Hemp Prices Continue To Fall

July 2021 saw record-setting temperatures in parts of the country, alarming spikes in Delta variant Covid infections, and large numbers of Americans returning to summer vacationing after having last summer’s dreams of ocean breezes and lakeshore barbecues dashed by the pandemic. It was also a notable, if not promising month for hemp. Hemp Benchmarks, a division of New Leaf Data Services and leading provider of financial, business, and industry data for the North American hemp markets, recently issued its report for July, which touches on some of the most high-profile talking points of the hemp market to date.

Wholesale cannabis prices have been experiencing a steady decline overall, with the exception of Crude CBD Oil and Broad Spectrum CBD Distillate. These products saw modest price rises in July but still fell short of the prices they topped out at a few months ago. There have been increases in transaction frequency and volume for CBD Biomass and extracted CBD products thanks to strong demand for delta-8 THC, which is synthesized from these products, but this has not been sufficient to move the needle on prices. Despite a steady demand, assessed prices for Delta-8 THC Distillate and Smokable CBD flower both dropped for the second month running, with indoor and greenhouse-grown products earning higher rates from buyers.

Delta-8 Demand

You might wonder why, with its steady-and-still-growing demand among consumers, Delta-8 THC has not been the rising tide that lifts all boats in terms of hemp sales. It may be due in part to state-by-state regulations and restrictions regarding its sale and use. As of July 1, The Connecticut Department of Consumer Protection established that businesses may no longer offer or sell products made using hemp or hemp-derived products with any concentration of THC, including deltas-7,8,9 and 10. A Senate bill signed into law on June 22, 2021 affirmed that products containing deltas-7,8,9 and 10 may only be sold by licensed cannabis retailers or medical marijuana dispensaries. New York has instituted similar restrictions. Delta-8 is also facing some opposition in states with legal cannabis markets as it is cheaper to manufacture than cannabis, is not taxed, and is cheaper to produce.

On the agricultural side, there has been an ongoing decline in the amount of acreage devoted to hemp production in 2021 due to farmers downsizing operations, fewer startups, and those who have cultivated in the past choosing not to grow this season. Meanwhile, existing hemp acreage endured threats posed by extreme weather conditions and the continued onslaught of Covid-19. 

In better news, fiber hemp is getting increased interest from farmers this year as a less volatile corner of the hemp market, being less prone to fluctuation due to changing regulations governing its use. Innovations in the industry abound as interest surges, such as the development of more precise and efficient processing equipment and proprietary technologies that meet the unique needs of customers. This is not to say that no hurdles exist, including developing cultivars that produce higher yields to make fiber hemp economically viable for farmers and the lure of growing other more financially rewarding row crops over hemp. And while there is less controversy around fiber hemp as opposed to hemp grown for CBD products, there is still a strong need for uniformity of regulation between states and better infrastructure in order for this market to flourish. 

The overall decline of the hemp market points to dramatic consolidation, a trend borne out by new data from The Brightfield Group revealing that the number of brands in the CBD industry has dropped from 3,500 at the end of 2019 to 2,000 today. Still, with new innovations on the rise and Delta-8’s stubborn but steady ascendance, there is hope that the rebound of the hemp market will not be a matter of “if” but “when”.

 

Julie Aitcheson

Julie Aitcheson is a freelance writer, author and educator. In addition to Green Market Report, her work has appeared in Vanguard Magazine, The Fresh Toast, Green Entrepreneur, Daily Press, The Baltimore Sun, LA Weekly and The Chicago Tribune. She received a full fellowship to the 2013 Stowe StoryLabs and won second place in the 2014 San Miguel Writers' Conference nonfiction writing competition. She has published two young adult novels and is currently at work on a piece of adult fiction.


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