CBD is a hot commodity. While legal marijuana is gaining ground in several states, CBD for medical use is far more widely accepted.
Hemp, which is now legal across most of the USA, is the source of the cannabinoid and part of the reason behind its widespread acceptance. Furthermore, because CBD is an additive to a wide variety of nutraceuticals, it can be found in many mainstream retailers. The result has been a Wild West market and a mad scramble for good, reliable sources of CBD isolate.
Marijuana Venture interviewed several experts in the space for their opinions to some key questions: David Maddalena, publisher of Hemp Connoisseur magazine; Russell Stebbins, CEO of OLEO Inc., a manufacturer of micro-encapsulated CBD ingredients and CBD-infused drinks; Thomas Guel, CEO of Lilu’s Garden, one of the largest CBD producers in North America; and Robert Chapman, CEO of BCH Organics.
Marijuana Venture: What’s driving the explosive growth of CBD? And do you see it as a sustainable, long-term trend?
David Maddalena: Multiple factors, not the least of which is the acceptance of CBD by the World Anti-Doping Agency (WADA) as an anti-inflammatory substance. In addition, some large drink manufacturers are already looking to add CBD to several new products.
Russell Stebbins: Consumer education is a trend that is happening in many regions as people realize that they need to be in control of their own health. That trend is similar to what you find in the consumer food market. Yes, it’s sustainable; however, the current brokering and deal-making isn’t, and will be routed out by large manufacturers as they scale up.
Thomas Guel: I think that the general public’s awareness of the product’s health benefits, along with government acceptance, are the big driving forces. People are seeing the value and the policy trend leaning toward full legalization.
MV: Is U.S. hemp production going to keep up with demand?
DM: It’s not keeping up with demand right now. I think we will be able to keep up in the next couple of years, but we are really just looking into a crystal ball at this point.
RS: Yes, many people are getting into the industry and increased production will scale with demand, unless demand goes up even faster.
Robert Chapman: U.S. hemp production has increased in Colorado, Wisconsin and Kentucky. Farmers in several states are switching crops to hemp. We expect this fall’s hemp crop to be large. However, hemp must be refined into oil and CBD isolate, and this takes some expertise. Hemp production will be fine. However, CBD isolate may not keep up with demand. Hemp oil should be readily available.
MV: Are there differences in quality between domestic and CBD from Asia?
TG: Definitely! A couple of the big issues to watch out for are synthetics, heavy metals and solvents, which tend to be more prevalent in Asian CBD.
DM: As of right now, I’d only trust domestic hemp (CBD) as it is easier to vet. That doesn’t mean there isn’t good hemp overseas, but not knowing the source of the biomass would give me pause. I would be extra careful if I didn’t know the source.
RS: The differences lie in morality and product variation. In food industries it’s common to pay more than twice as much for a commodity with paperwork that confirms origin. Although isolate is more or less chemically the same if verified by a certificate of analysis, the difference can be in the contaminants found in product originating from China that has been filtered through labs in Europe or other regions by corporations such as Isodiol.
RC: In my experience, CBD sourced from Asia is difficult to trust. Heavy metal content can be high, and material can be adulterated. Often the material is accumulated by “flippers” who resell.
MV: What should a wholesale buyer of CBD isolate watch out for?
TG: They should get to know their supplier and their supplier’s source. There are a lot of “snake oil salesmen” and bad actors operating in this space. Go directly to a respectable supplier whenever you can.
RS: It’s all land mines. Watch out for everything. Trust no one and make sure both parties know how escrow agreements work. Residual solvents, residual heavy metals, other contaminants and falsified documents are just a few of the problems you can encounter.
DM: CBD is an unregulated market, and 90% of the players are new to the business. Right now, there seem to be more bad actors than good ones. I recommend that if you’re going to get involved, take your time. Get a good lawyer and a trusted escrow account to make sure both parties are protected.
MV: Will CBD isolate prices rise or fall in the next 12 to 18 months?
RC: CBD prices are currently all over the map. Sourcing and validation can drive price. Reliable, documented material costs more. Price should trend down as more processors come on-line. Cannabis and hemp are commodities. Supply should exceed demand in four years.
RS: I’ve been told prices will go up. However, that is for quality product. Prices may stay the same or even decrease for lower quality or overseas product.
DM: I think the price is going to fluctuate like any commodity, depending on the season. However, prices won’t drop dramatically from where they are for at least a couple of years.
TG: There will be an increase in production as more companies enter the business. Over the next few years, I believe that the market and its pricing will stabilize.
MV: What advice do you have for purchasers of smaller quantities of CBD who might be looking for 1 to 10 kilograms of isolate?
TG: Do your homework on your supplier/manufacturer. Get a supply contract to lock in better price points if you’re able.
DM: Either find a trusted processor that you can develop a long-term relationship with or find a trusted broker (easier said than done!) who can add your smaller order to a larger one for a better price.
RS: Pay the price quoted if it works for your model. There are a lot of “price hunters” in the marketplace so many manufacturers won’t sell directly because the low-ball operators can bring problems to the business.
RC: One kilogram isn’t a heck of a lot. Expect to pay a lot more for smaller amounts. Ten kilograms gets to be more meaningful, but this size can be more susceptible to adulteration and chicanery. I recommend paying for your own analytical assay. Many buyers of small amounts of isolate expect to sell it online in gram amounts. There is a high demand for material in smaller quantities. My advice? If you value quality, expect to pay more. Do your own contract analytical at any size purchase.