I O N & H A R V E S T I N G
hemp production. Scale will be necessary to
achieve the price competitiveness and sta- As a fiber crop, hemp still lags significantly in popularity com-
bility required by industrial supply chains. pared to other natural fibers. In 2019 the U.S. grew 13.7 million
Efficiencies to scale are an important compo- acres of cotton and 355,000 acres of flax, compared to the less
nent to fiber processors’ business models, and than 4,000 acres of hemp dedicated to fiber production.
taking advantage of them will be crucial for
processors to achieve profitability. While total licensed hemp acreage in 2020 for all applications (e.g.,
seed, CBD, fiber) in the U.S. was projected to decrease slight-
The potential of hemp as a natural fiber re- ly (9%) to 465,000 from 511,422 acres licensed in 2019, the
mains significant, though the economics of proportion of hemp being grown for fiber is yet expected to in-
fiber processing makes unlikely that the crease significantly.10 Still, the increase in fiber acreage is modest
industry will emerge as quickly as the CBD
industry. For the hemp fiber supply chain
f U.S. Acreage
to reach the scale and quality necessary for
major manufacturing applications, the indus-
try will need to secure large amounts of capital Hemp Fiber 3.95
(est.) thousand acres
for infrastructure, develop relationships with
established manufacturers to utilize hemp 355
Flax thousand
in their products, and find ways to increase acres
the price competitiveness of hemp relative to
other natural or synthetic fibers.

13,700
Cotton thousand
acres

Source: New Frontier Data

10.  Hempindustrydaily.com/2020-outlook-licensed-u-s-hemp-
acreage-falls-9-from-2019-but-grower-numbers-increase-27

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 35

FIBER

compared to the quintupling of licensed CBD Prices paid to farmers are volatile, ranging from $180 to $360 per
acreage that occurred from 2018-2019. Unlike ton of fiber, depending on quality. Yields also vary widely, ranging
the CBD market, fiber farmers will find a lim- from 2.5-5.0 tons per acre, depending on growing methodology
ited number of processors concentrated in a and cultivar type. Fiber, therefore, offers significantly less profit
few regional hotspots, limiting their ability to potential to farmers than does CBD, but, due to the volume
secure a buyer for their stalks. required by processors, is theoretically also more dependable to
farmers near processing centers, and less likely to go unsold. De-
Given the cost of transportation, farmers spite the challenges posed by uncertain prices and a lack of quality
located close to a decortication facility are standards, cultivation represents the easiest part of the supply
best positioned to secure a buyer for their chain to scale, as barriers to entry remain quite low.
crop. Considering the size of the U.S., a
signif icant number of decortication fa- P R I M A R Y P R O C E S S I N G (D E C O R T I C AT I O N )
cilities will be needed to facilitate f iber
processing nationwide. North America to date has seen limited processing capacity due
to a lack of facilities capable of decorticating hemp fiber. The
shortage had long been attributed to a chicken-or-egg dynam-
f 2020 U.S. Fiber Processing Capacity ic – it made no sense to build a processing facility with so little
(tons) hemp being grown, and conversely there was no market to grow
hemp without a factory to process it. Thanks to recent invest-
ment in the space spurred by the rapid rise in popularity of CBD,
and subsequent expansion of hemp acreage, however, cultivators
and processors can mutually succeed.

27.5k
As of May 2020, there were seven operational decortication fa-
cilities in Canada, half of them concentrated in Alberta, where
most Canadian hemp is grown. In the U.S. there were at least
three operational decortication facilities spread out over several
states, with more facilities under construction for operation by
2021. Total North American capacity for 2020 was estimated at
31,000 tons of fiber and 76,000 tons of hurd.

