Reports of Hemp's Boom then Bust

By NHA
Source: nationalhempassociation.org

During the past 6-12 months hemp has been drastically impacted. After hemp biomass and related wholesale oil has dropped 90%+ in price; many companies have found themselves over leveraged and underfunded to achieve their goals. Some companies have completely closed, others have been forced into bankruptcy, while some teeter on the cusp of one or the other. Financial strength in the industry is not something many can boast, as even some of the largest companies continue to take on debt to maintain operations.

The effects on CBD prices and its market share have been attributed to the lack of clarity from the FDA. Clarity and legalities would offer positive guidance and certainly improve the demand and business prospects for CBD products and CBD oil; the CBD opportunity in hemp is of such a finite volume that the acceleration in raw material production is simply not sustainable. The US has approximately 900 million acres of farmable land. In 2019, the estimated acreage registered was 250,000 and approximately 100,000 acres were harvested. This caused a glut of supply that has crashed the raw materials market. Even if FDA approval resulted in a 10-fold increase for CBD demand, this would only require less than .2%, or 2/10 of 1%. A hundred-fold increase would bring it to about 2% of all farmable land. By comparison corn, wheat, soybeans and cotton all represent at least 5%, and some up to 10% of total land farmed. Most directly comparable to CBD might be tobacco which accounts for over 300,000 acres, still well below 1/2% of total farmland.

If hemp wants to become a major agricultural crop, it must be versatile and have purposes outside of CBD oil. We need fiber, seed, textiles, etc. that will add to or replace uses of cotton and other crops. Ideas for hemp usage in construction, paper alternatives, and technology could also help increase the need for production, but all of this would be non-cannabinoid related. What everyone may know by now is that hemp’s future is not a bust, but only the beginning. The future does not reside solely in the cannabinoid market, but in the endless alternatives offered from the hemp plant.