Tobacco

Farm Bill to Ignite Hemp Combustibles?

Retailer explains optimism for promising tobacco category
Photograph: Shutterstock

BOULDER, Colo. -- For tobacco category managers wondering what will come of the highly publicized 2018 Farm Bill that will bring more hemp products to market, Keelan Gallagher has one response: hemp combustibles.

With the passing last December of the Agriculture Improvement Act of 2018, Gallagher, director of trade marketing and brands for Smoker Friendly International, Boulder, Colo., says that legally grown and developed hemp products may present a regulatory and tax advantage in the combustible category.

“Hemp currently does not have the same regulatory or tax burdens of other tobacco products,” Gallagher said. “So, for instance, a flavored-hemp wrap would not fall under a flavored-tobacco ban.”

These hemp combustibles also wouldn’t be subject to the same tax rates as other similar products, he said, so he sees an opportunity for lower retail pricing or higher margins. He believes manufacturers can bring hemp cigarettes to market just like cigarettes for about $15 per pack at retail, but with margins as high as 50%. Retailers have the potential to make 10 times more on a pack of hemp cigarettes than a pack of tobacco cigarettes, he said.

Manufacturers that deliver a “quality-tasting smoke” at an “accessible” price point, and provide the medicinal, cannabidiol (or CBD) benefit linked to hemp, will entice trial from the adult combustible-tobacco smoker, Gallagher said. He believes that market can be as many as 30 million to 40 million people.

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