Primary processing facilities for hemp fiber can cost between $3

million to $25 million USD to construct, and – due to the costs
10k of transporting raw hemp stalks – are geographically limited to
3.9k 66k
processing hemp grown within about a 75-mile radius.
U.S. Canada
Due to the large capital investment required, the volume-based
€ Hurd € Fiber
nature of commodity processing, and the geographical limita-
Source: New Frontier Data tions to raw material sourcing, a significant first-mover advantage

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 36

FIBER

exists for primary fiber processors. That other materials. According to Dan Madlung, founder & CEO of
market dynamic – geographic limitations in leading hemp materials company BioComposites Group, "The only
particular – means that the early presence fiber we can buy in North America is inferior quality, not like Europe,
of primary processors in an area is likely to which has different grades of fiber for different product applications."
attract secondary processors, ultimately
concentrating hemp fiber production into re- For manufacturers to seriously consider utilizing hemp in their
gional hubs. Such regions will be among the products, the fiber must achieve a level of consistency char-
first to enjoy returns to scale, and thus have acteristic for a commodity. That will require a high degree of
competitive advantages in attracting invest- standardization, and industry cooperation in upstream supply
ment and opening new markets. chains. If those initial obstacles in price, quality, and consistency
can be overcome, however, then hemp fiber will find itself well
Because of the considerable barriers to entry positioned for widespread use in manufacturing.
(and its importance to the overall fiber supply
chain), primary processing remains the princi- G E N E T I C S & S E E D S U P P LY
pal bottleneck slowing industry growth.
The aforementioned lack of consistency and quality in fiber
M A N U FAC T U R I N G crops is, in part, attributable to the lack of stable genetics avail-
able to farmers. Most of the fiber cultivars currently being planted
Hemp fiber is among the strongest of natural in North America have been bred specifically for conditions in
fibers, and its strength and sustainable nature Europe or China, and are now in the process of being acclimatized
make it particularly well suited for certain man- to local growing conditions. The acclimatization process can take
ufacturing purposes. However, the North upwards of a decade, but is vital in creating dependable regional
American market is limited by inconsistent genetics, given the wide variation in climactic and soil conditions
quality and its lack of unified industry stan- across the U.S. Dependable genetics are also key to limiting THC
dards. North American companies currently content while achieving consistency in quality and high yields.
rely on expensive imports, further weakening
the competitiveness of hemp fiber relative to There is ample room for innovation in hemp genetics. During the
century when all forms of cannabis were illegal in the U.S., there
was little serious academic research into hemp genetics in the
nation, nor was it included in the major crop research programs
which have driven serious advancements in the genetics of tradi-
Primary processing tional cash crops. Since 1990, cotton yields have increased by an
annual average of 1.57%, soybean yields by 1.67%, and corn yields
remains the principle by 1.99%.11 Hemp yields, productivity, and hardiness of cultivars
bottleneck slowing are expected to increase dramatically in the coming decade as
similar innovations in genetics, fertilizers, and precision agricul-
industry growth. ture techniques are applied to hemp.

11.  NASS.usda.gov/Charts_and_Maps/Field_Crops

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FIBER

Investment & invest the funds into collective marketing and industry research.
Market Structure Checkoff programs commonly use collectivity among agricultural
products to compensate for the lack of incentives which individu-
MARKET STRUCTURE al producers have to invest in marketing and research.

