These hemp farmers are making a killing on the CBD industry
(CNN) — Blue Forest Farms used to grow hundreds of acres of kale, squash and pumpkins. But it has since switched its focus to a different cash crop: hemp.
The farm, which is located in Erie, Colorado, has dedicated 150 acres to growing hemp so far — and it’s still planting.
“We’re now expanding it to 1,000 acres,” said McKenzie Mann, Blue Forest’s production manager.
About 500 acres will come from land previously used to grow kale and squash.
Farmers across the United States have been rushing into hemp ever since President Donald Trump signed the Farm Bill into law in December. The legislation removed hemp from the government’s controlled drug category, triggering a surge in demand for cannabidiol, or CBD, a chemical that is derived from hemp and marijuana plants.
CBD is non-psychoactive, meaning it won’t get you high. (THC, or tetrahydrocannabinol, is the chemical in cannabis that does that). Instead, CBD extracted from hemp is marketed for everything from pain relief to reducing inflammation, stress and anxiety, and it is sold in an array of products from shampoos and oils to pet treats and granola.
Farms that were already growing hemp are seeing both demand and profits surge, while farmers who have never grown hemp before are rushing to plant it in their fields.
“There’s a lot of excitement in the farming community because hemp is seen as a high-return crop. There are many farmers around the country who are struggling to make ends meet and they’re looking for an alternative like hemp to boost revenue,” said Eric Steenstra, president of VoteHemp, a non-profit that advocates for the commercial sale of hemp.
Mann has been fielding multiple calls a day from farmers around the country. “They’re corn farmers, wheat farmers. They want advice on how to grow hemp,” he said.
Blue Forest charges $35 to $40 per pound for the high-quality hemp it sells for CBD extraction. That compares to about $1 a pound for the kale it sells. The company declined to disclose its total sales of hemp last year but said the category is very profitable for the business and it expects its hemp sales to double this year.
Mann said the price of hemp went up slightly after the Farm Bill was signed. Industry watchers say the price could stay at these levels or inch even higher if supply for CBD doesn’t meet the demand.
But if too many farmers get into the hemp business, the market could become saturated and prices could start falling, Mann noted. Last year, just over 78,000 acres of hemp was grown in the US, up from 9,649 acres in 2016, according to VoteHemp’s 2018 Hemp Crop Report.
More than just CBD
Total sales for hemp-based products in the US were about $1.1 billion in 2018, and are expected to more than double by 2022, according to New Frontier Data, a market research firm focused on the cannabis industry.
Much of those gains will stem from demand for CBD products. But hemp can also be used for a variety of other products, such as fibers, clothing, rope and building materials.
“It’s important to take a longer-term picture of the hemp market,” said Steenstra. “Right now, CBD is the hot commodity and is a significant driver of the market and profit for farmers. But as an agricultural crop, hemp has significant market potential for grain and fiber.”
Andy Rodosevich is cofounder of Hemp Depot, a Colorado Springs, Colorado, business that operates its own farms and is a distributor of CBD and hemp products.
The company planted 5.2 million hemp plants in 2018. “This year we are planting three times that number. We’re trying to keep up with demand for CBD and scale up production,” said Rodosevich.
Hemp Depot charges $35 to $40 for a pound of the high-end hemp it sells for CBD products. Last year, the business sold about 25,000 pounds of hemp, helping the farm log a total of $10 million in sales. This year, he expects to sell 35,000 pounds with total sales crossing $50 million. Rodosevich said the goal for next year is to sell 2 million pounds.
He says he’s also gotten calls from enthusiastic farmers asking for advice on how to grow hemp. He understands the excitement but tries to set reasonable expectations for them.
“While hemp is unbelievably profitable for farmers, growing it has its challenges,” he said.
For starters, the seeds aren’t cheap. Good quality seeds guaranteed to provide high CBD levels and low amounts of THC that fall below the federally mandated 0.3% threshold, can range from $1 to $2 each.
Hemp farming is also labor intensive. While large-scale farms use machinery for growing traditional crops like wheat and corn, specific machinery for planting and harvesting hemp is still lacking. So hemp farms rely on manual labor for planting, harvesting and removing weeds.
Randy Wenger, a corn and wheat farmer whose 5,000 acre farm in Yuma County, Colorado, has been in the family since 1919, tried hemp farming for the first time last year.
“I was looking for an alternative crop that could be profitable for me and wouldn’t break the bank,” he said.
Even though he sought advice from other hemp farmers and researched farming techniques online, it was still a challenge. He was surprised at how much manual labor was needed to tend to hemp. “You can spend a lot of money just on the labor,” he said.
The hemp he was growing for CBD didn’t turn out to be the best quality either. ‘It was a total failure,” said Wenger.
Nevertheless, he is willing to try again.
“CBD is a popular topic,” said Wenger. “But my advice to farmers is, learn as much as you can about it and then enter at your own risk.”
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Blue Forest Farms used to grow hundreds of acres of kale, squash and pumpkins. But it has since switched its focus to a different cash crop: hemp.
Wholesale Hemp Prices
A Look at 2020 and Beyond
Kush.com sees hundreds of wholesale hemp transactions every month from across the United States. This perspective on wholesale hemp & cannabis prices is a useful tool you can use moving into the second half of 2020.
