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2020 HEMP PREDICTIONS


From our proprietary Subjective Probability+Game Theory Model algorithm, its "best guesses" *** for 2020: (1) Confusion reduces feasibility in the hemp market to cause materially contraction by financial partners and place at risk their prior commitments. (2) The hemp market will level out with only the most qualified and advanced players surviving. (3) First-time hemp farmers and other growers who experimented the year before lost more money than they could afford. 2020 will be no different. (4) Propaganda continues to spew about the "profitable successes" without proof or actual fact-based consensus. (5) FDA regulation will dominate effective entry by major corporations, compromising viability in the sector. (6) Overproduction in 2019 will continue in 2020 while losses accelerating. (7) Lack of reliable personnel assemblage weakens the sector and lowers any prospect of long-term growth.

*** SP+GTM as an 87% success performance on “best guesses” of all questions asked to the algorithm relating to hemp and marijuana from 2015 to 2019.

NOISE FROM THE OTHER SIDE OF THE PAGE

Russ Cersosimo, co-founder, Hemp Synergistics, Pittsburgh, said: “With increased regulatory compliance on the horizon, I expect to see many of the first-wave farmers, extractors and product manufacturers exit the business. Those who jumped into the industry without any real experience in farming, extraction, science or CPG (consumer packaged goods) will be challenged to compete successfully in a regulatory industry and changing landscape.

What he said is justified with reservations. SP+GTM suggests that the second wave is coming in 2020, and the market will level out – but only the most qualified and advanced will be positioned to succeed to serve the market with high-quality products on a consistent basis.

Mark Case, founder, and CEO, International Hemp Auction and Market, Knoxville, Tennessee said: "2019 was a gamble but a good year for most.

What he meant: "A good year for most" must mean hickadees, sparrows, jays, and grosbeaks feeding on the seeds. Tennessee farmers lost big time. A few processors gained a marginal profit from the despair of the growers. Asking him a direct question about 2020 prospects would be a fool's game.

Brenda Verghese, vice president of research & development, Stratos, Colorado Springs, Colorado, said: "Successful only for those who are wise and prudent, fully integrated and who work with a good business plan to go the long haul."

What she meant: Small players and not too smart farmers are going to get wiped out.

Ted Haney, executive director, Canadian Hemp Trade Alliance, Calgary, Alberta, said: " We did just fine. Competition made us better farmers. Learned a great deal.

What he meant: Cost of product and hemp were sky-high and too many players."We did just fine" is like saying "I lost all my chickens in a thunderstorm but I still have the coup."

Kim Collier, hemp consultant and wellness coach, Missoula, Montana, said: "Buckle up. We are unstoppable."

What he meant: He's not talking about profits. In a whisper, Mr. Collier added, “I think it’s going to be a collaboration of science, location, products, and ingredients for a very effective healing experience and strong business plan in this space.”

To us "healing experience," suggests losing everything and fighting back. Wow! Mr. Collier, we recommend that you step aside before sinking the entire state of Montana.

James McCoy, hemp farmer and retailer, Pahrump, Nevada, said: “We’ve already grown this year (2019) like eight times more hemp than we needed. It will all workout market’s goin’ turn.”

What he meant: The consumer hemp market is not nearly as robust as people predicted it to be. Cheap hemp, getting cheaper in 2020

Ray Mazzie, executive director, Hemp Industries Association of Florida, Tallahassee, said: “The hemp industry will surely experience explosive growth in 2020 as the USDA and FDA (U.S. Food and Drug Administration) begin to release rules, take comments and eventually implement said regulations.

What he meant: “Forget about what the supply/demand curve, it looks like the USDA and FDA are going to make it harder to make a profit in hemp. Compliance and learning from others’ mistakes will prove to be a valuable lesson for 2020 hemp operators, regardless of where they sit in the supply chain.”

Marysia Morawska, horticulture educator, University of Nevada, Las Vegas, said: “I think a lot of these farmers are going to realize that the cannabis plant is not a CBD plant. What we’re going to see is a movement toward a trifecta or even quad-usage plant – so, something that’s utilized for the fiber, for the flower, for the grain. I think CBD will become the byproduct of the cannabis plant.”

What she meant: Farmers beware. CBD is worthless.

Patrick McCarthy, CEO, ValidCare, Denver, said: “ The U.S. consumer is going to wake up to the fact that certification and dosing matters. They’re going to get particular, where they’ve been trying things in the past. They’re going to start really paying attention to, what is the product I’m taking? How do I know that it’s safe? How do I know how much that I should take, and who says it’s safe?

Mr. McCarthy is speaking the truth --- listen to him.

Ross Burtness, founder, ReGrow, San Diego, said: “With the mass adoption of CBD products already in place, we will start to see a more compartmentalized line of products aimed at new and existing consumers. Stricter regulations will push the market toward adopting proper genetics, DNA markers and compliant resin varieties. With the emergence of data-driven insights, cutting-edge management technology and predictive tools, there will be more variety available to the public at lower costs.

Mr. Burtness is speaking the truth; worth listening to him.