As the industry scales and commoditization of

hemp continues, sellers are bound to increase Trends to Look Out For
faster than the number of buyers, as barriers
to entry for processors are much higher than I N D U S T R Y C O L L A B O R AT I O N
for farmers. Therefore, industry stakeholders
in the long run should expect the market to As the hemp fiber industry scales up and begins to compete with
more closely resemble other major agricul- traditional fiber crops, a high degree of intra-industry collaboration
tural markets, with many farmers supplying will be necessary to close the gap. The 81-year-long prohibition
a limited number of processors who supply a of hemp has created many opportunities for innovation, but also
large and diversified retail market. inhibited the creation and refinement of industry standards and
specifications so vital to manufacturing. Furthermore, various
I M PAC T O F C OV I D -19 regulatory and public education battles needing to be fought will
require consensus from various industry stakeholders. Failure to
Though capital markets were tight in 2020 achieve such consensus could result in each some delayed adoption
in response to the COVID-19 pandemic, from manufacturers, lukewarm public opinion, and a disagreeable
subsequent changes in the broader canna- regulatory environment. In short, a unified and collaborative fiber
bis legalization landscape, coupled with the industry will be better equipped to accelerate and manage growth
opportunity to strongly align hemp with the than would be a shortsightedly divided industry.
Biden administration’s climate related prior-
ities, suggest that both domestic and global BAL ANCING INTERESTS
investment in industrial hemp solutions are
likely to rise significantly in the next two years. Much of the reason for the quintupling of licensed hemp acre-
age throughout 2018-2019 was due to the outsized anticipation
C H E C KO F F P R O G R A M S by farmers of exceptionally large profits. Such windfalls, though
realized by some, have largely failed to materialize; consequently,
In addition to private investment entering estimates for unsold biomass from the 2019 season range up to
the space, public investment in hemp fiber 53% in some states.12
has likewise been steadily increasing. In June
2020, Montana announced plans for the first Compared to CBD, profit margins for hemp fiber are more
hemp checkoff program in the U.S., to begin modest (if greater than for traditional cash crops like corn, soy, or
in the fall of 2021. The program will levy a 1% cotton). Given widespread disruptions caused by the ongoing trade
fee on growers’ and processors’ profits, and war with China, and likely sustained economic disruptions caused

12.  Hempindustrydaily.com/chart-michigan-to-increase-2020-
hemp-production-but-53-of-2019-crop-is-still-unsold

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FIBER

by the COVID-19 pandemic, the hemp sector AC H I E V I N G E F F I C I E N C Y

may be seen as an increasingly attractive al- THROUGH TECHNOLOGY

ternative to produce greater income in a newly

emerging, domestically focused market with The modernization and standardization of cultivation and process-
high potential for future growth. ing methodologies will be critical to achieving the efficiency and
price competitiveness necessary for hemp fiber to compete with
other fibers.

Inefficient, labor-intensive processes such as retting will need to

To date, public be reconsidered, improved, and automated wherever possible.

Furthermore, the success of genetics research and precision ag-
education about riculture techniques elsewhere in the agricultural industry cannot
hemp fiber products be ignored, and investment must be made in the applications of
modern crop science for hemp.
has been minimal.
E D U C AT I O N A N D C O N S U M E R E N G AG E M E N T

The comparatively smaller environmental footprint of hemp rel-

ative to other natural and synthetic fibers creates an opportunity
AC H I E V I N G E F F I C I E N C I E S to leverage hemp as a hyper-sustainable crop with appeal to in-
OF SCALE creasingly environmentally conscious consumers. To date, public
education about hemp fiber products has been minimal. How-
When produced at scale, the versatility of ever long that hemp remains a premium-priced natural fiber,
hemp fiber stands to make it an exceedingly manufacturers must be persuaded about significant potential
valuable raw material relative to other nat- consumer demand for hemp fiber worth justifying its inclusion
ural and synthetic fibers. Scaling the fiber to their product lines. Therefore, collective marketing efforts
supply chain to hundreds of thousands – if – Montana’s hemp checkoff program, as example – will be im-
not millions – of acres will require widespread portant to sustaining the growth trajectory of this industry.
support with adoption from the farming
community, large capital investments from
processors, and mass public education, yet
prove necessary for the market viability of
hemp fiber products.

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FIBER

What to Expect in 2021

FIBER PRODUCTS WILL

D E V E L O P I N WAV E S I M PAC T O F C A N A D I A N L P S

The North American hemp fiber market Canadian cannabis conglomerates which have dominated high-
is likely to develop piecemeal as the ca- er-THC markets in the past now find themselves overextended
pacity and quality of the fiber supply chain and ill-positioned to achieve similar results in the fiber market.
slowly ramps up. As such, different hemp While industry giants like Aurora Cannabis and Canopy Growth
fiber products will become viable at differ- lay off significant portions of their workforces and reorient them-
ent times as the amount and quality of fiber selves to achieve short-term profitability, they are unlikely to
being processed improve, and as processors be sufficiently agile to deploy the necessary resources and in-
become more efficient at producing various vestment to develop the supply chain for fiber. That presents a
grades of products. significant opportunity for outside financing from private equity,
venture capital firms, and angel investors.
The first wave will include products with the
lowest processing requirements – i.e., animal
bedding and absorbents. The second wave
will include products which require superior
scale or quality to produce – i.e., construc-
tion materials, fiberglass substitutes, and
nonwoven insulation. Finally, a fully matured
hemp fiber industry will include products with
highly specialized manufacturing processes
and large, continuously available amounts of
hemp fiber. Those will include cellulose, in-
dustrial and consumer textiles, automotive
components, and supercapacitors.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 40

