Wholesale hemp prices declining despite fractured US supply chains, investment advisor says

Patrick Rea, a former editor of Nutrition Business Journal, now directs Canopy, an investment fund directed toward the cannabis space.  Rea spoke with NutraIngredients-USA at the recent Supply Side West trade show in Las Vegas, NV.

CBD—banned, but no pariah​

The fraction of cannabis most relevant to the dietary supplement industry is cannabidiol, or CBD. The Food and Drug Administration earlier this year flatly said that CBD is not a legal dietary ingredient, but that hasn’t stopped product developers from nudging around the edges of that envelope. The big reason for that, Rea said, is beyond the current dearth of products (and any self respecting market abhors a vacuum) is that the CBD molecule itself has so many promising properties.

“It has enormous applications. It is an antioxidant, it protects brain cells, there are some studies out from the NIH that shows it destroys cancer cells,”​ Rea said. 

“They are just seriously understudied because the DEA (Drug Enforcement Administration) controls the licenses that are assigned or given to clinicians, academics and researchers.  Let’s not forget that cannabis is still Schedule One drug,”​ he said.

Assuming that FDA’s current ban on CBDs were somehow to be lifted or the drug status of the plant were to change, as many advocates expect, what could legally be said about them?

“I think that everyone will have to come up with new claims,”​ Rea said. “I think a lot of the claims under DSHEA are pretty gutless.  ​

“But just like the supplement industry today there is a lot of information out there on the plant that people can study. Remember, this is an herb, just like St Johns Wort. It is one of the most efficacious plants that we have found. It just needs to be studied more,”​ he said.

Supply questions​

Rea said that the supply end of the picture is still somewhat clouded. DEA has been interdicting shipments of plants and seeds across state lines, so supplies of plant material are confined to within the states where it is legal, something that would have to change for full scale commerce to take place.

“Certainly the way legalization is occurring right now is there are state by state silos. You can’t grow and produce anything in one state where it is legal and take it to another state where it is legal, so there is no interstate commerce. But what we have seen is wholesale prices coming down as more efficient growers get into the market,”​ he said.