PALM BEACH, Florida, July 9, 2019 /PRNewswire/ — Recent articles across the web highlighting the ever increasing demand for CBD infused products has created a bit of a frenzy. It may be the hottest portion of the hottest market in 2019. But such a demand also creates questions about is there enough supply to meet that demand of basic resources especially the extractors; the ones who extract the CBD from its various sources.
Cannabis Extraction Companies Are Booming
Some observers even predict that there won’t be enough supply to meet the demand for cannabis in oil form. But as one article said: “business is booming for cannabis extraction companies, despite the supply shortages.”
Some of the bigger well known cannabis companies have built or are building their own extraction facilities to complement their growth operations, but experts say that that infrastructure won’t fill the future demand for cannabis oil products.
Cultivation Output vs Extraction Capacities Are Imbalanced
Some writers believe that as the cannabis industry evolves, it will become fragmented, with various companies specializing in separate parts of the vertical market… just like other verticals in other industry markets. They predict that companies focusing solely on cannabis extraction will end up being an increasingly important subsection of the overall industry.
The imbalance between cultivation outputs and extraction capacities within the industry is on the rise. This is an obvious indicator that the market for extraction services and the equipment required by these extraction companies will continue to accelerate.
Farmers are Turning to Industrial Hemp to Survive
According to the U.S. Department of Agriculture, farm production within the United States is expected to fall an additional 6.7% this year on top of already weak market over the past few years.
These reductions will likely result in the overall U.S. agricultural production for 2019 being the lowest since 2006. Prices for the commodities that are being produced are also at near record levels.
One of the few bright spots in the agricultural sector is industrial hemp, which became legal via the December passage of the U.S. Farm bill. Estimates for hemp production for the 2019 season continue to be revised upward, with major hemp producing states, such as Colorado, Kentucky, Oregon, North Dakota, and others, reporting sharp increases in both cultivation applications and expected acreages.
CBD Projected to Surpass $20 Billion by Year 2020
Arcview Market Research, is now predicting the market for Cannabidiol (CBD), which is mainly derived from hemp, will surpass $20 billion by year 2020. Hemp and its by products are growing fast and are one of the few bright spots in the agricultural sector.
It’s clear the 2019 and 2020 hemp cultivation seasons will be massive. The power balance between cultivators and extractors is expected to continue to heavily favor extractors and we are seeing that part of the industry expand massively to be able to handle the significant amounts of hemp biomass that will be harvested and will ultimately be processed.