CBD is one of the fastest growing markets in the U.S., with a recent soar in popularity with no signs of slowing down anytime soon. CBD has become the latest consumer trend thanks to social media influencers touting its potential benefits, an increasingly positive viewpoint on cannabis, and a growing number of potential application areas. In fact, researchers at Global Market Insights believe that the CBD market could reach $89 billion by 2026 and could grow at around 52.7% CAGR through 2026. Here’s everything you need to know about the state of the CBD market in 2020.
- What is CBD?
- CBD Market Size and Growth Expectations
- Innovation in the CBD Market
- Growth Drivers in the CBD Market
- Pitfalls and Challenges in the CBD Market
- CBD Market and the Impact of Covid-19
CBD, short for cannabidiol, is a chemical that’s present in the hemp plant. It’s one of over 100 known cannabinoids and is a cousin to the more well-known cannabinoid, THC. THC is the substance that’s responsible for making people feel “high” when they partake in cannabis. CBD, on the other hand, is non-psychoactive. In fact, many users report experiencing positive health benefits after taking it, including improved mood, sleep, and pain. CBD interacts with the body’s endocannabinoid system, which is the system that attempts to achieve balance and homeostasis within the body. Researchers believe CBD helps turn on transmitters in the ECS that promote well-being and return your body to a state of equilibrium.
The passage of the Farm Bill in 2018 made CBD legal in all 50 states at the federal level. The law requires companies to extract CBD from hemp plants that contain less than 0.3 percent THC, which ensures that CBD consumers don’t feel any psychoactive effects of THC. Instead, they can simply reap the potential therapeutic properties of CBD.
Although significant clinical randomized controlled trials are lacking in the CBD space, a lot of preclinical trials have shown potential promise. CBD has been linked to a reduction of neuropathic and inflammatory pain, an increase in total sleep time and REM sleep latency, a reduction in the severity and frequency of migraines, and a reduction of anxiety and depressive symptoms. It also shows promise in some studies as a possible preventative treatment for epilepsy. The FDA has approved one pharmaceutical application of CBD, a drug called Epidiolex, for the treatment of certain seizures. Currently, companies are prohibited from labeling CBD as a dietary supplement by the FDA.
According to Global Market Insights, consumers spent approximately $2,858 million on CBD products in 2019. The most commonly purchased product was CBD oil, followed by capsules and isolates. Researchers believe that the overall CBD market could grow at around 52.7% CAGR through 2026, reaching $89 billion by 2026. These numbers line up with an earlier report by Grand View Research which projected that the collective market for CBD sales in the U.S. will surpass $20 billion by 2024.
The CBD market is segmented by application method into oral, topical, inhalation, transdermal, and sublingual. Oral was the largest market segment and was valued at over $1 million in 2019, according to Global Market Insights. This segment includes CBD oil, sprays, tinctures, capsules, and tablets. Additionally, the medical segment accounted for the largest revenue share due to the increased use of CBD products for numerous medical conditions. In fact, marijuana-derived CBD dominated the market in 2018 from sales in dispensaries and government-approved pharmacies.
North America accounted for the largest market share, and this is expected to continue. However, Eastern Asia and the South Pacific are expected to be the next boom market for CBD products, according to Research and Markets.
Some of the prominent companies operating in the CBD market share include Kickback, Wise Way LLC, Kill Cliff CBD, Natural Native, Apis Mercantile, Aurora Cannabis, NuLeaf Naturals, and Medterra, among others. New and exciting companies are continuing to burst onto the scene, driving innovation and creating new products that meet consumers’ needs.
The aspect of CBD that’s most exciting is its flexibility. CBD can be added to practically anything, making it easy for consumers to incorporate it into their daily routine. It has dozens of different applications in multiple industries all at once. CBD naturally dovetails with wellness products, as well as food and beverage products and even beauty brands. Some innovative companies are driving innovation in the CBD market by creating unique products that solve specific consumer problems. For instance, CBD has been combined with coffee, which has been said to counteract the negative effects caffeine. CBD sparkling water is sold as a tonic, and some consumers say it helps them become more friendly and social at gatherings. CBD-infused bath bombs are a big hit right now, intended for reducing muscular pain and enhancing relaxation. CBD has also hit the beauty and skincare market with creams, tonics, and lotions that claim to reduce acne and skin inflammation. CBD treats for pets, which are said to help reduce anxiety and promote a sense of calm in pets, are also a popular application.
More and more companies are coming out with innovative CBD products every day. These new application methods serve to drive the CBD market upwards as more consumers find products that meet their needs. For instance, consumers who have never tried CBD for themselves might see the benefit of giving it to their pets to help with anxiety. Seeing the potential benefits in their pet, they might then feel comfortable trying CBD products for themselves.
CBD products are also becoming more sophisticated in their formulations. Companies have begun to focus on bioavailability, using technology to increase absorption. In other words, if companies can make their products more bioavailable, consumers can get more from less. Plus, companies can add bioavailable forms of CBD to more unique products, such as teas, lollipops, ice cream, water, and so much more.
The growing awareness and acceptance of cannabis and CBD products is the number one growth driver in this market. More and more people have begun to accept cannabis and CBD due to their potential health benefits and this changing attitude will propel the CBD market forward. For instance, a recent survey from Gallup found that 70 percent of Americans don’t have any moral objection to smoking cannabis.
