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HIGHLIGHTS
  1. Hemp-derived CBD wholesale prices are well above those of traditional crops
  2. U.S. farmers planted 285,000 acres of hemp in 2019, 2.7 million acres expected by 2023
  3. Top 21 CBD companies in U.S. account for 69 per cent of market share

Hemp acreage in the United States more than tripled in 2019 and will increase exponentially by 2023, as cannabidiol (CBD) prices soar above those of traditional crops and convince farmers to switch over, likely creating a national surplus and pressuring wholesale values, market research firm Brightfield Group said.

CBD prices, however, will remain well above those of traditional crops.

Roughly 285,000 acres of industrial hemp were planted in the United States in 2019, more than triple the 78,000 acres last year, after the 2018 U.S. Farm Bill federally legalized the crop.

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The majority of this crop – 87 per cent – is expected to be processed for CBD, as this non-intoxicating cannabinoid has been associated with health and well-being uses in beverages, supplements, and cosmetics.

The United States, China and Canada are the world’s top three hemp growers with a total of nearly 1 million acres planted. Brightfield expects the United States alone will harvest 2.7 million acres in 2023, but the percentage that is planted for CBD extraction will decline to 82 per cent as the industry will need to validate the crop’s value beyond CBD production, Brightfield estimated.

The U.S. hemp-derived CBD market is forecast to reach US$23.7-billion by 2023, along with a surplus of hemp-derived CBD, compared with US$5.1-billion in 2019.

With this, the crop is expected to boost incomes of family farms that are facing low commodity prices for corn and dairy. For comparison, while one acre of corn brings in less than US$1,000 revenue and an acre of tomatoes can bring in US$24,000, CBD from one acre of hemp could potentially be sold for more than US$40,000, depending on quality and yield.

The wholesale price of CBD isolate averaged US$4,762 per kilogram in 2019 so far and are expected to fall steadily to US$3,000/kg in 2022 as hemp production surges. Average revenue per acre was pegged at $45,000 per acre, Brightfield said.

The industry lacks traditional markets and faces challenges, however, as there is little price transparency and some companies that promise they will buy hemp from farmers, have not done so.

Already there are many CBD companies in the United States, with the top 21 accounting for 69 per cent of the market share. Around 30 per cent of U.S. CBD sales come from imported hemp, Brightfield said.

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Canada was the primary source of total U.S. hemp imports in 2017.

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