Jillian Hishaw, founding director, Family Agriculture Resource Management Services (F.A.R.M.S), Charlotte, North Carolina, said: “ 2020 will bring more stabilization to hemp farmers as they enter the planting season. Due to the extensive loss suffered by many small farmers who grew hemp this year, many will grow less acres and seek out securing purchase contracts with established processors and companies in California, Colorado and international markets, if possible. Many farmers that suffered an unrecoverable loss will not plant next year but wait until 2021 to ensure the regulatory kinks have been ironed out in 2020. Farmers of color will have more opportunities growing cannabis due to the 10-year felony restriction on hemp excluding many farmers of color out of the industry who factually have higher prior conviction rates.

What he meant, in part: Growing hemp is a high-risk endeavor, and only the funded and experienced may survive.

Casey Flippo, CEO, Natvana, Little Rock, Arkansas, said: “In 2020, the U.S. hemp industry is going to transcend previous norms by exponential amounts. Farmers and processors are going to have to come up with creative solutions to adhere to the domestic surplus as well as the pressure from consumers to provide a more economically reasonable end-product.

What he meant: Don't cultivate hemp unless you are smart enough to determine what to do with it.

Scott Propheter, vice president agronomy and outreach: Criticality, Hobgood, North Carolina, said: “I think there will be an overall decline in planted acreage for 2020 caused by the oversupply from 2019. I also believe that 2020 will be the catalyst year that begins a widespread consolidation in the processing community as margins continue to compress.

What he meant: Hemp cultivation and processing will not be profitable as prices decline. As for "2020 will be the catalyst year" a rare truth that equates to designing a Business Model that can take advantage of other people's mistakes.

Priyanka Sharma, co-CEO, Kazmira, Watkins, Colorado, said: “ We will see investment into genetics and harvesting technology in order to adhere to the USDA final rule. I expect an increase in research on cannabinoids and various hemp strains by universities. We will see newly formulated products enter the market at compact sizes with higher cannabinoid content. I foresee more consumer awareness on the tractability of the product from farm to shelf.

What she meant: True for specific operators with deep pockets. Not true for the small participant with limited financial resources and technical skills. Hemp is going to become a big money industry with farmers on the margins with limited flexibility to "earn" a living. Moreover, current operators that have committed vast resources to hemp may be washed-up, because their Business Models are based on 2015 technologies and overpriced assets on assumptions of high hemp prices and limited regulations.

Charlie McKenzie, chief adviser, Bioculture Group, Columbus, Ohio, said: “ While we find ourselves surrounded by quite a bit of uncertainty going into next hemp season, I am certain that an increased focus on business integrity and ethics, operational efficiencies, regulatory compliance and production quality will be necessary for any hemp farm or business to see success in 2020 and beyond.

Mr. McKenzie is on the money. Excellent advice.

Wesley Ray, co-founder, Combined Hemp, Bend, Oregon, said: “2020 will resemble 2019 with twice the amount of land. The only difference besides acreage is the letters abbreviating the cannabinoid. CBG breeders exploded onto the map when total THC testing was in the USDA proposed rules. Expect the same with feminized CBG seeds popping up at an alarming rate. New explorers to the industry, be alert, do your research and learn from the farmers of 2019’s mistakes.

Mr. Ray is on the money. Excellent advice.

Michael Bronstein, president, American Trade Association for Cannabis and Hemp, Washington DC, said: “ The hemp industry will have the best year of growth since (President Franklin Delano Roosevelt signed an executive order in 1941 legalizing hemp production for the U.S. effort in World War II), but not everyone is going to win. Complexity of the business and supply issues in the market will favor early adopters who can produce quality and consistent product at scale. Additionally, the CBD market will find increasing competition and additional regulatory scrutiny before the dust settles.

What is meant: I can lie with both sides of my mouth at the same time.

Brent Williams, managing member, Highwater Financial, Nashville, Tennessee, said: “We believe that the hemp industry will have a large focus on expanding infrastructure in 2020. Farmers will see a painful loss of both money and crops from the 2019 season due to limited access to drying, proper storage or timely processing. With many farmers getting burned on production contracts in 2019, we also believe there will be a slower growth rate in the number of acres grown until there is a tangible increase in demand.

Mr. Williams is on the money. Excellent advice.

Adrienne Snow, founder, Western States Hemp, Reno, Nevada, said: “I think extraction capacity will increase by up to another 20%. Grow licenses will possibly double, however, actual harvested product will most likely increase only by 50%. There will still be a lot of confusion between the states and USDA. The big players will continue to watch from the sidelines through 2020, awaiting calmer seas before jumping in and truly merging Wall Street and hemp.

Mr. Williams is on the money. Excellent advice. His statement rings true: The big players will continue to watch from the sidelines through 2020, awaiting calmer seas before jumping in and truly merging Wall Street and hemp.

Claire Crunk, president, Southeast Hemp Fiber, Santa Fe, Tennessee, said: “We will see emerge a tighter, higher standard for manufacturing practices in extraction as regulatory frameworks and consumer awareness improve. We will also observe continued innovation in fiber processing methodology and fiber product development that will feature domestically grown hemp fabrics and bioplastics applications.

What she meant is partly true and suggests “to remain out of the hemp sector until the technology can be effectively figured out.”

Whatever you do in hemp or marijuana, don’t read our news pages if losing money is your gift.


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