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A Brief History on the CBD Industry and Outlook for the Future


“You’ll see, CBD Isolate will be selling for less than $2,000 per kilo in the next two years.”

“I can’t even imagine that,” was my naive response to my new friend and colleague. “Why would anyone want to race to the bottom that quickly?” To my own shock and awe, he was right. By the end of 2020, CBD Isolate prices had dropped over 85% and fell below $2000/kg.

Having been born and raised in New York, in 2016, I packed my bags and relocated to Colorado to get in on the action of a new industry: legal industrial hemp. Within a year, I left the company I started with and joined the very small team at a competing facility where I sold the first KG of CBD isolate and contributed the build-out of a private label program, creating a sales machine that generated over $120 million in revenue in less than 3 years. Today, I’ve aligned with the strongest vertical in the space, driven by some of the best leadership in consumer products. In this piece, I am hoping to share some perspective on the evolution of this industry that I have witnessed as well as some of the things that I have learned through my experience that have helped me to stay competitive and keep my employer thriving.

If you haven’t studied commodities economics, a crystal ball may feel like the only tool you’ve got in predicting the path to creating a sustainable business in the CBD isolate market these days. Factors such as regulatory uncertainty, manufacturing planning & innovation, and the pace of consumer adoption have had a major effect on the health and fortitude of the market since its 2014 inception. Let’s look into how these factors have attributed to the ups and downs we’ve experienced as active members of the market, searching for answers on what’s next and how to survive the volatility of this emerging industry.

In 2016, we were in the “gray area” days of legal opinion letters on how to interpret the framework described in the 2014 US Farm Bill Sec. 7606. The FDA sent warning letters to CBD companies who were making false medical claims as well as inaccurate labeling. Merchant processors and banks were dropping CBD retailers faster than we could get a repeat order. Early in 2018, consumer demand for CBD began to rise and the industry wondered whether the FDA would classify CBD as a food or a drug, and what that would mean for the future of the industry. Without regulatory clarity, CBD processors made speculative decisions on where to grow — one of the largest factors in the pricing compression of 2019. Should a manufacturer invest in becoming a pharmaceutical grade manufacturer, a fully compliant food processor, both, or neither?  Waiting for the breadcrumbs of direction from the FDA kept us starving for the information we needed to plan. Rumors were flying that the FDA would make its call by the end of 2019, which didn’t happen, keeping big brands and retailers on hold. All of this while major retailers began taking CBD products, generating global interest in the category and a significant increase in consumer demand. You can see the quandary.


Then, the COVID-19 crisis took center stage and ensured hemp derived cannabinoid products would be on the back burner until further notice. Already in 2021, we have experienced what I like to call “the defibrillator of the CBD Isolate market” – chemically modified or converted industrial hemp cannabinoids a.k.a. Delta-8 THC and Delta-10 THC to name a couple. The demand for these isomers re-energized the demand for CBD isolate, which is the main raw ingredient used in creating these highly sought-after psychoactive compounds. Many of CBD manufacturers on the cusp of failure were given a second chance due to this resurgence.

That said, we all knew it was only a matter of time before the states or the DEA would push back. The U.S. Hemp Roundtable has published a list of the states that have joined the motion of prohibiting the manufacturing and/or sale of these converted cannabinoids just shy of a year from when they were first hitting the shelves of stores and online marketplaces. This begs a similar question to that of 2019, will the manufacturers affected by these new regulations shut down, relocate, push back on the regulators, or simply keep operating as usual, in the “grey area” mantra of the old days until they get shut down? If you think that the closing of some of these operators will catapult the consolidation of hemp processors, you’re probably right. These are the decisions that directly impact demand for CBD.


