by Lynda Kiernan, editor, GAI Media
GAI News has been running a new feature called “Question of the Month”. Below are the expanded results of the first month’s responses, along with commentary from GAI News Editor Lynda Kiernan.
Question:
One of the top trending ag and investing topics as we venture into 2019 is the legalization of industrial hemp production in the U.S. In your opinion, how much of an impact on the ag investment space will this development have?
I must say, the close split in responses to this question really surprised me.
Exactly 36 percent of respondents stated that the legalization of industrial hemp production in the U.S. would have a significant effect on ag investment – opening new channels of investment, new markets, new ancillary investment opportunities, and would offer greater ability to diversify portfolios.
Meanwhile, 44 percent of respondents stated that legalization of industrial hemp production in the U.S. would have somewhat of an effect on ag investment. New investment channels are always a good development, but production volumes will not be enough to translate into big changes for the ag investment space.
The remaining 20 percent of respondents stated that legalization will have only a minor impact on ag investment, stating that investors will likely hold back capital until there is federal legalization of cannabis.
All told, 80 percent of our respondents believe that legalization will have a certain degree of positive effect on ag investment. This positive effect is already being seen played out in New York State.
Following the passage of the 2018 Farm Bill allowing for the commercial production of hemp, Canadian marijuana company Canopy Growth announced its plans to invest up to $150 million to establish its first production facility in the U.S.
The Hemp Industrial Park project will include large-scale production capabilities focused on product manufacturing, and is expected to result in tons of hemp extract produced per year. Once the site is established, Canopy will source its hemp from U.S. farmers and will act as the anchor business at the location. However, third party businesses can join the innovative vertically integrated hemp ecosystem from cropping, to seed, to fiber, and more.
The scale of this project, the political support it has rapidly garnered in New York, and its structure under which additional third-party businesses can join in creating a vertically integrated hub, could be seen as a single reflection of the latent potential in legal U.S. hemp production.
The $150 million project can also be seen as an albatross signaling solid investment ground ahead in the hemp category for all of our positive thinkers out there. Bravo!
~ Lynda Kiernan