What Regional Economic Factors Drive Feedstock Cost for Cannabinoid Hemp Processors in the United States?

Authors

Tanner McCarty, Utah State UniversityFollow

Author Disclosures

This research was supported by funding from the Utah Agricultural Experiment Station

Abstract

This study measures the importance of various regional economic and agronomic factors on a grower’s decision to cultivate cannabinoid (CBD) hemp flower in the United States, and its subsequent effect on CBD processor feedstock cost. I use real options analysis to recover the price of hemp flower required to trigger land use change from commodity crop production to hemp flower production across various scenarios endemic to different hemp producing regions. Results suggest the most important factors in determining the price required to trigger CBD floral hemp production are the expected yield of floral hemp and CBD concentrations within it. CBD processors looking to secure affordable feedstock should prioritize regions supporting these factors. Under current state policies and cultivars, the Southern United States appears to be the most likely, of current major hemp production regions, to be capable of producing low-cost floral hemp. This is due to its relatively favorable growing conditions.

Recommended Citation

McCarty, Tanner (2019) "What Regional Economic Factors Drive Feedstock Cost for Cannabinoid Hemp Processors in the United States?," Journal of Agricultural Hemp Research: Vol. 1: Iss. 1, Article 6.
DOI: https://doi.org/10.61611/2688-5182.1002
Available at: https://digitalcommons.murraystate.edu/jahr/vol1/iss1/6