With more and more farmers planting more and more acres of hemp, the cost of CBD isolate has dropped precipitously in the past year, according to Beau Whitney, founder and chief economist at Whitney Economics in Portland, Oregon.
Whitney says the price of CBD isolate was in the range of $7,000 per kilogram in early 2019, but have fallen to between $1,000 and $3,5000 per kilogram as of January 2020.
Whitney’s data lines up with what CBD companies are also seeing on the market this season.
“A year ago, isolate was $5,000 per kilogram. Six months ago, it was $3,500. Now it’s $2,000,” says Ben Rippley, CEO of Sunny Skies CBD. “Distillate has followed a similar trajectory. Full-spectrum distillate was $4,000 per kilogram six months ago, and now it is $3,000. I haven’t seen finished CBD product prices drop proportionately, but prices are decreasing steadily nonetheless.”
According to Whitney, the price drop is driven by the drastic increase in available biomass of hemp, which has dropped from $40 per pound to as low as $7 per pound. Whitney calls it a “real tough go for farmers right now” but the low cost of plant material and the limited number of companies processing hemp for CBD has led to a boom for those making and selling isolate.
“Processors are making bank,” he says, adding that this is typical for a new and emerging industry.
Whitney also says he sees better days ahead for farmers as big-name companies and retailers are still sitting on the sidelines as the Food and Drug Administration completes its regulation of the industry, which should lead to a stabilization of prices and a buyer’s market. With a more favorable regulatory environment, Whitney envisions large, national companies jumping into the industry and purchasing large amounts of isolate for a wide range of products, leading to farmers “rising like a phoenix from the ashes.”
— Brian Beckley