Seed & Grain
16.5%
AF TER CANNABINOID PRODUCTION , f Projected U.S. Hemp Grain
hemp grain for human consumption is the Wholesale Market
most prominent use of hemp worldwide. An CAGR 2020-2025
estimated 5% of U.S. acreage is dedicated to
cultivating hemp for grain. "Grain hemp" in $57.6
this context refers to hempseeds destined for $140M
$43.3
human consumption. In contrast to the ex-
$120M $31.8
plosive CBD market, hemp grain in the U.S.
$100M $22.8
has been expanding slowly yet steadily since
$15.6
Canada first legalized hemp cultivation in $80M $10.1 $86.4
1998. Since that time, the U.S. has grown to $80.4
$60M $74.3
$68.3
become the largest consumer of hempseed $57.1
$62.6
$40M
products in the world. Despite this, more than
90% of hempseed products consumed in the $20M
U.S. in 2020 came from imported seed, 95% $0M
of which originated from Canada.
2020 2021 2022 2023 2024 2025

In the wake of the 2018 Farm Bill’s legalization € Imports € Domestic Source: New Frontier Data
of hemp production, U.S. farmers are begin-
ning to experiment with growing hemp seed
for grain and other products. Despite growing the scope of the market. However, a number of state agriculture
demand and widespread interest from farm- departments lump grain hemp production in with hemp grown
ers and health food companies alike, the U.S. for seeds to be used for planting, further complicating the data.
hemp grain industry faces significant chal-
lenges to its continued growth. As of October, data compiled by Hemp Benchmarks® from
state agriculture departments shows that there are about
At this time, any accounts of the size of the 13,500 acres licensed in the U.S. for production of hemp grain
domestic grain hemp sector are estimates. (or seed for planting) this year. About 10,000 of those acres
The U.S. Department of Agriculture (USDA) were reported by the Montana Department of Agriculture
does not yet have reliable data on acreage de- alone. States where grain hemp is known to be grown – includ-
voted to grain hemp production. Some state ing North Dakota, Colorado, Kentucky, and Washington State
agriculture departments compile hemp acre- – have not provided acreage figures, indicating that the total is
age by end use, providing a partial picture of likely a good bit higher.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 41

SEED & GRAIN

New Frontier Data projects retail sales for hemp food f Flax, Chia & Hemp Nutrition Comparison
products to reach $67.1 million in 2020, and grow to
$144.1 million by 2025, at a CAGR of 16.5%. Seed-
based products were the most common type of hemp Per 1 Tbsp. Flax Chia Hemp
food, accounting for 83% of total sales, while oil and
seedcake products made up 8% and 9% respectively. Total Fat 4.5g 4g 4.6g
The most prominent company in the hemp foods space is
Manitoba Harvest, which controlled 58% of the market Omega 3 2300mg 2400mg 1000mg
in 2020. Manitoba Harvest was acquired by Tilray in
2019 for $317 million USD. The fastest growing prod-
Omega 6 600mg 800mg 2500mg
uct category of hemp seed products is protein powder,
which reached $4.7 million in total sales in 2020.
Protein 2g 2.5g 3.5g

Market Analysis Fiber 3g 5g 0.3g

Calories 0.05 0.22 0.26

Use Cases

HUM AN CONSUMP TION

Hemp seed cultivated in the U.S. is grown almost en- f 2020 U.S. Hemp Seed Market Retail Sales
by Product Category
tirely for food applications. Hemp-based foods have

���
been gaining in popularity in the U.S. since Canada
first legalized hemp cultivation in 1998. Hemp seed is
8%
among the most nutritious sources of plant-based pro-
9%
tein found in nature and is valued for its Omega Fatty
Acid content. These attributes have earned hemp seed
a place along other so-called "super foods", renowned
for their nutritional density. Oil and seedcake leftover
from pressing the seeds are also nutrient-dense and
can be used in food products.

