Farmers bet big on CBD

2 years ago    By Admin

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Many farmers planted hemp last year, hoping for some of the bonanza predicted for the newly legal, nonintoxicating variety of cannabis that yields the soothing stuff called CBD. But demand didn’t materialize, and the price fell 30% from December to January, say researchers at New Leaf Data Services. “Large volumes of biomass remain unsold,” notes a New Leaf’s Hemp Benchmarks report, “suggesting that further price erosion is possible.”

Even Senate Majority Leader Mitch McConnell was a booster when Congress legalized hemp in late 2018, hoping that it would make up for declining tobacco sales in his state of Kentucky. Cowen analysts predicted that CBD would be a $16 billion opportunity for companies like Canopy Growth and Tilray. Boosters believed that CBD products would fill supermarkets, drugstores, and mass merchandisers. Fashionistas would wear hemp threads.

Barron’s was skeptical. The likes of PepsiCo and Walmart haven’t committed to CBD-laced products. The Food and Drug Administration says it can’t permit the biologically active ingredient in food and drink without safety tests. Health regulators in states like California are also keeping it off shelves. Even mail-order specialists like Charlotte’s Web Holdings blame regulators for stunting CBD sales. The company’s stock has slid 65% since April.

CBD may become hot again. But for now, Hemp Benchmarks reports that only a fraction of the acreage licensed to grow hemp was harvested in 2019, yet a glut still resulted. As the new planting season approaches, farmers should be buying seeds and starter plants. But seed prices are lower than they were in October.

barrons.com