Below you’ll find prices for different hemp categories over the last 6+ months, and the current market wholesale hemp prices. We will occasionally update this page with new data throughout the year, so be sure to bookmark it.
Wholesale Hemp Biomass Pricing
CBD content and quality matters! The lowest recorded price was under $7 per pound while the highest approached $40 per pound.
CBG Biomass has averaged around $61 per pound over the same period.
Wholesale CBD Crude Oil Pricing
The average price for smokable CBD concentrates has been around $9.52 per gram.
The average order size since November 2019 has been 11 kilograms.
Wholesale Hemp Flower Pricing
Since February 2020, the whole hemp flower price has held steady around $160 per pound.
Nearly 300 transactions were used to calculate this data providing a solid baseline for the hemp industry.
Wholesale CBD Distillate Pricing
Since January 2020, the average price for CBD Distillate has been around $1,360 per kilogram.
Other popular cannabinoids such as CBG, CBC, and CBN continue to increase in demand.
Wholesale CBD Isolate Pricing
“Samples” or small orders of CBD Isolate sold for upwards of $5 per gram.
CBG Isolate ranged from $5 per gram to over $10 per gram depending on the size of the order. Wholesaler buyers are commonly seeking discounts when ordering in bulk.
Wholesale Hemp Seed Pricing
When sold by the pound, the average price for hemp seeds has been around $578 per pound since December 2019.
Looking at per seed prices, we have seen everything from $0.15 per seed to over $1 per seed, but find that the average cost per unit is around $0.55 for quality genetics.
The average price for CBG seeds has been $6.53 per pound during the same time period.
Wholesale Hemp Pre-Roll Pricing
As mentioned before, quality matters! Hemp and CBD Pre-Rolls ranges from a low of $0.75 per preroll to $1.50 per unit. That is a HUGE spread considering the supply available on the marketplace.
The average wholesale order size for hemp pre-rolls was right at 212 units.
Wholesale Hemp CBD Edibles Pricing
Hemp infused edibles continue to climb in popularity, but show a large variance in price based on category.
Wholesale prices have shown hemp edibles sell for between $0.18 and $1.00 per unit with an average order size of 1,200 units.
More and more buyers are searching for CBD infused edibles and the pricing trend could continue to climb.
Current Wholesale Prices
To calculate the current wholesale hemp prices we looked at sales over the past 60 days.
How Price Indexes are Calculated
No data set is perfect. There are some considerations to take, when looking at the analytics and making your own business decisions.
- The Kush Marketplace is B2B, prices will differ for direct sales
- Within product categories, quality of the product can vary
- Additional costs might have been added depending on packaging or shipping concerns
- Large orders often involve a price break, and smaller orders may drive the average price higher
- These sales took place on Kush.com and could differ from prices on the outside marketplace
Ultimately, I’d recommend giving these numbers a margin of error of about 10-15%, and judge your products quality honestly before pricing higher or lower on the spectrum.
Hemp Outlook for 2020: Are Things Looking Good or Bad?
As we enter the second half of 2020, where do we see prices going? There’s always two ways to view a trend, and usually both sides have good reasoning.
Bullish Perspective: The Crash is Over
Even with the charts largely trending down, there’s plenty of positive points to look at moving forward. To start, prices seem to have hit the bottom and flattened out compared to ‘Pre-Covid’ price crashing. Additionally there’s been a small uptick in pricing in nearly every category in April to May.
Another positive could be the rise of ‘Self Care’ products following Covid-19. CBD is being introduced into home products at high rate, many of which are currently seeing a rise in demand. (Yes, there’s already CBD Hand Sanitizer.)
Virus aside, the demand of CBD could rise dramatically in the coming months and years on its own. Here’s a quote from a recent Forbes article written by Abbie Rosner, and published on May 29th:
Because boomers’ awareness of CBD’s health benefits is growing, Lee explained, many are shifting from trial use to becoming daily users. In fact, the number of boomers who reported using CBD 5 or more times per week rose from 36% in 2019 to over half (56%) in 2020, according to Brightfield Group’s consumer insights. They also found that 19% of boomer CBD consumers reported using CBD multiple times per day.
Bearish Perspective: Rough Harvest Ahead
It’s not difficult to be negative in 2020, and the hemp market isn’t immune. Many hemp businesses have closed shop, and this could mean a flattening or dip in supply, but it also means more ground for the consolidation of big brands. As with any emerging market, smaller operations will be forced into niche areas while a few big brands start to dominate the main stage. Harsh outside conditions will only speed up the process, putting out smaller farms and leaving the market open for big players.
Harvest is coming! If prices stay low into July-August, the first batch of light dep plants will be harvested flooding the market with supply. It’s not likely prices will start to rise steadily while supply is increased, so the best you could hope for is a steady market come September and ‘Croptober’.
If you’re looking for a consistent supplier of CBD Isolate at a fair price, check out the listing below:
Since 2/20, wholesale hemp flower prices have averaged $160/lb, CBD Distillate has been around $1,360/kg and small orders of CBD Isolate sold for $5/g.