As farmers across the nation continue to convert crop land to industrial hemp, wholesale prices for the cannabis cousin have dropped significantly.
If it feels like hemp CBD products are popping up everywhere you look, you’re probably right. But hemp supply isn’t just excessive in the retail market. As the CBD trend continues to peak, market analysts now say that significant oversupply has already caused a hefty drop in the wholesale price of hemp.
According to Bloomberg, a new report from hemp industry analytics firm PanXchange noted a 75% drop in the wholesale price of hemp over the past six months. In July of 2019, hemp biomass was going for $40 per pound, while the same product will now fetch only $10 per pound on the pre-extraction market.
“Every way you slice it, the physical demand for the CBD market is much, much smaller [than the supply,]” PanXchange CEO Julie Lerner told Bloomberg. “I’m a little surprised that retail prices have not started to come down yet. There’s so much competition.”
Still, despite the fall in wholesale hemp prices, the cost of retail CBD products have remained relatively high. But as more cultivators enter the marketplace, and federal regulators move closer to final regulations for edible CBD products, Lerner expects customers to pay less for their cannabidiol creams and tinctures in coming years.
“It’s a little bit chicken and egg,” Lerner said. “There won’t be demand for it until prices drop, and people won’t be planting for the industrial fiber market until there’s huge demand for it, so we’ve got to get over that hump first.”
As the hemp industry emerged after the passing of the 2018 Farm Bill, most major reporting about the market has concerned complications with THC testing, federal regulations, and other early hiccups. With the hemp industry entering its second full year of legality, though, industry experts are confident that overwhelming supply will outweigh any persistent issues.
“We are hearing that despite the losses people have had this year, they’re still going to increase plantings, and you have Texas, Florida, Wyoming and a bunch of late-comers that are just starting this crop year,” Lerner said.
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