COVID-19 as one of the indicators of overheated CBD market

Under the current conditions , only those companies “survive” that can not only adapt to the new realities, but also manage to rebuild, including developing their own unique approaches to solving problems with the implementation and bringing the most complete information about the product to potential consumers .

The current year clearly demonstrates how unstable the global economy is even to challenges such as the coronavirus pandemic . Today, all countries in the world , even economically developed countries such as the USA , Germany or France, suffer significant losses, their economies are slowing down , established ties are collapsing, and economic relations have been developing for years . Not spared this trend party and hemp industry , which only intensified continuation of the sharp reduction in investment activity (started back in 2019), the growth of bankruptcies and capital outflows are already observed. 

According to experts specializing in this issue of consulting companies , in the first quarter of 2019, 94 mergers and acquisitions of enterprises related to hemp business were registered on the American market . In the same period of the current year, only 19 similar contracts were registered. The above trend is confirmed by the data of the analytical agency “Mergermarket”, which show that in the second half of 2019 only 73 transactions were carried out compared to 110 carried out in the first half of the same year, and to date, 27 such commercial operations have been announced in the United States .

In 2019 the total amount of funding for all contracts concluded in the hemp industry , specializing in the CDB investments , amounted to more than $ 9.2 billion, while for the entire period of 2020 the total value of confirmed transactions fell to $ 325 million.

The situation with the global COVID-19 pandemic negatively affected the level of profitability of companies and the industry as a whole . The fact is that even before the "global quarantine," observed a negative trend associated with capital outflow due to high requirements for licensing and glut the market hemp raw materials and products , containing in its composition beznarkoticheskie cannabinoids , which eventually led to the on falling prices CBD products . Therefore, coronavirus only increased the rate of decline in the market for products containing drug-free cannabinoids in their formulation . According to some experts , a kilogram of plant cannabidiol extract ( CBD ) in 2014 in some cases could be sold for $ 70,000, while the same amount of extract today is estimated at only $ 750.

The value of the assets of individual hemp companies is so devalued that, for example, the company Gen Canna Global from Kentucky, which planned to raise capital in its business through a public sale of shares (IPO), ultimately filed for bankruptcy in February this year.

Analyzing the situation in the hemp market , experts agree that companies with a turnover of less than $ 6 million will be forced to join forces or they will go bankrupt. Companies with a capital of $ 40 million or more are projected to be “painless” for up to 1 year. And only large industrialists will be able to increase their assets by absorbing “problem” enterprises . 

Many players of the market beznarkoticheskih cannabinoids United States understands that the pandemic will continue to bankrupt especially smaller producers , retailers and processors associated with the plant , as they are not eligible to participate in most federal programs approved in three stages liquidation coronavirus and designed to protect business since CBD products in the US market remain illegal at the federal level. 

Manufacturers of products , which includes beznarkoticheskie cannabinoids , for example, can not get access to the Office for small businesses , including "Program of protection of wages," which provides the possibility of obtaining preferential loans to small businesses , which is one of the tools to minimize the effects of layoffs. And the claim to most of the other benefits guaranteed by the state, which will have the company of other sectors of American business , hemp companies in all likelihood will not. 

COVID-19 hits especially vertically integrated companies specializing in retail sales of KDB products , since such operations are banned at the federal level, and the lack of clear regulation does not allow retailers to advertise online sales on popular social networks through which online trading is active . 

It turns out that under the  current conditions , only those companies “survive” that can not only adapt to the new realities, but also manage to rebuild, including developing their own unique approaches to solving implementation problems and bringing the most complete information about the product to potential to consumers .