Disclaimer: It is important to note that these are just bold predictions. In the end nobody has a crystal ball. That being said, my predictions for 2020 will be very positive to the many consumers who purchase CBD products, and a blessing for future CBD buyers. Transparency and lower prices will be the future according to my predictions. CBD prices will begin to lower for the consumer, however, that will come at a cost for many companies in the business of selling CBD, and will make for a very rough year if unprepared.
Without further ado:
Prediction #1: The Food and Drug Administration (FDA) will make important recommendations and guidelines regarding CBD as it relates to THC content, packaging/labels and rules around CBD food and beverage products.
Prediction #2: The FDA will narrow the legal limit of THC to 0.2% or lower. (Currently, the FDA allows for up to 0.3% total weight of THC per CBD product.)
Prediction #3: Standards will be set requiring better transparency on all CBD products labels. Companies will no longer be able to trick the consumer into thinking they are buying CBD when they are mostly getting hemp seed oil. Labels must clearly state the amount of CBD & THC in each product, expiration date, origin of product and restrictive use and possible side effects of CBD products.
Prediction #4: The FDA restrictions on food & beverage products with CBD will continue to be enforced in 2020. Companies that ignore the FDA restrictions will be fined and some will be shut down.
Prediction #5: Due to the new FDA recommendations, the FDA and state regulators begin shutting down several CBD companies that are ignoring or violating FDA guidelines.
Prediction #6: The demand for CBD products continues to grow as more people begin using the products to relieve ailments such as muscle pains, inflammation, stress/anxiety and insomnia.
Prediction #7: Even as interest for CBD products grows, the supply of CBD distillate and isolate raw materials will far outweigh the demand. This will create much lower prices for the raw materials required to make CBD products. Lower prices for consumers will result as retailers and CBD sellers try to establish market share within the industry.
Prediction #8: The number of farm acreage dedicated to industrial hemp will increase in the first quarter of the year, and decrease significantly thereafter as more farmers realize it is not the cash crop they expected and the costs of producing hemp/CBD begins to outweigh revenues. There are over 450,000 acres permitted to grow hemp in 2019. The industrial hemp plant, also known as “weed” is far more complicated to grow. Many farmers/growers will switch back to traditional row crops or specialty crops.
Prediction #9: Major retailers will begin selling CBD products. Several retail stores began selling CBD in 2019. This will continue in 2020 as more retail chain stores enter the fray.
Prediction #10: By mid-summer of 2020 the average prices for CBD products will drop by 25% as a price war is established due to competition amongst retail stores and online CBD establishments.
Prediction #11: The number of companies focused on selling CBD products will be lower by year-end 2020. In 2019, hundreds of companies began selling CBD. Many of these companies will be out of business or just “ghost” websites with little or no CBD sales. FDA restrictions, competition, price-wars and costly, yet unsuccessful internet marketing will make it hard to survive and make a profit. As with almost all new industries, whether it is automobiles, telephone and computers, only the companies with the highest quality, innovation, best business practices, customer loyalty and service, and ability to withstand prolonged price wars will survive.
Prediction #12: Consolidation of the largest CBD companies will begin as the battle of industry market share begins to take place. This mid-stage (second of three stages) consolidation stage will lead to several struggling companies desperately merging together only to create larger struggling companies. Consolidation usually happens in 3 stages. The first stage, which has already happened, usually takes place when deep- funded companies pay ridiculously high prices for early established and/or promising companies only to realize most of these companies bring very little value, higher expenses and, ultimately, future write downs. The third consolidation stage, which will happen in 2-3 years. The third stage happens when the most successful companies either merge together or large retail conglomerate companies begin bidding for the survivors to further establish market share.
Prediction #13: Many of the large CBD companies that received significant funding from investors in 2018 and 2019 file for bankruptcy (although federal regulations currently doesn’t allow cannabis companies to file bankruptcy), and simply go out of business in 2020. Speculative investment funding leads to poor business spending, poor business strategy, high ongoing expenses which leads to a dire need for more money which will not be available.
There you have it. Happy New Year! To all our customers, thank you for your business and rest assured that we at Andy’s Hemp Products are positioned and prepared to not only survive these potential challenges, but succeed and continue to provide to you the best product at the best prices.
