Breaking into the cannabis industry is an exciting prospect in 2022, considering all the amazing options available these days. Industrial hemp cultivation has been legal at the Federal level since 2018, and there are tons of top shelf CBD flower providers currently on the market. And marijuana cultivation and sales legalization has been sweeping the US over the last few years.
Deciding which direction to go can be a daunting task, and the choice will ultimately be governed by several factors including:
- What’s legal in your state
- How much governmental red tape you are prepared to deal with
- Whether you want to grow for personal or commercial use
- Which is more profitable for you
Here’s the thing about cannabis cultivation you need to be aware of regardless of whether you decide to go with growing CBD flower or marijuana: Each state makes its own laws and regulations are tight no matter what.
Hemp Cultivation Laws by State
When the 2018 Farm Bill legalized industrial hemp cultivation, it did so with the understanding that each state would enact its own regulation and monitoring programs — to be approved by the USDA. Not every state immediately hopped on board, and Idaho was the final state to enact a program in 2021.
It’s important to know that hemp cultivation, though legal at a Federal level and within each state, is not quite the free-for-all you may be imagining. Since hemp is a volatile plant that can have varying concentrations of THC (even when they are bred to have less than 0.3%), testing is often required at regular intervals, paid for by the farmer.
Some states allow for remediation if the plants show a THC concentration that is too high early on, and others require all plants in the crop to be destroyed. Obviously, this is not good for your profit margin.
Marijuana Cultivation Laws by State
Even though hemp cultivation sounds complicated, the laws and regulations get even murkier when it comes to marijuana. This is because marijuana possession, sale, and cultivation are still a Federal crime. In a recent green wave, states have been passing marijuana legalization at a fervent pace, with 38 states having legalized at least medical marijuana and 19 legalizing recreational as well.
Some states allow personal marijuana cultivation, meaning you can grow a small number of plants on your own property, inconspicuously and for use by only you. Some states require you to register your plants, others just require you to tag and claim them.
This is not the case for all states, and getting into commercial cultivation can be tricky. Because it’s a Federal crime, marijuana cannot be sold across state lines, even from one legal state to another. This means that you need to break into marijuana cultivation in the state where you intend to sell your product.
Limitations on Marijuana Cultivators
Many states will only grant licenses to a limited number of cultivators, which means that if you didn’t get in early, you can kiss your opportunity goodbye. Ohio, for example, is a medical marijuana state. The state will only grant licensure for 33 companies to grow and sell marijuana plants in the state.
And while medical marijuana may be more expensive to buy, it’s also a lot more expensive to grow. With limitations on the number of dispensaries that are allowed to operate, the market in Ohio is highly competitive, even with only 33 cultivators in business.
Financial Considerations When Deciding to Grow Marijuana Vs. CBD Flower
Since growing CBD flower is legal at the Federal level, getting into growing hemp is much easier than growing marijuana.
Banks Cannot Legally Work with Marijuana Cultivators
All cannabis is a high-risk investment, and banking comes with higher fees for hemp cultivators. But as of right now, most banks outright refuse to work with marijuana cultivators. Banks that do work with licensed marijuana industry agents often charge up to $3,000 a month just to have a bank account where you can keep your money.
In most states, once you get your initial license for hemp cultivation, you are golden with your money and it is much easier to find CBD-friendly financial institutions.
Crop Insurance
Fortunately, the USDA has strengthened the availability of crop insurance for hemp farmers. Crop insurance is vital for farm profit margins, considering all the unpredictability of the environment and other factors these days. If your marijuana crop is destroyed, so is the income you planned to gain from your harvest.
Final Thoughts
When deciding whether CBD flower or marijuana cultivation is more profitable, there is far more to consider than the price of your crop per acre or per pound. In the end, growing CBD flower might be your best bet until marijuana becomes Federally legal and state-to-state laws are ironed out.
