While the everyone is itching to find their place in the legal marijuana industry, one group is already getting out of the pot game and turning to hemp. Growers are seeing prices for marijuana drop at rapid rates impacting their bottom line. The Associated Press reports that “the retail price for a gram of pot has fallen about 50 percent since 2015, from $14 to $7.”
It’s All About Economics
In what boils down to the economics of supply and demand, growers in states like Oregon are experiencing a surplus in cannabis inventory which is a contributing factor to the price drop. The Associated Press reports that “Oregon's inventory of marijuana is staggering for a state its size. There are nearly 1 million pounds (450,000 kilograms) of usable flower in the system, and an additional 350,000 pounds (159,000 kilograms) of marijuana extracts, edibles, and tinctures.” The Oregon market is not the only market that is saturated, High Times reports, the “average asking price for a pound of cannabis on Colorado’s wholesale market is currently at an all-time low of $1,298, down from a three-year high of $2,007 in January 2015.”
As the profit margin for marijuana cultivation diminishes, hemp is seen as a cash cow. In Oregon, the number of state licenses has "increased more than twentyfold since 2015, making Oregon No. 2 behind Colorado among the 19 states with active hemp cultivation" per the Associated Press. The driving force behind hemp’s new-found fame is the precious commodity it produces called CBD oil.
CBD, Worth Its Weight In Gold
CBD oil gained popularity over the last few years as people used it for a variety of conditions including “anxiety, insomnia, depression, and seizures” according to CBS News. Unlike marijuana, CBD oil is legal in 46 states which makes it more accessible to the public.
There is demand for more CBD oil, and it is quite valuable. According to the Associated Press, “[i]n its purified distilled form, CBD oil commands thousands of dollars per kilogram, and farmers can make more than $100,000 an acre growing hemp plants to produce it. That distillate can also be converted into a crystallized form or powder.”
In addition to the financial benefits of growing hemp, what also makes this plant appealing to marijuana cultivators is its relationship to cannabis. As a cousin to marijuana, hemp contains a lot of the same benefits but with “less than 0.3 percent of THC, the compound that gives pot its high” according to the Associated Press.
The grow process is similar for hemp and marijuana plants. In an interview with the Associated Press, president of Vote Hemp, Eric Steenstra, explains, "There are a lot of growers who already have experience growing cannabis, and when you're growing for CBD, there are a lot of the same techniques that you use for growing marijuana."