Demand for CBD exploded after hemp-derived cannabinoids were legalized in 2018. Within two years, sales hit $4.6 billion. However, analysts believe that number could have been even higher if the industry hadn’t been whacked by regulatory uncertainty and 2020’s pandemic restrictions.
According to BDS Analytics, a cannabis-focused analytics company, 2020 CBD sales fell significantly below expectations.
“Originally going into 2020, we were expecting closer to about 70 to 75% growth,” Kelly Nielsen, vice president of insights and analytics at BDS, said in an interview. “We tempered that estimate given how things … progressed throughout the year.”
In reality, the market only experienced 55% growth.
Slower sales led to a drop in CBD wholesale prices in 2020. Before the pandemic, hemp biomass prices hit a high of $40 per pound in July 2019. Less than a year later, in January 2020, the price had fallen to $10 per pound.
CBD wholesale prices stabilized in 2021, although month-on-month shifts in pricing were observed.
CBD consumer prices were flat in 2021 as well. Last year, CBD analytics firm Leafreport determined that on average, CBD consumer prices decreased by about 2 percent between April and November 2021. That’s a slight, almost unnoticeable change.
Pricing for CBD products is inherently more varied than pricing for bulk CBD because consumers are often willing to pay a premium for things like brand name and organic certifications. So, although the price of CBD only changed by 2 percent during the time period Leafreport studied, certain CBD categories saw wild fluctuations. Many of these product categories record a big difference between the least and most expensive products.
For instance, Leafreport notes that: “The most significant price difference is in the creams and topicals category, which has a staggering difference of 11142% separating the most expensive products from the cheapest. In April 2021, the difference was 4718%.”
CBD sales are expected to grow every year. CBD wholesale prices, however, are affected by supply as well as demand. If the market is oversaturated, it will drive down costs for everyone.
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