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INVESTING 101 EDUCATION

How Does the New Farm Bill Impact the Real Estate Market?

The Farm Bill of 2018 promises to revolutionize the agricultural industry across America. According to the American Farm Bureau Federation, the passage of the 2018 Farm Bill solidifies the government’s stance of financial and legal support for small, medium and large operation farms. Most notably, the 2018 Farm Bill allows farmers to grow hemp, allows retailers of all kinds to sell products such as CBD oil that are derived from hemp, and opens the door to a new world of real estate investment opportunities in the cannabinoid market.

What is the Farm Bill?

The Farm Bill is the expression of the fundamental government policies regarding the agricultural industry in the U.S. About every five years, the Farm Bill is reviewed, changed and renewed by the in-office administration. The impact of the provisions in the Farm Bill is huge. They affect international trade, farm credits, farm subsidies, nutrition programs, conservation efforts, agricultural research and more.

What is New About the 2018 Farm Bill?

After decades of the government not distinguishing between hemp and marijuana, the 2018 Farm Bill allows the broad cultivation of hemp. Previously, legal hemp cultivation was limited to small pilot programs designed to study hemp. The 2018 Farm Bill also provides for hemp-derived product transport across state lines and the marketing and commercialization of hemp-derived products, including CBD. Further, as long as the growing and cultivation of hemp is conducted according to Federal law, there are no restrictions on the sale, transport or possession of hemp or its derivatives. This sets the foundation for an exciting upswing in the cannabinoid market.

Understanding Hemp and CBD

Some clarification about hemp, CBD and THC may help you to better understand the cannabinoid industry better:

  • CBD is short for cannabidiol (pronounced can-a-bid- eye-all), one of many compounds found in the Cannabis Sativa plant. CBD is extracted from the hemp plant, a variety of Cannabis Sativa.
  • THC is the compound that causes the “high” associated with cannabis. THC comes from the marijuana plant, which is also in the Cannabis Sativa family of plants.
  • CBD has only trace amounts of THC and does not cause the psychoactive sensations associated with marijuana use.
  • When people talk about the cannabinoid market today, they are referring to the CBD market.

What Are The Benefits of CBD?

In order for there to be a market for anything, there must be consumer demand. There’s a lot of demand for CBD; specifically CBD oil. The market for CBD oil is expanding exponentially, and with good reason. CBD oil has been linked to a variety of health benefits including pain relief, anxiety relief and more. Project CBD reports at least 50 symptoms that can be alleviated with CBD. Even more benefits of CBD may emerge as CBD is studied more aggressively by the scientific and medical community.

How is the Real Estate Industry Affected by the Cannabinoid Market?

There are multiple opportunities for real estate investors who want to get in on the burgeoning cannabinoid market.

First, there is an increased demand for commercial lease space by retailers who want to specialize in selling CBD products. While any retailer is permitted to sell CBD products, there are so many different varieties of CBD products that it makes sense to have entire stores dedicated to them. Commercial real estate investors have likely already seen a spike in demand.

Second, agricultural land investors will see increased demand for farmland on which to grow hemp. Because of the wider market for hemp and the renewed government financial support for farmers, even small farmers won’t have to worry about earning a good living. Existing farmers are already looking to extend their land holdings in order to grow hemp in addition to current crops. Many experts predict a massive return to homesteading and living off the land; another good indicator for real estate investors who buy and sell farmland.

Finally, in places where real estate zoning restrictions previously prohibited the manufacture of certain illegal substances, those restrictions will likely be adjusted to allow the processing of hemp and CBD. This paves the way for commercial, industrial processing of hemp to extract CBD for its many uses. For real estate investors, this means more demand for commercial warehouse and manufacturing space.

The New Farm Bill of 2018 ushers in a new era of opportunities for real estate investors. Even if you don’t want to directly buy and sell commercial real estate or farmland, you can get in on the booming cannabinoid market by doing private money lending and investing in projects or companies that are more directly involved in processing hemp and CBD oil. There are so many ways to profit that it only makes sense to give thoughtful consideration to this new opportunity. If you’d like to find out ways to invest, either as a private money lender or buying and selling the property, please give us a call or send us an email. We have many opportunities for you to consider.