HEMP IN ANIM AL FEED

83%
Hemp seed’s nutritional value and protein content
make it an excellent candidate for use in the multi-bil- € Seed € Oil € Seedcake
lion-dollar animal feed market. However, despite its
Source: New Frontier Data, 2020

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 42

SEED & GRAIN

�
potential, current federal regulations make it de-facto f 2020 Est. Retail Sales of Hemp Seed Products
illegal to use hemp seed too feed animals destined for Millions $USD

�
human consumption.
$4.67
For hemp to be used in animal feed, it must be approved $5.03
by the FDA-Center for Veterinary Medicine, a long and
arduous process. Multiple industry stakeholders are at-
tempting to achieve this by sponsoring Clinical Feed
trials and nutritional analyses, but more research into the
safety and efficacy of hemp and its byproducts as animal
feed is necessary.

If the animal feed markets do open up to hemp, however,

it would make grain hemp a significantly more attractive
crop for farmers to grow because it would broaden the
total addressable market and make the risk of an unsold $57.43
crop much less likely.
€ Hemp Seeds € Hemp Oil € Seedcake Products

COSME TICS

f 2020 U.S. Hemp Seed Market

Hempseed oil is becoming a popular ingredient in cos-

���
by Market Share
metics products in the U.S., valued largely because of
its omega fatty acids content. Early adopters of hemp-
seed oil in cosmetics have seen a great deal of success.
Dr. Bronner’s soap company, one of the first American 2% 13%
companies to use hempseed oil in commercial products, 3%
exceeded $120 million in revenue in 2019 and employs 8%
more than 200 people. The increased use of hempseed
oil in cosmetics is projected to mirror the growing prom-
58%
inence of CBD in cosmetics. 17%
INDUSTRIAL PRODUCTS

There is significant potential for non-food applications

made from the hemp seed. Industrial oils, paints & var-
nishes, and lubricants are just a few of the products that € Manitoba Harvest € Bob's Red Mill
can be manufactured from the oil of the hemp seed. € Nutiva € Nature's Earthly Choice
While this area is in its nascent stage, steadily increas- € Navitas Organics € Other
ing grain acreage is creating an incentive to diversify
Source: New Frontier Data

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 43

SEED & GRAIN

by investing in product development. Pioneer Historical Growth Trends

companies like Zila Works – an Alberta-based
bioplastics firm which is developing an epoxy The U.S. consumes more hemp seed products than any other
resin made from hemp seed oil – are making country, importing more than 140 million lbs. in the first 10 months
steady advancements in research. of 2020. Growth in demand for hemp-based food products coin-
cides with several large-scale trends in consumer behavior:
Despite its potential, hempseed-based
industrial products are currently far from PL ANT BA SED PROTEIN
being price competitive. Petroleum-based
oils and traditional commodity crops like Global demand for plant-based proteins is projected to increase at
corn and soy are heavily subsidized and pro- a 5-year CAGR of 7.1%.13 Demand for meat-alternative brands has
duced at a scale many hundreds of times that skyrocketed over the past two years, a trend which has been high-
of hemp. Because of this, hempseed growers lighted by the exceedingly fast market adoption of products such
should focus on identifying niche, high-value as The Impossible Burger by major restaurant chains. This market
industrial opportunities. adoption has been fueled in large part by concerns over the quality
and environmental costs of industrial-scale meat production.

U.S. Hemp Seed Product Imports

(2016-2020)

80M 9.9M

10.5M 12.7M 5.4M

60M 8.6M
5.7M
6.1M 11.5M
14M
7.9M
40M

20M

51M 42.9M 46.4M 62.2M 54.8M

0M
2016 2017 2018 2019 2020
(through
Aug.)

