While China has agreed in a recent agricultural agreement to purchase an unspecified amount of hemp fibre from the United States, it seems unlikely that U.S. producers will be willing to seize this opportunity. Two important events issued by President Trump-centered have developed in recent weeks and each has taken turns taking over the spotlight and being overshadowed by the other. First, we have the ongoing hearings on the impeachment proceedings in the Senate, which began on January 16, and second, phase one of the U.S.-China trade agreement, signed and released on January 15. When the trade agreement was released, some pissed off the hemp aspect of the trade agreement, which was relatively recently billed industrially in the United States, thanks to the 2018 Farm Improvement Bill of 2018. A reference publication on marijuana published an article the day after the january 16 trade agreement was published, saying that “China needs to import more hemp from the United States. Under the new trade agreement. It is an overly generous interpretation of the trade agreement. We will examine and clarify this overly optimistic statement below. The short flash is that China can buy more hemp from the U.S. under the new trade agreement, but China certainly doesn`t have to buy more hemp (or any) American hemp as a result of the trade deal. The economic opportunities offered by this aspect of the new trade agreement could offset some of the negative effects that the Trump administration`s tariffs already have on the cannabis industry. Like most other producing industries, the U.S. cannabis industry imports the raw materials of many of its products from China.
These imports, including glass, plastic, electronics and paper, which are used in the manufacture of vapours, tubes and bongs, are now subject to increased tariffs. As the world leader in hemp production, the United States is well positioned and, if this continues, the United States could soon take the lead in China. This projection is exciting and really shows that hemp can become a global industry – built to hold. If I were a player, I wouldn`t take those 1/216 odds (less than half of 1%) that China`s increased land purchases will certainly have a significant impact on the hemp industry in the United States. This 1/216 represents approximately $90 million in increased purchases in 2020, which would represent an increase of about 7% in the U.S. hemp industry in 2020, which is expected to grow globally with annual growth of 14% by 2022. Chinese companies could just as easily decide that they want to buy $90 million more in human hair, which is one of 216 agricultural products on the hemp list. U.S. companies that want to export hemp to international markets are larger than those that are willing to explore and invest to do so. The list of these agricultural products includes the “real hemp” for the low THC cannabis variant recently legalized by the 2018 Farm Bill. The agreement does not specify exactly how much more hemp China will import, but the agreement stipulates that by 2020, China will have to import $12.5 billion more onshore products (including hemp) than in 2017. Next year, China will have to increase agricultural imports by $19.5 billion.
The FTC Trail would also require convincing each USMCA country to make a task force. In the United States, the USMCA (as in the case of CAFTA and similar contracts) will come from the Office of the U.S. Trade Representative and congressional trade committees. Expect great interest from Mexico and especially from Canada to build cannabis chains: each country will be one step ahead of the United States.