CBD Prices Drop by 56% in One Year
The passage of the U.S. “Farm Bill” in December 2018, which federally legalized industrial hemp, has had a significant impact on the cannabis industry. As the acreage dedicated to hemp cultivation has increased, the price of cannabidiol (CBD) has plummeted.
CBD Now Costs $4,133 per Kilogram
Between October 2018 and August 2019, the price of pure CBD dropped by 56%, from $9,740 to $4,133 per kilogram. Experts attribute this downward trend to the rapid development of hemp farming in the United States. According to a report by Hemp Gazette, the area of farmland dedicated to hemp increased by 455% this year, reaching 206,390 hectares. However, in practice, hemp was actually planted on only 93,000 hectares.
Chase Nobles, director of the portal Kush.com, predicts a collapse in cannabinoid prices on the global market due to the growing number of businesses involved in hemp cultivation and processing. If all American farmers licensed to grow hemp actually plant it, the total acreage could nearly double, leading to a significant increase in raw material production.
The U.S. CBD Market Impacts Europe
Experts estimate that U.S. CBD production will reach 4,700 tons this year, which is eight times higher than current demand. As a result, economists predict a drop in raw material prices and a fivefold decrease in the profitability of hemp cultivation (from $50,000 to $10,000 per 0.4 hectares of crops). The oversupply in the American market is expected to have a domino effect on the European industry. From August 2018 to August 2019, the average price of CBD in Europe nearly halved, mirroring the price trend in the U.S.
According to research by Technavio, a price war has erupted in the global hemp market among major companies. This is due to the widening gap between supply and demand. The head of one European cannabis company stated that they have to lower CBD prices every month because of the oversupply. Currently, CBD prices are in free fall, and experts are unsure how low they will go.