€ Hemp Seed € Hemp Oil € Seedcake & Oilcake Source: U.S. Census Bureau

13.  Marketsandmarkets.com/Market-Reports/
plant-based-protein-market-14715651

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 44

 SEED & GRAIN

V E G A N I S M & V E G E TA R I A N I S M Industry Developments

5% of A merican adults (~10.5 million I M P O R T D O M E S T I C AT I O N

people) identify as vegan or vegetarian.14
The popularity of vegan and vegetarian diets Prior to the establishment of State hemp 'pilot programs' in
is growing substantially, with the global vegan 2014 (the first step towards the eventual legalization of domes-
food market projected to grow at a 5-year tic hemp), the U.S. market was 100% dependent on imports to
CAGR of 9.57%.15 Hemp's high protein con- serve demand. Total imports peaked at $78.1 million (USD) in
tent makes it a particularly attractive food to 2015, a 1,200% increase since 2005. Historically, these im-
these demographics. ports have mainly come from two countries - hemp textiles from
China, and hemp grain from Canada.
FA L L I N G S E E D C O S T S
Chinese imports of hemp textiles – which require an extremely
The dramatic increase in hemp acreage from labor-intensive production process – are unlikely to be replaced
2014-2020 has significantly decreased the by domestic fiber sources in the near term as it would be exceed-
price per pound of hemp seed. This price drop ingly difficult for domestic players to compete with China’s low
has broadened the customer base for hemp labor costs and lax environmental standards.
foods, which have traditionally been seen as
an expensive, niche market. Canada, on the other hand, has no such comparative advantage.
Canadian exports - which have exceeded $300 million USD
since 2010 - have long relied on the lack of competition caused
f U.S. Hemp Seed Imports by Region
(2017-2020)
by U.S. prohibition to dominate the grain market. In 2017, 92%
of total hemp imports– approximately $61 million USD – were
of seeds and food products, 95% of which came from Canada.

Since the 2018 Farm Bill, however, this artificial protectionism

has largely evaporated. The legalization of U.S. hemp cultivation
has provided American farmers an opportunity to supplant Ca-
nadian hemp grain imports with domestic stock.

The long process of import domestication has already begun,

but the economic fallout from the COVID-19 Pandemic
and the U.S.-Chinese trade war could very well accelerate
the process. COVID-19 has created massive uncertainty in
˜ North America ˜ Europe - 4% global export markets as well as in food prices. Several coun-
- 95% ˜ Asia - 1% tries – including Russia and India – have banned broad arrays
Source: U.S. Census Bureau

14.  News.gallup.com/poll/267074/percentage-americans-vegetarian
15.  Healthcareers.co/vegan-statistics/#Vegan_Trends_and_Growth

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 45

SEED & GRAIN

of agricultural imports in order to support U.S. demand for hemp grain is projected to increase at a CAGR
farmers and secure domestic food supplies. of 12% over the next five years,16 and interest in growing hemp
Uncertainty in these export markets could among farmers remains high. However, there are serious chal-
force U.S. farmers to focus more intensely on lenges to American farmers seeking to replace their Canadian
the domestic market and explore the poten- counterparts. According to Tom Dermody, former VP of Stra-
tial of new crops, including hemp. States such tegic Development for major seed supplier International Hemp
as North Dakota and Montana have already Solutions, the primary obstacle to import domestication is cur-
dedicated significant acreage to hemp grain. rently a lack of seed supply. Dermody says "the logistical challenge
These states are close in proximity and pos- presented at the moment for grain and fiber cannot be understated.
sess similar climates to the Canadian prairie, There simply is not enough domestic planting stock to service the
where most Canadian hemp is grown. kind of demand that we're seeing."

While a shortage in planting stock may well slow down gains in

the market share of U.S. farmers, it is unlikely to stop them from
dominating in the long run.

