Imagine running a race with brand-new shoes and a burst of energy but no idea what the course looks like.

That’s the position in which today’s hemp industry finds itself.

Every level of the hemp supply chain—from farmers experimenting with a new crop to retailers looking to supply white-hot consumer demand for CBD—is eager to capitalize on the plant’s new legal status in the United States. But the enthusiasm comes at a time when the racecourse hasn’t been set, making the path to market as mysterious as a running trail leading into a dark forest.

The U.S. Congress fired the starting gun on the hemp race in late 2018, when a new Farm Bill ended an experimental period of growing low-THC cannabis varieties. Congress took hemp out of the Controlled Substances Act and gave the crop legal protections that black-market cannabis could only dream of, from crop insurance to a guarantee of interstate transportation.

Hemp entrepreneurs can participate in the modern mainstream economy. They can raise capital in the same ways other startup businesses do and access mainstream retail channels such as grocery stores and gas stations. The law has inspired countless new entrepreneurs to jump into the hemp business, but no one knows the exact path forward for the hemp industry, and new hurdles can appear overnight.

Cultivation of the crop still is governed by a state-by-state patchwork of differing rules and fees, a holdover from the days when hemp production was allowed only under state-level pilot projects.

At a minimum, the Farm Bill requires states to:

• Test hemp crops for THC content, including inspections done at least annually.

• Establish rules for destroying hemp that exceeds 0.3% THC.

• Keep track of land approved for hemp cultivation.

• Ban drug felons from participating in the hemp industry for 10 years, unless the states had no such limit in previous pilot projects.

We anticipate that state differences in hemp regulations, especially THC testing protocols, will decrease over time as many states adopt federal enforcement minimums and start treating hemp growers more like traditional commodity farmers.

For now, though, just as in the marijuana industry, states aren’t waiting for the federal government to act. Some states allow commercial hemp activity under pilot projects authorized by the 2014 Farm Bill. Other states adopted hemp rules but put them on hold until the U.S. Department of Agriculture acts. Three states—Idaho, Mississippi and South Dakota—have yet to adopt any hemp rules, leaving producers of the plant in those states in the black market.

The map on page 158 provides a snapshot of which states fall into each of those categories.

At press time, the U.S. Food and Drug Administration’s position was that CBD cannot be put into food, drinks or dietary supplements, only in FDA-approved pharmaceutical products. But the agency has left that position largely unenforced, leading to a proliferation of over-the-counter CBD products.

In addition, some states passed laws giving in-state hemp companies express permission to flout FDA rules; others have remained silent or expressed a CBD position through administrative rulemaking, not a law.

All this makes the 2019 Hemp & CBD Industry Factbook essential reading for serious entrepreneurs investing in the hemp industry. This excerpt offers exclusive intelligence about the U.S.hemp market culled from extensive research and conversations with business operators who know this industry best.