One of the biggest names in California marijuana cultivation, Glass House Brands Inc. (CBOE CA: GLAS.A.U) (OTCQX: GLASF), is actively considering getting into the hemp sector, company leadership revealed during its second quarter earnings call last Tuesday.

The temptation is understandable: Glass House has several sizable greenhouses that aren’t being fully utilized for growing marijuana. One is actively being emptied out by a tomato farmer so Glass House can begin using the space for cannabis cultivation – either marijuana or hemp.

And because Glass House already has manufacturing capacity and branding for its own product lines, company executives said it would be a relatively simple pivot to take advantage of a potentially enormous new revenue stream.

“We are actively having meetings with large distributors of hemp-derived cannabis, and we are considering DTC, or direct-to-consumer products, shipped from our farm in Southern California directly to people in the states which legally allow it,” Glass House CEO Kyle Kazan said during the call, while emphasizing that a final decision has not yet been made.

The business benefits are obvious, including the ability to ship across state lines or even internationally, a lack of federal 280E tax burdens on hemp goods, and basic diversification as the California marijuana market continues to struggle with pricing pressure and competition from the underground market – as well as from the same intoxicating hemp goods that Glass House is considering producing.

Marijuana prices have continued to tumble in recent weeks, CFO Mark Vendetti said, with wholesale marijuana prices having “fallen below the lowest level seen in 2023.”

“We think that the current level of flower pricing is approaching an economically unsustainable level for many growers,” Vendetti said. Glass House even revised its expected price per pound downward for the rest of the year, to $275-$280 from $310-$315.

That’s a powerful motive for any California marijuana grower to diversify, especially when it would take very little effort, Kazan said.

“What we would do in the greenhouse in terms of retrofit or operations is no different between the two markets. It’s really just a different set of regulatory standards,” Kazan said. “What we’re looking at here would give us basically maximum optionality with minimal increased cost so that we can be potentially in both markets at the same time.”

The pivot could also open up markets that are still closed to marijuana, such as Texas, Glass House President Graham Farrar noted.

“I’ve seen numbers upwards of 7,000 hemp dispensaries in Texas,” Farrar said. “So, the market size is potentially massive. And frankly, it looks more like we would’ve expected and hoped cannabis to look at this point.”

Glass House would be far from the first major cannabis brand to expand into hemp. New York-based Curaleaf, Mike Tyson’s cannabis brand Tyson 2.0, and California-based Cookies and Jeeter have all made the leap, part of a national trend that has accelerated over the past two years.

The pivot would also be fairly easy because California lawmakers have thus far failed to regulate intoxicating hemp goods; an attempt at passing a bill to do so just failed last week when AB 2223 died in the Senate Appropriations Committee. That means much less red tape, compared to the cannabis sector, if Glass House did choose to begin growing hemp.