The logistical
challenge presented Challenges to Growth
at the moment for R E G U L AT O R Y H U R D L E S

grain and fiber

Hemp grain is at risk of being collateral damage in efforts to
cannot be regulate the CBD market. Despite the non-psychoactive nature
understated. There of their products, grain and fiber farmers are both face the
same strict regulatory requirements that exist for CBD farm-
simply is not enough ers. To many farmers, growing grain hemp is simply not worth the
domestic planting costly testing policies and legal liability of testing hot. Further-
more, hemp grain’s inability to be sold as animal feed narrows the
stock to service the market for farmers significantly.
kind of demand that
we're seeing. C O N S U M E R E D U C AT I O N

- TO M D ER M O DY A disproportionate amount of resources being dedicated to

Former VP of Strategic Development, consumer education in the hemp industry have been target-
International Hemp Solutions
ed specifically at CBD. Consequently, significant confusion
exists among customers as to the differences between CBD and

16.  Votehemp.com/press_releases/2016-annual-retail-
sales-hemp-products-estimated-688-million/

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 46

SEED & GRAIN

non-CBD hemp food. For example, many C L I M AT E C H A N G E

CBD product companies attempt to skirt
regulatory restrictions by using alternate titles Increasingly uncertain climate patterns and rising temperatures
for CBD. "Hemp oil" – which is often used in will affect agricultural productivity. Declining productivity will
lieu of CBD – is strikingly similar to "hemp- lead to a relative increase in the value of arable land, and com-
seed oil" – which refers to the non-CBD petition amongst crops will increase as market conditions will
cooking oil pressed from the seed. The result become progressively more volatile. Effects will vary among
is widespread consumer confusion about the different crops and regions; however, all production systems will
presence of CBD in food products. be affected by climate change. As current agricultural output
becomes harder to maintain, hemp will have to find a way to
P R O D U C T D E V E L O PM E N T justify its existence and growth.

More investment in product development will

be necessary for the hemp grain industry to
find outlets for its output as acreage contin-
ues to grow. Non-food, industrial uses have
a significant amount of growth potential, but
will require large amounts of research and
development to bring to market, and only
make economic sense once the industry has
already hit scale.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 47

 key
Takeaways
Cannabinoids
R E G U L AT O R Y A M B I G U I T Y I S DESPITE E VERY THING , DEM AND FOR
STR ANGLING GROW TH C ANNABINOIDS IS GROWING

By far, regulatory ambiguity represents the biggest ob- With more than 40 million consumers accounting for
stacle to growth in the CBD industry. The volatility and $3.83 billion USD in spending, demand for CBD is
uncertainty demonstrated far by regulatory agencies unlikely to dissipate. Rather, as fueled by consumers’ in-
makes long-term business planning impossible, and creasingly positive acceptance of cannabis and cannabis
severely affects capital investment, product develop- products, demand for CBD is projected to increase at a
ment, and distribution. Until clear policies are outlined 5-year CAGR of 12.2% between 2020 and 2025.
by regulatory agencies, extreme volatility can be ex-
pected to continue. L E S S AC R E AG E I N T H E N E A R T E R M

Declining prices for farmers, intense competition

INDUSTRY IS BET TING BIG ON
P O S I T I V E R E G U L AT O R Y O U T C O M E S among processors, and rampant oversupply mean that
acreage for high-CBD cultivars of hemp will decrease
Oversupply certainly exists in the market, but much of it in the near term. Over the next five years, New Fron-
is due to producers’ stockpiling inventory in anticipation tier Data expects grain and fiber acreage to surpass
of a business-friendly regulatory environment. Should that for cannabinoids.
those expectations fail to materialize in policies, major
processing operations will be critically jeopardized.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 48

KEY TAKEAWAYS

Fiber Seed & Grain

N O LO N G E R A C H I C K E N -A N D - E G G F I B E R & G R A I N W I L L OV E R TA K E
DY N A M I C I N T H E I N D U S T RY, FI R S T- C B D AC R E AG E I N T H E L O N G R U N
M OV E R A DVA N TAG E S N OW E XI S T

Fiber-processing infrastructure is quickly coming online An acre of cannabinoid hemp can produce many tens
in several U.S. regions as a multitude of companies race of thousands of dollars’ worth of CBD material, while an
to become the market leader in the emerging industry. acre of grain hemp will yield between $600 and $1200
Because the size of the market is still so modest, compa- of hemp seed. Over the next 5 years, New Frontier
nies which can take an early lead in processing stand to Data expects grain and fiber acreage to surpass canna-
make outsized gains as the industry progresses. binoid acreage.

