USDA’s mispricing of hemp floral output undervalues the crop—hurting market growth, dissuading farmers, and misinforming policy.
The U.S. Department of Agriculture’s current methodology for calculating the value of hemp—especially the high-value floral component—is misleading. By blending low-value biomass and high-value floral into a single average, the USDA erases floral hemp’s true economic significance. That distortion stifles investor interest, deters farmers, and misinforms policymakers, weakening the entire hemp sector. Accurate pricing is vital not only for growth but for shaping Arizona’s emerging cannabis-cultivation identity, policy momentum, and competitive edge.
Since hemp was federally legalized under the 2018 Farm Bill, the USDA has surveyed growers similarly to how it tracks corn, soy, and wheat—collecting self-reported data on total yield and intended use (fiber, grain, seed, or floral). However, applying the same valuation method to hemp fails to reflect the dramatic price difference between biomass and floral products. The USDA computes value based on a blended average of biomass and floral sales, obscuring floral’s premium market value.
In 2024, the average retail value for floral hemp exceeded $330 per pound, while biomass lingered at just $2 per pound. Yet USDA’s blending methodology resulted in an apparent average of only ~$18.56 per pound for floral output. That stark mismatch demonstrates how the methodology dramatically underreports the value of hemp’s most lucrative segment.
Whitney Economics highlights that the USDA’s valuation misrepresents reality. For example, the USDA places 20.8 million pounds of floral hemp at a total value of $386 million—which implies an average of $18.56 per pound. But at actual market prices, just 1.2 million pounds of floral product would generate the same $386 million. Scaling that out, 20.8 million pounds sells for an estimated $6.9 billion, or 24.2% of the total retail market—far outstripping corn (15%) and soy (7.9%) revenue shares.
This systemic undervaluation ripples across the industry: Investor hesitation: Misrepresented revenue figures obscure floral hemp’s profitability, dampening investment and infrastructure development. Farmer reluctance: If growers believe returns are minimal, they’re less likely to plant hemp or rotate crops accordingly. Policy distortions: Policymakers rely on USDA data. When that data undervalues the crop, legislators may wrongly conclude hemp isn’t delivering meaningful income—spurring restrictive laws. Indeed, in one congressional hearing, a senator claimed hemp farmers receive less than 1% of total market revenue—a narrative easily debunked by accurate pricing.
Beau Whitney, chief economist of Whitney Economics, warns this undervaluation “is having a profound effect on the entire hemp industry” and calls for immediate correction. Reframing hemp’s value would shift how investors, growers, and lawmakers perceive the market—especially in Arizona, where cultivation is adapting rapidly to regulatory change, emerging legal frameworks, and growing consumer demand.
Accurate valuation would bolster investor confidence and empower growers to diversify and optimize operations. That, in turn, could reshape Arizona’s agricultural ecosystem—positioning the state as a serious hub for floral hemp output, not just fiber or grain.
In a broader rebuke, Whitney responded to May 2025’s USDA report—valued at $445 million for total hemp production—pointing out it cannot align with a $28.4 billion cannabinoid market unless valuation is deeply flawed. The USDA’s average per-pound estimate ($19.10) diverges from industry-tracked prices of $310–$374—further illustrating methodological misfit. Such discrepancies undermine transparency and risk eroding stakeholder trust at a critical growth juncture.
The USDA’s blended valuation of hemp fundamentally underrepresents the economic potential of floral hemp—masking its true value, discouraging participation, and misguiding policy. For Arizona’s cannabis industry—increasingly defined by cultivation sophistication, banking innovation, and a pro-business policy outlook—correcting this valuation isn’t just academic: it’s essential. Accurate data can spur investment, expand crop adoption, strengthen supply networks, and shape smarter, evidence-based policy that fosters growth rather than suppresses it.
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