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Are CBD Prices Getting Cheaper?

Supply, Demand, Price Wars what’s Driving Prices Down?

Has the CBD rage slowed down? If you haven’t noticed, CBD prices have gone down a bit. Price wars, over supply, competition and the pandemic have all affected pricing and it’s all in the consumers favor.

“there’s persistent price compression” says Bethany Gomez of the Brightfield Group “at this juncture we’re not expecting that to change”. Brightfield predicts a 14% growth this year with sales to hit $4.75 billion in 2020.

According to a Brightfield group survey, CBD is gaining popularity. More people are buying CBD and existing users are increasing their consumption. However, the price drops across the industry are affecting overall sales and market growth.

With an estimated 3,000 brands on the market – brands will do whatever they can to compete. Larger retailers are carrying CBD products and with larger buying power comes lower pricing. “it’s econ 101” Gomez said to CNN Business. “If you have a market of 3,000 brands vying for CVS, they’ll do anything for their business”.

According to Bloomberg, farmers are growing far more hemp than the industry needs. “Charlottes Web Holdings Inc, the largest publicly traded CBD company, needed less than 500 acres of hemp to service an estimated $95 million of sales in 2019. Assuming Charlottes Web accounts for 2.4% of the $4 billion dollar U.S. CBD market, that means about 20,000 acres of hemp are needed in total. Instead, it is estimated that approximately 115,000 acres were harvested in 2019. And it’s only going to get worse.”

“We are hearing that despite the losses people have had this year, farmers are still going to increase plantings, and you have Texas, Florida, Wyoming and a bunch of late-comers that are just starting this crop year,”.

It’s not all gloom and doom for the CBD Industry, not by a long shot. Although the Brightfield group has lowered their original forecast of $24 billion by 2025 to now $16.8 billion, this is still a huge market to be won. With so many categories such as tinctures, topicals, beauty, pet, smokables, beverages and edibles the marketing possibilities are endless. Ultimately, the stronger brands will survive and the more engaging retailers will grow. However, it is the consumers that will benefit the most by having better products, more choices and lower pricing.