"Canopy expected to report sales of Biosteel and other CBD throughout the U.S. with partnerships with brick and mortar retailers in all 50 states. Especially GNC.
Should see a huge swing up. no matter the numbers on earnings day. " ============================================================== what do you smoke?
Hemp prices plunge as CBD demand falls short in a 'grossly oversupplied' market Hemp biomass prices reached a high of over US$40 a pound in July — it's now trading under US$10 a pound
Weed investors are so misinformed, and their investment is so misplaced.
It may not be apparent when you’re spending US$70 on CBD foot cream, but hemp prices are plunging amid a “grossly oversupplied” market, according to the head of the industry’s first price provider.
Hemp biomass prices reached a high of over US$40 a pound in July, just before the 2019 harvest came in, according to PanXchange Chief Executive Officer Julie Lerner. Today, it’s trading under US$10 a pound following a quadrupling of supply from 2018 to 2019.
Meanwhile, the CBD consumer market remains limited as the U.S. Food and Drug Administration continues to prohibit the extract in food or dietary supplements, although many sellers ignore that mandate. CBD is legal in other uses, such as topicals, as long as it contains less than 0.3 per cent THC, the cannabis compound that gets you high.
“Every way you slice it, the physical demand for the CBD market is much, much smaller” than the supply, Lerner said in an interview. “I’m a little surprised that retail prices have not started to come down yet. There’s so much competition.”
Lerner, a former Cargill trader, founded PanXchange in 2011. It started as a trading platform and benchmark pricing service for commodities in East Africa, then expanded into the U.S. via the specialty sand market for oil and gas. PanXchange launched the hemp industry’s first suite of benchmark prices in January 2019, one month after the U.S. farm bill legalized the plant, and added a trading platform in August.
Today, the hemp market is “rife with desperate sellers and opportunist buyers,” Lerner said in her December analysis of the industry. She looked at three different measures of potential CBD demand and found in each case that farmers are growing far more hemp than the industry needs.
Every way you slice it, the physical demand for the CBD market is much, much smaller than the supply Julie Lerner
For example, Lerner estimated that Charlotte’s Web Holdings Inc., the largest publicly traded CBD company, needed less than 500 acres of hemp to service an estimated US$95 million of sales in 2019. Assuming Charlotte’s Web accounts for approximately 2.4 per cent of the US$4 billion U.S. CBD market, that means about 20,000 acres of hemp are needed in total.
Instead, Lerner estimated that approximately 115,000 acres were harvested in 2019. And it’s only going to get worse.
“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,” she said.
Lerner predicted that industrial demand for hemp will eventually dwarf the CBD market, but that won’t happen until prices drop even more.
“It’s a little bit chicken and egg,” she said. “There won’t be demand for it until prices drop, and people won’t be planting for the industrial fibre market until there’s huge demand for it, so we’ve got to get over that hump first.” Cannabis Prices
Meanwhile, U.S. prices for cannabis also fell in most states and categories in 2019 — the opposite of the trend seen north of the border.
An analysis by wholesale cannabis marketplace LeafLink found that statewide pricing across categories fell in every legal state except Washington and Oregon. Prices also dropped in all categories except for edibles and ingestibles.
Notably, prices for smokable flower dropped 8 per cent nationwide, with California prices falling 21 per cent and Oregon tumbling 24 per cent. “This is likely due to the proliferation of non-flower related products as these two markets reach maturity,” LeafLink said in its report.
Despite the price increases in 2019, Washington remained the cheapest state to buy cannabis due to “product over-saturation,” LeafLink said. The most expensive state is Alaska, with its “exceptionally high logistics and shipping costs.”
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