A survey in February 2019 found that the changing attitudes towards cannabis boiled down to how the media has portrayed marijuana throughout the years. Today, cannabis users are no longer portrayed as ‘stoned slackers’ in the media, and there’s no longer such a negative perception of cannabis users in society. This change is perception is also due to growing medical applications of CBD. With the first ever CBD drug, Epidiolex, approved by the FDA, more consumers are starting to see the benefits of the substance. Growing legalization of cannabis products is another factor is the changing viewpoints on CBD. As more and more states legalize THC-laden cannabis, consumers begin to see its non-psychoactive cousin as benign – and potentially beneficial.
Another driver of sales in the CBD market is the addition of products to regular retail stores. It’s now possible to find CBD products on the shelves at mainstream retailers, such as CVS, Rite Aid, and Walgreens. It’s not just one or two stores, either. For example, in March 2019, CVS announced that it would begin selling hemp-derived CBD topicals through 800 stores spanning eight states, and Walgreens announced its plans to sell CBD topicals in 1,500 of its U.S. stores that same month. When consumers see CBD products sitting right at their local retailer, particularly drugstore chains they trust, it lessens any negative perceptions consumers may have.
Another significant driver of growth is a quickly growing segment of consumers with money to spend and a plethora of ailments to treat. Seniors have become one of the fastest rising groups of CBD consumers in the cannabis market. According to the AARP, seniors are turning to CBD for age-related problems, such as lack of sleep, pain, arthritis, inflammation, and other health concerns. Baby boomers typically have more disposable income to spend on pricier products to meet their needs, so this demographic may contribute to CBD market growth significantly in the coming years.
Though the market outlook on CBD is positive, there are still some pitfalls that keep it from reaching its full potential. For one, CBD is in a legal gray area. Cannabis is still listed as a Schedule I drug by the Drug Enforcement Agency, which puts it in the same category as heroin. Though the Farm Bill of 2018 legalized hemp that contains less than 0.3 percent THC, the FDA still hasn’t approved the use of CBD for dietary or health supplements. This means that CBD is out of the FDA’s jurisdiction and don’t enforce any laws that regulate its production, safety, or purity.
This legal gray area creates a sort of wild west in the CBD market, with testing requirements and other regulations left largely up to individual states. In some cases, a lack of regulatory oversight leaves the door open for unscrupulous companies to make inaccurate claims about the potency and purity of their products. One way that companies are circumnavigating this challenge is by having their products tested by a third-party independent laboratory. These labs test CBD products and provide certifications as to the potency and purity of the products. Companies can then provide consumers with an assurance that the product they’re buying is exactly what they’re paying for. In-the-know consumers expect companies to back up their claims and will only purchase from transparent companies that offer evidence to verify their products’ quality and purity.
Another challenge in the CBD market is the potential side effects associated with CBD. Clinical research has shown that CBD oil can cause side effects, such as anxiety, drowsiness, changes in mood and appetite, nausea, dry mouth, and more. These side effects are generally mild, and they can vary greatly from person to person and may increase with higher doses of CBD. For that reason, experts recommend starting with the lowest recommended dose for your body weight (1 to 5 milligrams of CBD per 10 pounds of body weight) and gradually increase the dose by 5mg per day until achieving the desired effects.
While many markets are seeing a steep downturn due to the Covid-19 pandemic, CBD seems to be holding strong. In fact, many researchers believe that CBD and cannabis products are recession-proof. While brick and motor stores did see a dip in CBD sales, online sales have seen a significant spike. According to research from the Brightfield Group, many consumers are turning to CBD products who are seeking to ease anxiety and stress during an uncertain time. In fact, the Brightfield Group found that four in ten consumers plan on using CBD more frequently during the pandemic, and 15 percent planned to use a higher dose than normal.
At the same time, with unemployment levels reaching an all-time high due to the pandemic, it comes as no surprise that some consumers can no longer afford their favorite CBD products. Additionally, regulatory approvals in the CBD and cannabis space have been put on hold during the pandemic. Some pro-CBD and cannabis legislation that was expected to be passed by this point has been put on the shelf in lieu of more pressing pandemic legislation. Therefore, companies might have to wait longer to get approvals for certain products in their state. Also, onboarding new CBD companies is not a priority during a pandemic, so new companies might not get their shot at hitting retail shelves until after the pandemic is over.
However, an exciting new study found that CBD may even be beneficial in fighting the virus. As this information further studies are performed to corroborate this claim, this connection will certainly drive market values even higher.
If you’re looking for more information on the state of the CBD market, check out these articles, reports, and studies:
- Cannabidiol Market Size, Share & Trends Analysis Report
- Cannabidiol (CBD) Market Size
- Cannabidiol Market Size Worth $9.69 Billion By 2025
- CBD Oil Market Research Report
- What You Need to Know About Products Containing Cannabis
- Boomers Fuel Boom in Popularity of CBD
- Coronavirus prompts spike in e-commerce sales of CBD; consumers seek higher dose products
- The CBD Industry Surprising Changes and Growth Due to COVID-19
- The bright future of the CBD market and the impact of COVID-19