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[PRESS RELEASE] – PORTLAND, Ore., Aug. 28, 2025 – Globally recognized cannabis and hemp economist Beau Whitney, the chief economist of Whitney Economics, introduced data that debunks the U.S. Dept. of Agriculture (USDA)’s methodology in calculating the value of the hemp cultivation sector, and errors in the methodology are contributing to the misperception that farmers are not benefiting from the rise in the hemp-derived cannabinoid industry.
“By publishing inaccurate data about the value of the hemp crop, the USDA is inadvertently hurting the very same farmers they are trying to regulate,” Whitney said. “The lower value of the crop is making it tougher for farmers to raise money, inhibiting infrastructural development and suppressing market growth. These USDA errors are also disincentivizing farmers from adding hemp into their crop rotations. In reality, farmers in the hemp industry are benefiting by their contribution more than corn or soy farmers.”
As part of the USDA regulations, farmers are required to self-report each year information about their hemp operations. Some of the data collected pertains to the type of hemp grown, its purpose (fiber, grain, seeds or cannabinoids/floral), the amount grown, and the value of the crop harvested. This is a similar data collection process for hemp cultivation to what is used for most other agricultural crops. However, the methodology for evaluating the value of the crop faces challenges in its application to hemp.
The methodology to calculate the value of hemp fiber, grains and seed is fairly standard since the products derived are limited and the value of the output is consistent. However, the methodology to calculate the value of the floral output is considerably flawed, as there are multiple uses of the cultivated output that vary significantly in value.
“The problem with the methodology in calculating the value of floral output is the flower’s value is significantly higher than that of the biomass,” Whitney said. “To conform with standard USDA practices, the value of the crop is derived from a blended average of the sales of biomass and the flower, and the combined average price per pound seriously undervalues the crop.”
The price of hemp flower in 2024 was in excess of $330 per pound, while the value of the biomass was an average of $2 per pound. According to the USDA report, floral cannabis output in 2024 was 20.8 million pounds valued at $386 million. This is an average value of $18.56 per pound. It would take only 1.2 million pounds of flower to surpass the $386 million value of the crop. With this flaw in determining the value of the crop, the USDA is undervaluing the entire floral sector.
By undervaluing the floral crop, investors do not have an accurate picture of the market potential. In turn, Whitney said, farmers are less willing to plant the crop or include it in their rotation, and policymakers are using erroneous data to make decisions. For example, in a recent congressional hearing, a senator was promoting restrictions on the hemp industry, claiming that out of the $28.4 billion in market value, farmers are getting less than 1% of the total revenue that is derived from the output.
However, if valued at $330 per pound, the 20.8 million pounds would sell for $6.86 billion at the wholesale level, which represents 24.2% of the total retail value. This would indicate that farmers are getting significantly more from hemp (24.2%) than corn (15%) or soy (7.9%).
Given that the share of revenue is greater than corn or soy, investors and farmers would view hemp in a much different light and be more inclined to invest in and grow hemp.
“Highlighting how much farmers are benefiting from hemp cultivation would also influence policies at the federal level,” Whitney said. “This error by the USDA is having a profound effect on the entire hemp industry and must be immediately addressed, or the hemp industry will be negatively impacted, and the growth of the market will continue to be suppressed.”
Resources:
https://www.nass.usda.gov/Newsroom/Executive_Briefings/2025/04-17-2025.pdf
https://www.fb.org/newsroom/fast-facts
https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=108346
For more information on this report, visit whitneyeconomics.com.