CBD producers have been building their foundations on the shores of uncertain waters, weathering the uncharted tides, year in and year out. While attempting to build a long-term and sustainable business, we’ve encountered yet another predicament that we can attribute to market confusion: speculative demand is resulting in over supply. In a healthy industry, a buyer and seller are directly connected and have meaningful conversations regarding forecasting. The two create a sort of “partnership” that leads to better planning. In some cases, there are dozens of brokers price shopping for the same buyer on CBD quantities that most producers couldn’t provide in their best month. Up until recently, it has been a buyer’s market. Oversupply has fueled competitiveness, in many cases driving pricing down below the cost of production. This false sense of demand has caused some suppliers to invest in increasing their output in order to meet the perception of demand that the brokers have created, leading to an even further exaggerated over-supply of product. This scenario creates a balancing effect, where producers are now forced to lower their prices in order to recover the cost of producing the product and are ultimately willing to sell below cost to mitigate their losses. Since 2020, many hemp processors have sold, filed bankruptcy or liquidated due to instability of the supply and demand cycle.

Peel it back a layer, and we find that quality input materials are becoming more scarce, causing prices to rise slowly as manufacturers bid on distillate, crude extract, and biomass to sustain their perceived demand requirements and maintain their current customer base at a competitive price. In the short term, failing businesses will harm the health and stability of the industry. In the long term, they will be a catalyst for further consolidation, leaving the best planners and executors to survive and support the growth of the CBD-based consumer packaged goods industry.

I remember when the first CBD brands were inking deals with pharmacy chains like CVS and convenience stores like 7-11. CBD was seemingly becoming publicly accepted. Suppliers, manufacturers and brands alike were blinded by this success. For a moment, we all thought that we had made it! Then… the pink parachute deflated. We don’t know anything about turning product. Any experienced CPG company knows that the real work starts once you make it to store shelves, but for us “cannabis folk”, we had never had the chance before. When retailers decided to sell CBD products, they expect the brands to draw the consumers, which requires advertising and education. Well, advertising was out of the question, with platforms like Google, Facebook, and Instagram having banned the promotion of CBD and were working hard to keep it that way. Education in an emerging category like CBD is critical, but how can we educate on the value and efficacy of a product without proper clinical trials or guidelines to adhere to? Consumers become confused when forced to turn to the internet to educate themselves – with misinformation in abundance, offered by companies with an agenda to be perceived as the purist, most effective and safe product on the market. When it comes to “dosing” – forget about it. You can’t even use that term. A proper serving size is still under scrutiny. The cost of CBD has plummeted 98.6% since 2016, but the price of the finished good has barely changed. The average price of a 500mg CBD oil is only 20% less than what it was during the same time frame. When brands create products that are based on formulation costs from five years ago and dosing cannabis derived THC products, they are missing a key insight to encourage the rebuy: efficacy.

Consumers are most comfortable trying new products in the $10-15 price range and will sometimes take the leap to $30. But no matter what the price, if the product doesn’t “work”, you won’t get that second order. Brands need to ensure efficacy by either utilizing delivery systems that increase bio availability, or increasing cannabinoid potency, which I believe they can do without raising their prices. Experienced CPG professionals will manage the next wave of top CBD brands that replace the less experienced pioneers.


So, what’s next for CBD?

Ups and downs are expected on the path to stabilization. It takes a team of experienced professionals continuously analyzing and taking action that has proven effective in growing businesses for decades before hemp legalization to succeed.

Most importantly, what I have learned through all of this and having joined the team at EcoGen Biosciences, is that the industry must continue to work together to push for a regulated and stabilized industry where there is a place for all who do it the right way. Companies like ours who see the future of the industry, through the lens of quality, transparency, and consistency will be the best positioned, whether the industry retracts or expands, to continue to be the core of the CBD supply chain. New cannabinoids will always emerge and be the “hot topics”, while the foundational ingredient CBD continues to commoditize and the producers who remain flexible, while remaining committed to their values will be the ultimate winners. I don’t share this in a boastful “look how great we are” way, it’s just the way we see the future and how we will continue to be the leaders that innovate.

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