The Short-Lived Promise of Delta-8 THC

delta-8 price

By Eric Singular, Director, Hemp Business Journal

The meteoric rise of delta-8 THC (delta-8) was borne of myriad factors that highlight larger trends witnessed across the U.S. cannabis landscape. Delta-8’s molecular similarity to the psychoactive compound that legally distinguishes industrial hemp from marijuana under United States law, delta-9 THC, made it easy for manufacturers to market the compound as “weed light” to a widening market of American consumers.

Consumer interest in delta-8 was particularly high in jurisdictions which prohibit access to medical or recreational consumer marijuana. Delta-8 effectively existed in such a gray area under the rules and regulations of the 2018 Farm Bill that it began being sold through distribution channels as broad as gas stations.

State lawmakers soon began advancing legislation to curb unregulated distribution channels, though the other driving force behind the rise of delta-8 was a glut in cannabinoid-rich biomass sitting on American farms. Necessity being the mother of invention, the new market for a minor cannabinoid gave farmers who had ventured to grow hemp for CBD in 2019 and 2020 an opportunity to unload biomass which they had cultivated for a market all but shuttered.

While delta-8 provided some opportunity for hemp supply-chain operators to recoup their investments, the tide turned rather dramatically. Last spring, a wave of state-level regulations swept the nation in efforts to close the sales loophole for the cannabinoid. At time of publication, 16 states have restricted or banned sales, possession, or consumption of delta-8.

A handful of states, including Texas and Oregon, have sought to regulate the compound like its molecular cousin, delta-9 THC. In July, Oregon lawmakers were successful in passing HB 3000 to establish specific standards preventing minors from purchasing delta-8 products, though in Texas pushback from industry operators thwarted efforts there (where in June, legislation aimed at banning delta-8 sales failed to pass).

While such attempts to stifle the future of delta-8 have made it harder for opportunists to capitalize on “weed light,” lopsided oversupply has driven the average price-per-kilogram of delta-8 further and further down throughout the last year. Similarly, oversupply has been an unfortunately recurring trend for the American hemp industry at large, which has likewise seen crashes in the prices for CBD biomass and bulk extracts.

Last March, New Frontier Data reported that the average price of delta-8 concentrate had fallen 45% since August 2020, though full-year projections for U.S. sales of delta-8 exceeded $10 million.

Come 2021, the average per-kilogram price of delta-8 rose 4% in May, reaching a height of $1,227.15. The next month, however, prices began trending downward, falling 1% to $1,215. In July prices fell further, by a whopping 12%, down to $1,069.20. Last month, prices dropped another 5%, to $1,015.74. New Frontier Data predicts the price in September to fall below $1,000.

Delta-8’s high prices during the first half of 2020 led to oversupply. Factoring in the state bans enacted during the spring, and the commercial optimism about delta-8 has seemingly fizzled. While state-level bans ostensibly invited federal intervention and nationwide regulation, U.S. Food and Drug Administration (FDA) guidance via two New Dietary Ingredient (NDI) notifications to Charlotte’s Web and Irwin Naturals, respectively, has cast looming doubt about the future for the entire cannabinoid sector.

In the FDA’s response in July to the NDI filing, the agency expressed concern over the scientific evidence submitted to substantiate CBD as a legitimate dietary ingredient. The agency specifically stated its objection that full-spectrum hemp extracts “may not be marketed as or in a dietary supplement.” As recently analyzed by New Frontier Data, the unofficially proposed Cannabis Administration & Opportunity Act being considered by the Senate  would grant cannabinoid rulemaking authority to the FDA. Given the agency’s current stance on the comparatively well-researched and understood CBD cannabinoid, delta-8’s fate seems dim. This week, the FDA castigated the “serious health risks” associated with consumption of the compound.

In the wake of the FDA’s rejection of CBD as an NDI, hemp-derived cannabinoid product manufacturers now collectively face an existential threat. For producers pursuing the next big thing to catch lightening among minor cannabinoids, the enterprise has shifted from giddy anticipation to fatalistic speculation: With winter coming, it may be time to mitigate risk and batten one’s hatches against another bitter season.

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