Hemp is a plant from the cannabis family that is often closely associated with marijuana. Marijuana or Cannabis indica and Cannabis sativacan contain high concentrations of tetrahydrocannabinol (THC) which is a psychoactive component of marijuana, along with a large number of other cannabinoids. THC is the primary reason why humans have used these two forms of cannabis medicinally, recreationally, and ritually for a few thousand years.
Hemp is a variety of Cannabis sativa that has been used by humans even longer, several thousand years, to produce fiber and oil seed. This variety has an extremely low or undetectable concentration of THC. It is not therefore able to produce the “high” from marijuana nor does it have any known medical uses. However, it is a very valuable and versatile raw material in the production of such products as paper, textiles, rope, bio-fuels, protein powder for humans, bird seed and many other products, including biodegradable plastics. It is generally considered environmentally friendly because it requires little or no herbicides, pesticides, or chemical fertilizers.
Its current economic value is difficult to determine because it has been linked with marijuana and considered illegal in many countries, including the US since 1937. In that year the Marijuana Tax Act of 1937 was passed which effectively made marijuana prohibited because the tax was set high enough to discourage legal transactions. It also stopped the cultivation of hemp, except during WWII because of hemp’s military usefulness. The Marijuana Tax Act was overturned in 1969 and replaced with the Comprehensive Drug Abuse Prevention and Control Act of 1970.
We do know that historically hemp has been extremely useful and valuable. According to Scott Sondles, author of Hemponomics: Unleashing the Power of Sustainable Growth:
Hemp is a variety of cannabis sativa and was one of the first crops domestically cultivated. Since the beginning hemp has been an essential staple crop and up until the mid-19th century it was the most traded commodity in the world. (p. 4)
Sondles recounts how hemp was the raw material that made the sails for ships, the ropes for the pulley and other early machinery, as well as the first form of paper to be extensively used. The seed oil was also important as a base ingredient in products such as inks and paints. Christopher Columbus’s ships contained over 80 tons of hemp-based products, primarily the sails and ropes used to power and steer the ships.
That might be all well and good, but maybe hemp is no longer as valuable. The development of plastics, technology, and new raw materials may have turned hemp into an obsolete product that can no longer compete in the industrial era.
To counter that notion, it is important to point out that Australia, Canada, and many other countries have all legalized the growing of hemp in recent years. France has a long tradition of growing hemp for seed oil and China plans to substantially increase acreage and production of hemp, primarily for textile production.
So why doesn’t the US take advantage of hemp production? Sondles and others point the finger at the DuPont Corporation. In 1937, the year that the Marijuana Tax Act was passed, the DuPont Corporation was awarded a patent on the production of plastics from oil. As Sondles sees it, correctly in my view, this was the turning-point case where special interests pushing a mercantilist policy agenda won out over the virtues of the free market.
Sondles lays out this sordid case of politics against the people. It begins with Harry Anslinger. Anslinger had been the chief enforcement bureaucrat of alcohol prohibition and went on to become commissioner of the Federal Bureau of Narcotics. He was appointed by Treasury Secretary Andrew Mellon, who was DuPont’s banker and Anslinger’s soon to be in-law.
Anslinger drew up the propaganda against marijuana and drafted the legislation that included industrial hemp. In order to avoid the tax and penalties associated with marijuana, farmers would have to process their crops on their own farms to remove all the leaves from the stalks before transport. This processing requirement made growing hemp economically prohibitive compared to the growing of other crops which would earn farmers subsidies from the federal government.
According to Sondles’s reading of history, the importance of marijuana may have been a secondary consideration compared to hemp in the passage of the Marijuana Tax Act. With Anslinger providing propaganda against marijuana from inside government, the cabal could count on William Randolph Hearst to distribute the propaganda through his large chain of newspapers. Hearst owned a “vast acreage of timberland and was investing in paper mills to manufacture newspaper using DuPont’s chemicals.” (p. 53)
There are two additional strengths of Sondles’s book that I would like to mention. First, it includes an introduction to hemp’s important place in world and American history. When you get done with the book you have to wonder how the textbook writers could ignore this crop in their books. The second strength of the book is that the author has a good sense of Austrian economics when it comes to politics, public policy, war, and even monetary theory, deflation and the Austrian business cycle theory. The author may be overly enthusiastic on the question of the prospects of legal hemp, but if the silly and sordid prohibition against hemp is repealed we will get the final verdict from the marketplace.
 Scott Sondles, Hemponomics: Unleashing the Power of Sustainable Growth (CreateSpace, 2013).