Banking & Finance

After Years Of Growth, Hemp Prices Continue Their Decline

After Years Of Growth, Hemp Prices Continue Their Decline

Despite increasing popularity and high demand for Delta-8, cannabis prices continue to fall. With the exception of modest price rises in crude CBD oil and broad-spectrum CBD distillate, prices still fell short of where they topped out a few months ago. Increases in transaction frequency and volume for CBD biomass and extracted CBD products –Delta-8 THC is synthesized from these products– has not been enough to boost prices.

State-by-state restrictions and regulations for Delta-8 likely prevent it from being a market-wide savior. Because Delta-8 is cheaper to manufacture than cannabis and is not taxed it is seen as a threat and faces opposition in states with legal cannabis markets.

Existing hemp acreage has endured extreme weather conditions and the continued onslaught of Covid-19, but as farmers continue downsizing operations there are fewer startups, and those who have cultivated in the past are choosing not to grow this season.

On the bright side, fiber hemp is getting increased interest from farmers this year. Being less prone to changing government regulations, fiber hemp is seen as a less volatile corner of the hemp market.  Nonetheless, in order for this market to thrive, there is still a strong need for better infrastructure and uniformity of regulation between states. Also, cultivars that produce higher yields are needed to make hemp fiber more viable than traditional crops.

The development of more precise and efficient processing equipment and proprietary technologies that meet the unique needs of customers has sparked interest and provides hope for a rebound in the market sooner rather than later. The number of brands in the CBD industry has dropped from 3,500 at the end of 2019 to 2,000 today. This continued dramatic consolidation points to the likely continued decline of the market

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