Legal risk exposure heightens uncertainty in developing US hemp markets

Abstract

In the past few years, hemp transitioned from a Schedule I controlled substance in the United States, to a crop only grown in pilot programs for research purposes, to a legal commodity for commercial production. The newness of the market; the lack of institutional, producer, and processor experience; regulatory and political uncertainties; and a threshold at which the crop becomes illegal all expose hemp markets to risks greater than those for more established sectors of production agriculture. In any market, risks are interrelated. For developing hemp markets the risk of crossing a legal threshold for tetrahydrocannabinol (THC) and becoming classified as marijuana (i.e., legal risk) affects and amplifies the other uncertainties.