Hemp prices have plunged because the market is “grossly oversupplied”, an industry expert claims.
Hemp biomass prices have dropped to $10 a pound after hitting a high of US$40 a pound in July, according to PanXchange CEO Julie Lerner.
Supply has quadrupled between 2018 and 2019.
She told Bloomberg: “Every way you slice it, the physical demand for the CBD market is much, much smaller.”
“I’m a little surprised that retail prices have not started to come down yet.
“There’s so much competition.”
Lerner adds that the oversupply problem is 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.”
Trading platform PanXchange launched the hemp industry’s first suite of benchmark prices in January 2019.
US farmers rushed to grow the plant as the CBD market in the US and abroad exploded – The American CBD market alone could be worth $2.75bn in 2020, according to cannabis experts at data analysts Nielsen.
The CBD market in the US has been rocked by a crackdown by health authorities.
The Food and Drug Administration (FDA) is going after firms that it claims are violating the Federal Food, Drug, and Cosmetic Act.
A statement reads: “Based on the lack of scientific information supporting the safety of CBD in food, the FDA is also indicating that it cannot conclude that CBD is generally recognised as safe (GRAS) among qualified experts for its use in human or animal food.”
The FDA also urged consumers to be wary of the safety of CBD products more broadly.