Hemp Industry Opportunities: CBD Products
Cannabidiol, more commonly referred to as CBD, is a main component of cannabis. Due to the passing of the 2018 Farm Bill, which removed hemp from the banned substances list, the CBD market has exploded at a rapid rate. Hemp is defined in the bill as cannabis with less than 0.3% tetrahydrocannabinol (THC). Prior to the 2018 Farm Bill, CBD was already becoming quite popular in states where cannabis and hemp were already legal. The bill consequently legalized hemp-derived CBD on a national level, fueling it’s already growing popularity.
Unlike THC, which is the chemical cannabis has historically been most well-known for, CBD has no psychoactive effects. It does, however, have a myriad of purported health benefits. Pain relief, reducing depression and anxiety, and treating certain seizure disorders are some of the most common claims. It even has implications in cancer treatments, reportedly killing breast cancer cells and alleviating some of the side effects of chemotherapy.
Previously, we explored the CBD extraction industry and processes. Now, we examine some of the products CBD is used in once it’s derived from the plant.
Oils & Tinctures
CBD oil is currently the most popular form of CBD. The expected Compounded Annual Growth Rate (CAGR) for CBD oil is expected to be over 30% from 2017 to 2021. In 2018, CBD and hemp oil sales amounted to $238 Million, a 57% increase over the prior year. Globally, this market is expected to reach $2.17 billion dollars by 2023.
Creams & Lotions
These types of products make up a smaller portion of the overall CBD product market. $1.7 billion dollars by 2025 with a 32.9% CAGR over 6 years from 2019-2025. These products are primarily intended for pain relief and treating certain skin conditions.
This is another surprising and emerging sector of CBD products. It is also one of the most rapidly growing. It is used in pets to treat a number of the same conditions as in humans such as anxiety and pain. Sales in this particular market are expected to reach $125 million by 2022 which would represent a 57% CAGR in a 5-year span.
This is just a sample of CBD products. Other popular forms include oils intended for vaporizing, cosmetics, pills & capsules, as well as edibles in both food and drink varieties.
One report shows that 40% of Americans are interested in trying CBD and roughly 8% already use the product. These statistics were garnered before the market could fully react to the national legalization of hemp and hemp-derived CBD. Since the legalization, the usage number has likely skyrocketed as the products are becoming more widely distributed.
The U.S. CBD market clearly presents tremendous business opportunities with seemingly exponential growth. However, despite the size and breadth of this market and the projected future demand, there are some reasons to be cautious. Depending on which vertical you choose to explore, there is likely to be steep competition. There are new companies emerging in the space every month. Meanwhile, established companies like Unilever, Ben & Jerry’s, and Anheuser-Busch has announced the development of CBD-infused products.
In addition, the CBD industry and products alike will continue to be under scrutiny for some time. As an example, in November, the Food & Drug Administration, after remaining silent on the use of CBD in products they control including foods, beverages, and cosmetics, issued warnings to several companies. They have declared that the Federal government has yet to conclude that CBD is generally recognized as safe. Their opinion and the guidelines that will emerge over time will undoubtedly have an impact on the sale of these products.
There is a tremendous opportunity here, but there are certainly some risks. Make sure to do adequate market and competitor research before launching or expanding a CBD product business. You will also need to be aware of current and emerging laws and guidelines. Joorney stays current on this rapidly growing and ever-evolving market and are well poised to offer business planning and Advisory Services in this arena.
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