Marijuana and hemp oil wholesale prices have dropped significantly in the last year according to industry executives indicating an upsurge in nationwide oil products.
The drop in wholesale prices reflects multiple market factors working simultaneously and sometimes at odds with one other.
One factor is the demand for marijuana which rose after states declared marijuana sector essential and allowed it to operate during the pandemic. Consumers stocked up and have continued to purchase products, consistently driving up marijuana sales.
Taking the cue, cultivators have been upped the supply of raw cannabis from which hemp is derived. That has, in turn, put pressure on oil prices despite increased demand for oil-derived products such as edibles, vape pens, and concentrates.
Michelle Jun, head of sales at Green Mill Supercritical, a marijuana supercritical CO2 extraction equipment company based in Pittsburgh, said extracted products made from oil are taking up more and more market share.
She added that generally, demand is shooting up but is also a clear reason to offset the fall in prices.
Jun attributes the increase in demand to a steady move of consumers switching to concentrates and vape products to achieve more precise dosing for medical and recreational cannabis.
Meanwhile, hemp-derived CBD, THC- remediated crude oil is selling for less than 1000 dollars a kilogram down in California, the same amount it was being sold before the pandemic.
Hemp-derived CBD crude oil that also contains THC is selling for less than $200 a kilogram from $400-500 a kilogram before the coronavirus outbreak.
Peter Houston, chief of operations at Backbone, a San Francisco-based supply chain software provider, described the surge in hemp and MJ oil supply as healthy. He added that the increased supply is due to marijuana being regarded as a vital business when the pandemic first hit the United States.