cbd oversupply

Cbd oversupply

So what’s the answer to how many acres the CBD industry requires to serve the public with hemp CBD products?

“It’s a risk this year if you’re planting for CBD alone,” said Lerner. “The buyers are few and far between. We have an enormous amount of 2020 oversupply. Companies are still working on 2019 inventories. Do the math. Hope is not a strategy.”

Have contract, will plant

“The CBD craze is coming to a close,” said Scott Schuett, partner with GBMM Brokers, which links producers to brands, with offices in Colorado and Hawaii. “A lot of farmers and farmer groups are sitting on two years of hemp now. They are waiting for a higher price point and that might not ever happen.”

“You have no leverage in negotiating the contract unless you have a hand in the spot market,” she said. “It is your ultimate quintessential price discovery.”

Cbd oversupply

Sierra Nevada Hemp’s growing customer base encouraged O’Farrell to look into expanding. Specifically, he is seeking a commercial building in Reno to serve as a retail space and a processing facility where the company could “potentially reduce costs by making larger batches.”

The seeds of a downturn were planted in 2018 when the federal farm bill legalized nationwide growth and cultivation of hemp. Until then, the FDA treated hemp in much the same way as its cannabis cousin: a controlled substance. The new farm bill, however, recognized the plant as having just a trace of THC, a compound that is more present in marijuana — and that produces the high associated with it.

He also sees a lot of opportunities in construction with hempcrete, a mixture of hemp fibers and binders that can be used as an alternative building material or insulation.

At its peak, hemp biomass was going for $22 to $25 a pound, said Frey, adding: “That same biomass, I couldn’t get rid of it for $1 a pound today.”

The plan calls for total THC testing and for all plots to be sampled and tested at the NDA lab, which is registered with the U.S. Drug Enforcement Administration.

“Doing the farmers markets has been great, because I get to hear from people how much our products help them,” he said.