Still benefiting from the glow of federal legalization, industrial hemp farming boomed in 2019. The industry's growth has continued this year, but with some winners and many losers as a spurt of new farmers led to oversupplies of hemp and CBD, which in turn led to plummeting wholesale prices.
With the majority of new hemp farmers growing the plant for CBD extraction and not fiber use, prices for unrefined CBD dropped as much as 83 percent from 2015 to 2020, according to a recent market report from New Frontier Data, while nationwide acreage devoted to hemp farming more than doubled. Colorado Department of Agriculture Commissioner Kate Greenberg, who called hemp farming a "mad rush" in a May interview with Politico, foreshadowed that drop last year:
"This is a bit of a new territory, because there are dollar signs all over the hemp industry, so you get folks who aren’t in it necessarily for the passion of farming, but for the opportunity to make money," Greenberg told Westword in 2019.
Marijuana Deals Near You
Farmers and botanists have been selectively breeding and growing hemp plants for high CBD content for the better part of the last decade, but New Frontier's market report suggests that switching lanes to lesser-known cannabinoids such as CBN or CBG could help struggling hemp farmers reduce obstacles going forward. There are over 100 cannabinoids — molecules such as THC, CBD, CBN, CBG and more that interact with our bodies' endocannabinoid systems — in the cannabis plant, and most of them, like CBD, aren't intoxicating. And, unlike CBD and THC, these minor cannabinoids aren't listed in federal or international drug laws, leaving a little more wiggle room for an already unregulated industry.
"With hundreds of new companies rushing into the CBD space, many in the industry are looking beyond CBD towards other minor cannabinoids," New Frontier reports. "For farmers feeling the effects of CBD oversupply, minor cannabinoids can offer higher prices and less regulatory oversight."
Both the New Frontier report and several members of the hemp industry with whom we've spoken see CBN (cannabinol) and CBG (cannabigerol) as the next big thing in the hemp and cannabis industries. Despite not being as popular or studied as CBD (which is new to clinical research itself), both CBN and CBG have shown potential in wellness areas such as fighting inflammation, pain, nausea and potentially even certain cancer cells.
We Believe Local Journalism is Critical to the Life of a City
Engaging with our readers is essential to Westword's mission. Make a financial contribution or sign up for a newsletter, and help us keep telling Denver's stories with no paywalls.
Support Our Journalism
Although CBG may be the more exciting of the two in terms of medical potential, hemp extractor Devin Alvarez predicted that CBN "will come along quickly" because it is currently produced at higher commercial levels.
"CBD and CBN are even more closely related, and CBD can be converted into CBN," Alvarez explained last December, adding that CBG, while better at targeting medical symptoms, is "still very expensive, both in genetics and extraction methodology."
The building blocks of future cannabinoid demand aren't going to help hemp farmers currently grappling with a crowded market, though. If farmers have the means to expand their operations, the New Frontier report suggests giving hemp processing and extraction a try. While there has been an increase in hemp farmers across the country, states are lacking in processing and testing facilities — and that includes states with more established hemp programs, such as Colorado, Oregon and Kentucky.
"That dynamic leads to worries that more biomass will be grown than can be processed, adding further downward price pressure on wholesale prices. While retail consumer demand is growing, with consumers showing interest in using CBD for a range of health and wellness applications, lack of scaleable processing capacity will be a key impediment to the industry’s ability to capture the rising consumer demand," the report adds.