MJBizMag August 2022 - 12

HEMP NOTEBOOK Kristen Nichols
Babies and Barley
Larger market forces have an outsized impact
on hemp-and marijuana isn't far behind
W
hat do the prices of baby
formula and barley have
to do with cannabis?
Quite a lot if you're working
with low-THC hemp. And it turns
out they have lessons for high-THC
marijuana operators, too.
ALL SIGHTS ON FORMULA
Two events this spring underscored
how the hemp and CBD industries
are shaped by market forces that
have nothing to do with cannabis.
Let's start with baby formula:
Shortages and a scary recall turned
the nation's attention to the
U.S. Food and Drug Administration,
which was ordered to throw new
resources toward securing a safe
and abundant supply of infant
formula.
After two years of pandemic
response, the baby-formula crisis
underscored how often the FDA
must turn its full attention to new
and imminent health and safety
threats. As a result, the FDA's
hesitancy to allow over-the-counter
CBD took a back seat yet again.
Remember those bills promising
to chart a reliable path to market
for CBD, upending years of
established policies on dietary
supplements? All of them seemed
to go from " long shot " to " fat
chance " in the halls of Congress,
where no sensible politician would
risk being seen as caring more
about cannabis policy than the cries
of hungry babies.
GRAIN AND UKRAINE
Next, consider barley. The lowly
cereal grain is also a major ingredient
12 August 2022 | MJBizMagazine
Turmoil and economic sanctions
have thrown any number of global
commodity markets into disarray.
in animal feed and beer, making it
the No. 4 crop in the world.
What nation grows a lot of
barley? Ukraine.
As you can imagine, Ukrainian
barley farmers didn't have much
opportunity to get a 2022 crop
planted while trying to fend off Russian
troops. The result has been price
spikes for barley farmers elsewhere,
including in the United States.
It's a similar picture for other
commodity crops formerly sourced
from Ukraine and Russia. Turmoil
and economic sanctions have
thrown any number of global
commodity markets into disarray.
CANNABIS CONNECTION
Both events-the baby-formula
crisis and the war in Ukraine-
matter to the hemp industry. Hemp
is more impacted by the global
market and political forces because
the industry is not irrationally
confined to state borders, as
marijuana businesses continue to be.
Hemp activists rightly
congratulate themselves for
persuading Congress in 2018
to authorize hemp cultivation
nationwide. But they'd be fooling
themselves not to realize that low
prices for other farm commodities
in 2018 (and a nasty trade war with
China, engineered by the Trump
administration) played a significant
role in convincing farm-state
conservatives to take a chance on
letting farmers grow hemp.
In the spring of 2019, those low
prices drove countless farmers to
seek refuge in the hemp industry,
hoping for enormous per-acre
profits from a sexy new product:
CBD. Overproduction and a market
crash resulted.
As hemp farmers approach the
fourth harvest season with legal
hemp, the crop will continue to be
affected by larger market forces.
Cannabis operators at all THC levels
would be wise to take note.
Savvy marijuana operators
should plan now to build cannabis
businesses that won't be upended
by war or unexpected health
emergencies. Otherwise, they'll
look back fondly on the days when
marijuana was confined to in-state
bubbles with fewer impacts from
global market forces.
Kristen Nichols covers hemp
for MJBizMagazine. She
can be reached at kristen.
nichols@mjbizdaily.com.
MJBizMag

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