Pricing and data firm Hemp Benchmarks said there has been a "noticeable contraction" in allowed hemp production capacity this year, with licensed acreage in the US declining more than 30% since 2019. And a reduction of the indoor and greenhouse surface of 64%.
Hemp is a type of cannabis that contains less than 0.3% THC, the compound that gets you high. It is cultivated for its CBD, a non-psychoactive ingredient that advocates say helps with everything from insomnia to pain, as well as industrial and food purposes. It was legalized in the US in late 2018, but the Food and Drug Administration still prohibits the use of CBD in food or dietary supplements.
Hemp Benchmarks said in its July report that it also expects a smaller proportion of the 2020 hemp crop to be grown for CBD, with the remainder used for fiber and grain.
"If the proportions of acreage planted and successfully harvested this year are almost like last year, it should end in a substantially lower supply of CBD flower other cannabinoid-rich biomass from this year's harvest, relative to 2019," he said the signature. This is starting to affect prices, with “stabilization rates” in recent months and even “slight upward trends” for some products, such as skiable bulk CBD flower and refined hemp oil.
"It is uncertain whether this trend will continue, given that many processors reportedly have significant amounts of inventory," said Hemp Benchmarks. In addition, "large amounts of extracted CBD are currently 'locked' in bankruptcy and lawsuit reorganizations, and it is unknown when that product could be re-launched."
Prices for CBD biomass are still well below where they were a year ago, trading in a range of US $ 40 cents to US $ 1.05 per percentage point of CBD content per pound, compared to more than US $ 4 in July 2019, according to the trading platform and benchmark price service Pan Change.
Demand for CBD
Supply may be declining, but so is demand. This year's CBD sales are forecast to be significantly below previous estimates amid the fallout from pandemic-related store closures, unemployment, and FDA inaction on food-related products, according to a Recent report from cannabis data firm Bright field Group.
The US CBD markets is now projected to reach $ 4.7 billion in sales in 2020, up 15% from 2019; that's lower than a previous forecast of around $ 8 billion issued last years. Bright field also significantly lowered its outlook for 2023 to $ 12.4 billion from roughly $ 20 billion previously.