U.S. farmers are quickly expanding hemp acreage to take advantage of the booming demand for CBD compounds used in the food and beverage industry.
In states where marijuana prices have plunged due to a flood of new entrants and oversupply issues, a significant number of outdoor marijuana growers are switching to hemp production.
Consequently, the majority of additional cannabis capacity in the near term will be dedicated to hemp production. The study, “Cannabis Growing Market,” produced by The Freedonia Group, Cleveland, Ohio, discusses the regulatory environment, production of marijuana and hemp, demand for consumables and growing equipment and trends by state.
“Demand for equipment used in cannabis growing applications is expected to reach $2.7 billion in 2019 and expand 10% annually to $3.9 billion by 2023,” says Carolyn Zulandt, analyst.
Growth will be driven by:
- New entrants in the cannabis industry, as they must make the initial capital investments necessary to compete with other growers.
- Cultivators with existing operations who will continuously need to replace light bulbs and parts and/or upgrade to new equipment.
- Expansions in canopy size that will prompt new equipment purchases by established cultivators.
Water tanks, irrigation equipment and hydroponic systems will account for the largest portion of sales in 2019.
Fans and HVAC equipment – important for indoor operations and for outdoor growers of marijuana and hemp that also maintain on-site greenhouses – will represent the second largest equipment segment.
Security equipment, lighting systems and replacement bulbs are also major expenses for cultivators.