SC ALE & CONSISTENC Y WILL WIN C O N S U M E R E D U C AT I O N E S S E N T I A L

The hemp fiber industry revolves around commodity Widespread consumer confusion surrounding the dif-
processing, and (like other commodity processing op- ference between CBD and non-CBD hemp foods is
erations) scale and consistency are critical to success. complicating growth. Significant resources will have
Large-volume producers who can maintain a high degree to be expended to ensure that consumers can make
of consistency will hold significant advantages over informed choices when considering hemp products.
smaller firms when it comes to getting manufacturers to
implement their material.
R E G U L AT O R Y H U R D L E S E X T E N D
TO NON- CBD CROPS

FA R M E R S A R E C R I T I C A L
T O T H E S U P P LY C H A I N The lumping together of the different hemp subindus-
tries under one umbrella is detrimental to the growth
Fiber quality is highly dependent on the skill and tech- of the fiber and grain markets. Effective regulations in
nical knowledge of farmers. With so many farmers the hemp space must understand the nuances between
disillusioned about hemp after the tumultuous 2019 cannabinoid, fiber, and grain hemp.
CBD growing season, ensuring a stable supply of
high-quality fiber from them will be a critical challenge
P R O D U C T D E V E L O PM E N T
which the industry must solve in order to achieve scale. W I L L E X PA N D M A R K E T
Companies that fail to form mutually beneficial relation-
ships with farmers will not succeed. As hemp grain continues to gain market acceptance,
developing new, innovative products will be essential to
maintaining growth.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 49

Explanations &
Technical Terms

FIBER VS HURD D E C O R T I C AT I O N
Hemp stalks consist of two main parts – hurd and bast (P R I M A R Y P R O C E S S I N G )

fiber – each of which has a range of different prod- Decortication is the process by which raw hemp stalks
uct applications. Fiber is further divided into "long" and are mechanically separated into their component parts
"short" fiber, each of which has different physical proper- – bast fiber and hurd. The aim of decortication is to
ties and is suited for different industrial uses. Long fiber is achieve uniform fiber length and hurd size. Decortica-
generally used for woven textile manufacturing, cordage, tion is one of the most important and capital intensives
and high-quality paper, among other products. Short areas of the hemp fiber supply chain.
fibers are used primarily for non-woven textiles, insu-
lation, and plastics additives. The wood-chip-like hurd DEGUMMING (WET PROCESSING)
is used primarily for animal bedding, litter, construction Degumming is a chemical process by which the glue-
materials, absorbents, and mulch. like lignin which binds hemp fiber bundles together is
broken down and removed, thereby softening the fiber
RET TING and readying it for woven applications.
Prior to mechanical processing, hemp stalks must
first undergo a process known as ‘retting’, in which the FIBER SPECIFIC CROPS VS
glue-like starches binding fiber to hurd are dissolved FIBER AS A BYPRODUC T

or allowed to rot away, making separation easier. His- Hemp fiber is generally obtained from specialized cul-
torically, retting has been done by letting hemp stalks tivars which have been bred to maximize the length and
lie in the field for several weeks after harvest and al- quality of their fiber. Although it can also be obtained
lowing them to rot slightly (hence the term ‘retting’). as a byproduct from the biomass leftover from CBD or
However, more sophisticated chemical and mechani- grain production, it is generally agreed that such fiber
cal solutions have been created that are slowly gaining is of inferior strength and quality, and therefore not
adoption from producers. suitable for most technical applications. This is because
the hemp plant has a finite amount of energy which it
distributes between producing fiber, seed, and leaves.
When cultivars are bred to maximize one of these areas,
tradeoffs occur.

© NEW FRONTIER DATA, ALL RIGHTS RESERVED // NEWFRONTIERDATA.COM // 50

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