IDEAS home Printed from https://ideas.repec.org/a/ags/aaeatr/316506.html
   My bibliography  Save this article

High Stakes: Managing Risk and Policy Uncertainty in the Market for CBD Food Products

Author

Listed:
  • Stevens, Andrew W.
  • Pahl, Joy M.

Abstract

Consumer demand for food products containing cannabidiol (CBD) has skyrocketed in recent years. This spike in demand has presented an opening for entrepreneurial small businesses to seize a lucrative market opportunity. However, sourcing CBD is risky due to volatile prices and spotty availability in the wholesale market. Consequently, some entrepreneurs have considered producing their own CBD by growing hemp and vertically integrating their supply chains. This strategy poses its own risks: hemp that contains too much tetrahydrocannabinol (THC) must be destroyed; hemp yields are variable; and state- and federal-level policies about hemp production are changing rapidly. This case study follows the story of Levi Budz, a young entrepreneur from northeast Wisconsin, as he founded and grew Budz Butter: a 2017 startup company that produced CBD food products. This case focuses on risk management and decision making under uncertainty with particular attention to a shifting policy landscape, price volatility for a key input (CBD extract), hemp production risks, and uncertainty about consumer demand and competition in the retail marketplace. These themes are broadly applicable to other emerging opportunities in the agricultural and food sectors, and especially applicable to entrepreneurial ventures.

Suggested Citation

  • Stevens, Andrew W. & Pahl, Joy M., 2021. "High Stakes: Managing Risk and Policy Uncertainty in the Market for CBD Food Products," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 3(4), October.
    • Handle: RePEc:ags:aaeatr:316506
    DOI: 10.22004/ag.econ.316506
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/316506/files/AETR_2021_007RRPDF_v3.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.316506?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Skorbiansky, Sharon Raszap & Thornsbury, Suzanne & Camp, Kevin M., 2021. "Legal Risk Exposure Heightens Uncertainty in Developing U.S. Hemp Markets," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 36(1), February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seojin Cho & John M. Antle, 2024. "Price‐endogenous technology, producer welfare, and ex ante impact assessment: The case of industrial hemp," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 883-903, March.
    2. Skorbiansky, Sharon Raszap & Astill, Gregory & Rosch, Stephanie & Higgins, Elizabeth & Ifft, Jennifer & Rickard, Bradley, 2022. "Specialty Crop Participation in Federal Risk Management Programs," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2022(Economic ), September.
    3. Dhoubhadel, Sunil P., 2021. "Challenges, Opportunities, and the Way Forward for the U.S. Hemp Industry," Western Economics Forum, Western Agricultural Economics Association, vol. 19(2), December.
    4. Jeffrey S. Young & Tanner J. McCarty, 2023. "Adapting network theory for spatial network externalities in agriculture: A case study on hemp cross‐pollination," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(4), pages 1267-1287, August.
    5. Waea, 2021. "Western Economics Forum: A Journal of the Western Agricultural Economics Association, v.19, Issue 2, Fall 2021," Western Economics Forum, Western Agricultural Economics Association, vol. 19(2), December.
    6. Sharon Raszap Skorbiansky & Suzanne Thornsbury & Anne Effland, 2022. "Specialty crops and the farm bill," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1241-1260, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaeatr:316506. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.