HIGHLIGHTS
- U.S. hemp-derived CBD market pegged at US$5 billion in 2019
- Hemp CBD popularity to benefit from health and wellness trends
- In U.S., online CBD sales drop sharply as consumers head to stores
This year will become known as the year CBD went mainstream in the United States, Brightfield Group said in a new report Tuesday.
According to the U.S. cannabis market research firm, American CBD sales will jump to US$23.7 billion by 2023 due to the legalization of industrial hemp and increasing social acceptance of cannabidiol, a cannabinoid that does not have the intoxicating effects that THC has. This is up from an estimated US$5 billion in 2019, which is already expected to be more than 700 per cent above 2018 sales, Brightfield said.
“Dramatic growth” will continue through 2023, with a compound annual growth rate at 47 per cent, in the “likely case” that the U.S. government will create a regulatory framework for CBD supplements, the report said.
“Hemp CBD’s persistent popularity is also in line with longer-term anti-pharma, health, and wellness trends that continue to drive consumer demand, which major manufacturers and retailers are extremely eager – and have already begun – to capitalize on,” Brightfield said in a report.
CBD, a widely used acronym for cannabidiol, a compound that can be extracted from cannabis and hemp, is already available in the United States in familiar product forms including anti-aging cream and multi-vitamins in easily accessible stores such as Walgreens and Kroger. CBD is used by many for health and wellness purposes.
But the industry is still awaiting the U.S. Food and Drug Administration (FDA) to establish its policy framework. While one policy option would be for the FDA to deem pure CBD isolates illegal despite the legal status of hemp leaf and flower, another would be for it to authorize sales conditional on strict compliance with all rules that generally apply to supplements. Another possibility is that the new drug requirements that preclude the FDA from regulating CBD as a supplement could be waived.
“As CBD has transformed from a niche product to a full-blown, more normalized (and less stigmatized) mainstream wellness product available in various known retail channels, it is reaching tens of millions more consumers across the age/gender/regional/political spectrum,” Brightfield said.
This brings with it a consumer shift from online CBD purchases to more brick-and-mortar shopping. In 2017, nearly 67 per cent of U.S. CBD sales were done online, the Brightfield report said, with roughly 25 per cent at smoke shops and dispensaries, while just 8 per cent were in natural food stores.
Last year, 25 per cent of CBD sales were conducted online, with natural food stores and smoke shops making up the bulk of other shopping locations.
In 2019, online purchases dropped again to 22 per cent of CBD sales, the importance of physical stores is expected to become increasingly important, largely due to the large retailers that entered the market.
The Globe and Mail
While tinctures remain the biggest part of the CBD market, this product’s lead over others such as topicals, vape oils and capsules will narrow as mainstream consumers increasingly look for CBD products in pharmacies, pets stores and natural food outlets. “These decisions are dramatically changing the nature of the market, especially when it comes to product types,” Brightfield said.
“The market is no longer entirely dominated by sufferers of extreme pain or epilepsy who must go to great lengths to attain product, nor primarily by cannabis consumers.”
This has caused the U.S. CBD market to become even more saturated in 2019, as companies race to make new products, causing the top 20 brands to lose market share while maintaining the “majority piece of a now much larger pie.”
Another aspect seeing a spike is the number of scientific trials, with 40 to be concluded in 2019, more than double 16 in 2018 and 12 in 2017. This is expected to drop to 27 in 2020.
Positive scientific research results are viewed as beneficial to the industry as they can increase sales and, in turn, overall CBD demand.
The Globe and Mail