Hemp CBD oversupply has farmers questioning their 2021 strategy
The “shocking” answer to how many hemp acres the CBD business really needs.
Here’s a numbers game for you. Guess how many acres of hemp the entire CBD business world needs to supply its product to America? Are you sitting down? You might want to pour an entire tincture bottle under your tongue to prepare to hear this.
Here’s a hint: Charlotte’s Web—the No. 1 brand in the hemp CBD business—reported almost $95 million in revenues in 2019. If you assume 1,500 mg CBD per tincture bottle, how many acres of hemp does the company need to grow?
During the crazy boom planting year of 2019, Charlotte’s Web reportedly grew 862 acres. Did it need that much?
“For $95 million revenues for Charlotte’s Web, you need only 57 acres,” said Julie Lerner, CEO of PanXchange, an OTC trading platform for commodities that provides baseline prices for hemp. “Charlotte’s Web alone has an inventory build of 30,000 kilos of distillate. That’s a massive number of inventory.”
That’s just one anecdote. But it’s a big tell on the wild disconnect between supply and demand in the hemp CBD world.
So what’s the answer to how many acres the CBD industry requires to serve the public with hemp CBD products?
“If we go with 1,500 mg per tincture,” said Lerner at a Zoom webinar hosted by the Hemp Industries Association, “it means we would only need less than 3,000 acres for the entire CBD market in the U.S. That’s shocking.”
After the last farm bill was signed, in December 2018, farmers around the country got zealously busy for the 2019 grow season. Planted acres rose from 77,000 acres in 2018 to 250,000 acres in 2019. Stung by a massive glut that led to price crashes, in 2020 that number fell back to 103,000 acres.
“You’re still talking 103,000 acres but we only need 3,000—actually, 2,819 acres,” said Lerner. “That’s one supplier. That would require only 4.4% of the 2020 biomass.”
That has led to the Great Storage Experiment—i.e., what to do with all that hemp? And since there is such a vast amount of hemp lying around, does it even make sense for farmers to plant any in 2021?