Hemp-Derived CBD Will Outpace All Other Cannabis Markets, Projected to Hit $22 Billion by 2022: New Report
Uncategorized September 13, 2018 MJ Shareholders
The hemp-derived CBD market is expected to hit $591 million this year, and, according to a new Brightfield Group report, it may grow 40 times this size—to $22 billion by 2022—if the 2018 Farm Bill passes. The rapid growth will be supported by an anticipated explosion in distribution channels for these products in the next few years; chain retailers are expected to enter the market as soon as 2019.
Tinctures are driving the hemp CBD marketplace, but topicals and capsules are gaining footholds—reflecting broader social trends toward wellness products and anti-pharma attitudes, according to Brightfield. As major retail companies get into the game, those larger consumer forces will play a role in hemp-derived CBD sales growth. This is an entirely different marketplace than regulated cannabis retail in state-legal adult-use programs.
The simply massive numbers set forth in this report afford an opportunity for the nascent hemp-derived CBD market to assess itself and plan ahead accordingly, Lex Pelger, science director at Bluebird Botanicals, said in an interview with Cannabis Dispensary.
“On one hand, yes, it’s really surprising to see this young industry be at such huge numbers so quickly—and still kind of pulling itself together—and on the other side, I don’t think it’s a surprise at all, because it’s about time,” he said. “With such a long human history of cannabis being an important plant, it makes sense that this is just exploding back onto the public consciousness like it does every couple decades.”
The report uses the anticipated passage of the 2018 Farm Bill as a door to more widespread sales and consumer popularity.
U.S. Sen. Mitch McConnell, a vocal advocate for Kentucky hemp farmers, added his industrial hemp legalization language into the Farm Bill earlier this summer. If passed, the bill would remove industrial hemp from the Controlled Substances Act and allow states to regulate the production, commerce and research of the plant. (Industrial hemp refers to the cannabis plant with less than 0.03-percent THC content. Hemp is used for a broad array of end products, from clothing and rope to construction materials and biofuels—and for CBD production.)
Right now, online orders of hemp-derived CBD products are the primary sales driver. Companies like Bluebird can ship CBD products anywhere in the U.S., as long as the plant source source meets that legal definition of industrial hemp and includes less than 0.03-percent THC.
The trend that Brightfield points to, however, is a flip from mostly retail to mostly wholesale. As these products become normalized in U.S. wellness markets, the online ordering process—direct to consumer—will quickly be replaced by a more traditional market that involves wholesale opportunities.
“That makes a lot of gut sense to us here,” Pelger said. “You do see interest at the trendsetters all over the country.”
For now, the federal government and many state governments remain on the lookout for hemp CBD product sales; Ohio, for instance, which is in the early stages of its medical marijuana program, recently issued a policy memo that laid out a no-tolerance approach to these products anywhere in the state.
The Farm Bill, of course, would work wonders for product manufacturers.
“Once the—if the—hemp farm bill passes in the next month or two, that’s going to be the nitroglycerine that really ignites the hemp industry, because it’s furthering and solidifying the protections from the first 2014 Farm Bill,” Pelger said. “That’s going to give a lot of coverage to the bigger players who have been a little bit nervous to get in.” Like Whole Foods, say, or Walmart.
“There are so many different types of wholesale retailers where a CBD product could appear that once all of them start flooding into this market, it’s really going to be an amazing thing to see,” Pelger said. “It’s amazing to see the growth that’s happened already, and it’s only the organizations getting in that have some bravery to them.”
And even if the vast majority of retail companies aren’t yet involved, the number of product manufacturers has already consolidated greatly in just the short window of time since the 2014 Farm Bill passed.
“Twenty businesses now host two-thirds of hemp-derived CBD sales,” according to the Brightfield report, “as the evolution of the market has allowed these companies to develop reputations, spread the word about their brands and products through grassroots-level word-of-mouth marketing, and grow their consumer bases tremendously despite the barriers presented by the current regulatory system.”
Colorado-based CW Hemp is, by far, the market leader.
The company recently launched an IPO on the Canadian Securities Exchange, picking up nearly $100 million in capital in the process.
“Completing this IPO milestone is tremendously rewarding for the company, our family, and for the people that we serve,” Charlotte’s Web co-founder Joel Stanley told Forbes. “The founding principle of Charlotte’s Web was to do our greatest good in the world by helping people live better lives. Now, with the successful completion of our IPO, we have added valuable financial capital. This gives us the ability to further invest in research and product development, expand our geographical reach, build the valuable infrastructure needed for ever increasing production requirements and ultimately to share our Charlotte’s Web products and vision worldwide.”
Top photo courtesy of Adobe Stock
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