Cannabis Ranks The 6th Most Valuable Crop In The U.S.
Harvest time has come, but U.S. cannabis farmers may not burst into cheers for the results achieved.
Although cannabis has become the sixth most valuable crop in the United States, the illegal status of the plant at the federal level doesn’t protect the industry’s farmers and affects the value of wholesale production.
The second annual harvest report published by cannabis information resource and marketplace Leafly has found that adult-use cannabis farmers grew some 2,834 metric tons of adult-use cannabis in 15 legal cannabis states in 2022.
Compared to the previous year, cannabis farmers grew 554 (24%) more metric tons of cannabis in 2022, but the crop’s value fell by around $1 billion due to the decrease in prices of legal cannabis.
The 2022 report estimates that cannabis grown in the U.S. is worth $5 billion a year, while the value of America’s legal cannabis crop ranked fifth nationwide in 2021.
“Only corn, soybeans, hay, wheat, and cotton bring in more money on a wholesale basis,” the report reads.
Leafly’s data is limited to only the production of adult-use cannabis harvested in 13,297 active legal cannabis farms in 15 legal cannabis states. So, it doesn’t consider the crops for medical cannabis and the cultivation grown by illegal operators.
The report aims to fill a void of federal and state authorities in assessing the adult-use cannabis supply chain’s value.
In fact, the United States Department of Agriculture (USDA) doesn’t track adult-use cannabis production as the crop used for recreational purposes is still illegal at the federal level under Schedule I of the Controlled Substances Act.
But even some legal cannabis states still lack to gather information about adult-use cannabis cultivation.
“The federal government isn’t alone in ignoring the value of the harvest. Many legal states still fail to capture this important information,” the report reads.
Therefore, Leafly collaborated with the cannabis and hemp business consulting, data, and economic research firm Whitney Economics, to collect data, conduct interviews, and analyze wholesale prices and classes of cannabis quality.
Leafly estimates that cannabis ranks no. 1 crop in Alaska, Massachusetts, and New Jersey, but the report highlights that regulators don’t publish production totals in two of those states.
Today, 19 U.S. states and the District of Columbia have legalized the adult use of cannabis. In 15 states, the legalization is fully operational, and cannabis can be sold under state license, while the remaining legal cannabis states are implementing the regulations to start the sales.
The illegality of adult-use cannabis at the federal level affects cannabis farmers’ ability to perform the most basic functions of a business, such as own bank accounts, obtain crop insurance, and get loans.
As farmers can’t sell their crops directly to consumers and don’t have enough legal retail outlets for their production, prices per pound of wholesale cannabis have fallen despite the rising inflation for most products and services in the country.
For instance, California farmers increased production by 63 metric tons on the legal side, but the cannabis harvest’s value slipped from 5th to 8th in the state because of those price drops.
“The average untrimmed, dried pound might have been worth $786 wholesale in August 2022, but individual outdoor pounds have drawn prices as low as $100,” the report reads.
Furthermore, the condition of cannabis farmers has also been worsened by the local municipalities that have ‘opted out’ from allowing legal cannabis sales, “creating economic protection zones for unlicensed, illicit cannabis sellers” at the expense of the legal operators.
Overall, the report shows a scenario in which Western U.S. cannabis farmers grew too much cannabis over the last year, while Midwest and Eastern farmers didn’t grow enough to meet their region’s demand.
As a result, western farmers haven’t enough demand to sell their harvests, while Midwest and East Coast customers overpay for cannabis products.
In addition, the fact that the illegal status of cannabis at the federal level prohibits farmers from selling adult-use cannabis across interstate lines has repercussions on cannabis prices.
Cannabis Ranks The 6th Most Valuable Crop In The U.S.
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