The U.S. hemp market is undergoing a significant shift from producing oils, concentrates, and finished CBD products, such as vapes and topicals, to a wider variety of hemp fiber products with the promise to develop into a much larger industry. With the looming climate crisis, demand is booming for renewable and eco-friendly products to replace traditional ones, and hemp is a viable, cost-efficient option for many. Hemp currently makes up a small portion of the U.S. textiles, animal bedding, paper, and building materials market, but that is about to change. Grand View Research’s hemp industry report projects the U.S. industrial hemp market will increase at a compound annual growth rate (CAGR) of 20 percent from 2022 to 2030.
As a hemp logistics company, we are already seeing this shift reflected in the cargo we are shipping. The growth on the horizon will require massive volumes of biomass and end products to be shipped—and shipping shouldn’t be an afterthought.
Shipping hemp in the U.S. is far more complex, regulated, and risky than most other cargo. Despite federal legalization of hemp with the 2018 farm bill, the patchwork of regulations that differ in every state along with hemp’s similarity to cannabis can wreak havoc for suppliers, carriers, processors, and retailers when it is shipped across state lines. Logistics is not something that only matters in large-business development. It is just as crucial in terms of improving efficiency and profitability with smaller and medium-sized businesses.
Hemp doesn’t move itself, and every law enforcement “bust” of a hemp carrier creates a problematic ripple within the supply chain that slows industry progress. With that in mind, the Southern Hemp Expo included the topic of transport in its annual event program for the first time.
I had the privilege of being the first to address the topic at that event shortly after I was appointed to the Board of Directors for the Hemp Alliance of Tennessee, which seeks to provide the broadest spectrum of educational resources to hemp companies. I’m sharing some highlights as well as additional insights with you, in the hope that you won’t be making news headlines for the wrong reasons.
The hemp industry will grow faster and stronger when industry veterans share their collective knowledge and experience. To this end, here are eight critically important areas hemp suppliers need to address to prevent the costly and potentially traumatic results that can occur if they wing it on transportation.
Communication is key
Law enforcement and United States Department of Agriculture (USDA) officials in each state have their own preferences. Unless you plan to have a staff member dedicated to these updates, it is best to outsource transportation to those specializing in shipping hemp.
Some areas are going to be problematic no matter how much information or paperwork you provide, so try to route around problem areas. A one- or two-hour detour is a small price to pay to avoid a stop that may take hours or days and/or court appearances to get resolved and could result in a shipment of spoiled product due to the delay.
Ensure you’re insured
Very, very few cargo insurance companies insure hemp; I can count them on one hand. If your carrier is saying you are insured, ask them if your policy specifically states they ensure hemp and check their description of the cargo on the bill of lading. Some carriers assume hemp is covered or misrepresent the cargo to secure insurance or avoid the additional paperwork, but that behavior can come back to bite the client when they have to file a claim. It doesn’t even take a major accident to cause issues. A refrigeration outage or a delay of a few days due to overzealous law enforcement can cause certain types of product to spoil, particularly during high temperatures.
With that distinctive cannabis smell, it’s almost a certainty that a driver is going to get stopped by law enforcement at some point, so it is critical that your driver be prepared. We train our drivers on what to say and what information to provide to law enforcement and provide all the documentation in a comprehensive packet. It’s unlikely law enforcement will just take a driver’s word without any documentation, and less likely if there is a language barrier. That’s why it is important that every shipment’s packet includes the following:
- Sending company name and complete contact information.
- Cargo contents.
- Lab test results verifying all cargo is compliant.
- Recipient company name and complete contact information.
- Local USDA contact person who is aware of shipment.
- Local Law enforcement contact person who is aware of shipment.
No less-than-truckload (LTL) shipping
Even if your shipment is less than a load, we strongly recommend you ship it directly to the destination without allowing pick-up or drop-off of other clients’ cargo. It’s just too easy for portions of your load to “disappear” if your cargo is assumed to be cannabis.
Track the truck and each piece of cargo—all the time. It’s essential that you know where everything is in real-time so you are the first to realize if any item goes astray or a weather system or other issue threatens the transit route.
Logistics, cannabis, and hemp expertise
Many companies are experts in growing, testing, processing, or selling hemp, but too often the logistics of getting it from Point A to Point B are an afterthought. Transportation often is assigned to someone who may have little knowledge about logistics, regulations, and complexities surrounding hemp transport or hemp compliance. Your time is best spent on your specialty, and it is usually far more cost-effective and productive to contract with logistics experts to source transportation providers and manage the logistics.
We firmly believe that the future for hemp is extremely bright, and a key factor will be managing the logistics in this complex environment. We encourage hemp companies across the supply chain to look to experienced hemp logistics companies for the specialized expertise to ensure regulatory compliance at all stages in the supply chain to ensure reliable delivery that will foster industry growth.
Before co-founding The 357 Company, Kevin Schultz was vice president at Verano Holdings, a vertically integrated cannabis company, focusing on its entire supply chain including strategic planning for compliance and production to ensure timely delivery of consistent, safe products. Previously, he designed and built out the B2B wholesale divisions in Illinois and New York for national cannabis operator PharmaCann.