Before starting a hemp business, you will need to weigh the pros and cons just as you would with any other business venture. That being said, one thing is unique to the hemp industry, and that is the extensive list of rules and regulations that are involved. If you can get past that hurdle and make sure that your hemp business is in full compliance with the law, then you might be able to find success in the hemp industry.
How to be a Profitable Hemp Farmer
Here’s a 3-minute video from Farmer Tom’s Hemp Company on how to make money farming hemp.
An Overview of the Hemp Industry
The hemp industry is gradually getting stronger and attracting more and more people. New participants in this industry are attracted by the potential for profit that lies in hemp.
The hemp industry is poised to grow at a CAGR of 34% between 2019 and 2023, and reach a value of $26 billion by 2025.
The hemp industry can be divided into the following broad categories: medicinal hemp and industrial hemp. Industrial hemp can be further classified into different sub-categories, hemp fiber being the largest one.
Different parts of the hemp industry can also be classified based on the different processes involved in the preparation of hemp. This includes cultivation, harvest, extraction, processing, and delivery. When starting a hemp business, you should consider all of these categories and find the one that you’re the best at.
What Does the Law Say?
Hemp cultivation is legal under federal law, but the industry is highly regulated. The U.S. Department of Agriculture is tasked with the responsibility of overseeing the hemp industry.
The law demands that every hemp business is licensed by the authorities in their respective states. It also stipulates that hemp with more than 0.3% THC is illegal under federal law, and must be destroyed.
In the U.S., 47 states have formulated hemp programs that regulate the cultivation of hemp. In these 47 states, hemp cultivation is legal for either research or commercial purposes. The three states that have not legalized hemp cultivation are Idaho, Mississippi, and South Dakota.
Hemp laws are updated on a regular basis, and they change from state to state. Before starting a hemp business, it is important to understand hemp laws, and how they are going to affect your business.
Types of Hemp Businesses
You can venture into the hemp industry through different channels. The one you choose will be determined by your area of interest, the capital you have available, your expertise, and your geographical location. Possible occupations within the hemp industry include the following:
- Hemp farmer
- Hemp producer
- Hemp broker
- Hemp wholesaler or retailer
- Hemp researcher
- Auxiliary staff such as accountants, lawyers, bloggers, marketers, transporters, and sales agents
How To Set Up A Hemp Business
Create a Business Plan
Before starting, you will need to create a business plan that outlines how the business will operate. It should cover the responsibility and liability of the business, the source of funds, the business model, market entry plans, and financial strategy.
After creating the business plan, you should share it with a few experts in the industry, an accountant, and a lawyer to get feedback. Carrying out a market survey is also an essential part of creating a business plan.
Get Relevant Licenses and Business Permits
All hemp business will require licensing from the state or tribal regulatory agencies. Apply for all the necessary hemp-related and business-related permits, and make sure that your business is set up in accordance with the law.
Figure Out How You’ll Acquire Your Funds
Your business plan should outline how you’re going to get all necessary funds. Depending on the size of your business, you can consider the following funding options:
- Personal funds
- Friends and family
- Loans from banks or other lending institutions
- Venture capital funding
- Angel investors
Hire the Right Personnel
A hemp business will require personnel to handle the different aspects of the business. This includes lawyers, accountants, marketers agents, sales agents, and other supporting personnel.
Launch the Business
Once the business plan is fine-tuned, cash is in hand, and the right personnel is on board, it is time to execute the business plan.
Evaluate and refine the business plan
Once you have rolled out the business, you should give it some time before you go back and evaluate the effectiveness of your strategy. This should happen every three months, especially when you are starting out.