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Beau Whitney, Chief Economist
October 2023
Whitney Economics does not take a position on the legalization of cannabis nor does it take positions on proposed legislation; however, it does derive revenue from cannabis and hemp related companies and stakeholders. The views, opinions, and positions expressed in this paper are those of its author Beau Whitney, and do not necessarily reflect the views, opinions, or official positions of any of our affiliated organizations, groups or clients.
The hemp-derived cannabinoid industry rose in prominence in the years since the passage of the 2018 U.S. Farm Bill. The Farm Bill de-scheduled hemp as a controlled substance, thereby allowing for the rapid expansion of the hemp industry. While many parts of the hemp supply chain have experienced a boom-and-bust cycle, hemp-derived cannabinoids produced from CBD have expanded rapidly.
Federal regulation was not able to keep pace with the rapid deployment of hemp products on the market. While mostly self-regulated (with the exception of the cultivation of hemp), concerns arose over the potential intoxicating effect of some cannabinoid products, and the potential public safety risks associated with intoxication. State legislatures attempted to intervene and provide regulatory structure to the industry, but those efforts have generated several unintended consequences on the industry.
Currently, the total demand for hemp-derived cannabinoids is valued in excess of $28 billion and supports the employment of 328,000 workers, who earn $13 billion in wages. Overall, the total economic impact of the hemp-derived cannabinoid industry on the U.S. economy is in excess of $79 billion. While they may seem large, these estimates are actually conservative, because they do not account for demand and employment from gas stations, grocery stores and convenience stores.
Industry stakeholders are asking if, from a regulatory perspective, the state-by-state system is working. While some have said that state interventions have addressed serious public safety issues, others have said that the state-by-state systems are doing more harm than good. They argue that a more enhanced federal regulatory structure is more appropriate, given the size and scale of the industry and the need for standardization at the cultivation, manufacturing and retail levels.
In order to address these issues, policy makers at all levels require data. Up to this point, there has not been a comprehensive, national assessment of the hemp-derived cannabinoid industry. Whitney Economics has taken a conservative approach to data gathering and projections. The intention of this report is to provide a baseline of data in order to help hemp industry stakeholders understand the level of economic activity associated with hemp cannabinoids, and the impact that policy changes will have on the future.
Beau Whitney is the founder and Chief Economist at Whitney Economics, a global leader in cannabis and hemp business consulting, data, and economic research. Whitney Economics is based in Portland, Oregon. Beau has provided policy recommendations at the state, national and international levels and is considered an authority on cannabis economics and the supply chain.
