The 2018 Farm Bill led to more growers and producers than market can currently bear.
It’s no secret the health and wellness market for cannabinoids has created significant consumer demand since the passing of the U.S. Farm Bill in 2018. But it has also become oversaturated as hemp producers from across the world dive in to take their slice of the pie.
Some estimates have the global CBD market being worth some $2.8 billion in 2020, with the U.S. market accounting for about $1.3 billion of that total. Thousands of CBD brands, peddling flower, oil, edibles and other various forms of the plant claim to supply the “best” or “highest quality” CBD available.
But there’s only so much demand to go around. Many producers are figuring that out the hard way.
In Nevada, hemp farmers Joe Frey and Adrienne Snow had 100 acres of hemp on their farmland in the rural northern country of Churchill back in 2019, according to a report from the Northern Nevada Business Weekly. Today, they have only eight acres.
According to the Nevada Department of Agriculture, the number of hemp plants grown across the state fell by nearly 70 percent from 2019 to 2021 – dropping from nearly 5,000 acres to roughly 1,600 – and the number of certified hemp growers plummeted from 213 to 116.
Snow told NNBW the downturn began with the Farm Bill, in which U.S. Congress legalized the nationwide growth and cultivation of hemp. It made the plant a cash crop for CBD and “completely removed the risk factor” when banking opened up for farmers of the plant.
“And tons of people jumped in,” she said.
Hemp exploded across the country
The total area of hemp planted across the country exploded in the months after the landmark bill passed – increasing from 32,000 to 146,000 acres, according to the U.S. Department of Agriculture. But the oversupply has led to prices plummeting for both hemp flower and its biomass.
Trimmed hemp flower has dropped from $350 per pound to just $50 per pound in Nevada, Frey told NNBW. Biomass that used to sell for $22 to $25 per pound now sells for less than $1 per pound. CBD isolate has also fallen from $3,000 per kilogram to about $300.
“None of the outputs are sustainable at this point,” Snow told NNBW. “No matter how much you cut your costs as a farmer, once this oversupply is gone, there’s no way you can farm the hemp, extract the hemp, pay all the employees, and sell a kilo of CBD isolate for what they’re selling it for now.”