Cannabidiol (CBD) is the part of the cannabis plant that doesn’t get you “high” like the THC side of the plant. It is typically used for health reasons instead of for recreational purposes. The CBD products are either derived from industrial hemp plants or marijuana plants.
The Hemp Business Journal estimated that the CBD market will grow to a $2.1 billion market in consumer sales by 2020 with $450 million of those sales coming from hemp-based sources. That’s a 700% increase from 2016. In 2015, the market for consumer sales of hemp-derived CBD products was $90 million, plus another $112 million in marijuana-derived CBD products which were sold through dispensaries – bringing a total CBD market to $202 million last year.
Matt Karnes of Greenwave Advisors is even more optimistic about the growth of the CBD market saying, “In terms of the CBD market size, I estimate an almost $3 billion market by 2021. Right now there are 15 states that allow CBD only — this is in addition to the 28 states plus DC that have legalized medical marijuana.”
There is also evidence that traditional marijuana users are willing to give CBD a try. Outco, the largest licensed cultivator in Southern California learned that 38% of users and non-users said they wanted to learn more about CBD oil. They too believe that the market is poised for growth.
Not only is the market projected to grow by leaps and bounds, but it has already been targeted by industry insiders. According to Headset Research data, in Washington state alone there are over 800 CBD products in the marketplace. This makes it difficult for consumers to know what is what when they are trying to buy CBD products. In addition, CBD products, although suggested to improve a variety of health problems, can’t actually make those claims. So most labels on these products are intentionally light on details and this can make it pretty difficult for a shopper to know what to buy.
The government’s approach towards CBD is equally confusing. The Federal government is unclear as to oversight of these products. CBD isn’t specifically defined under the Controlled Substances Act, however, the Drug Enforcement Agency (DEA) believes it is a Schedule 1 controlled substance and took The Hemp Association to court over that designation, but they lost in 2003. The Industrial Hemp Farming Act of 2015 would amend the Controlled Substance Act or CSA to exclude hemp and thus hemp-based CBD. Still, some hemp-based CBD products are sold in every state believing they aren’t subject to the law.
Medical Marijuana Inc. said that there were $65 million in hemp-based CBD sales in 2015 and that they are the current market leader with over $800,000 in retail CBD sales per month. Their CBD sales have grown from $3.4 million in 2013 and are expected to be $9 million in 2016.
The market has already changed dramatically in the short time that Medical Marijuana started selling their products in 2013. Four years ago, customers were paying $1.25 for a mg., but buying less. Now the prices have plunged to 2.5-4 cents per mg. and the volumes have increased. They were basically the only game in town in 2014 when their sales were $14.5 million. However, increased competition and the drop in prices has halved their sales figures even though their customer count has increased.
It is critical for consumers to educate themselves. Medical Marijuana says its products are derived from hemp grown in Austria. Their products include Dixie Botanicals and Real Scientific CBD oils. They also own the Kannaway company, which makes the Revive line of products including the Pro-X, a 1,000 mg of CBD that is marketed towards athletes that need to avoid THC products. The company believes everyone should have 50 mg’s of CBD every day.
Another industry leader, the venture capital firm General Hemp, which owns a majority interest in Medical Marijuana, Inc. made $34 million in CBD sales in the last three years (2014-2016), excluding Medical Marijuana, Inc. companies. There is also CBD producer Axim Biotechnologies, which holds the license for CanChew, a CBD chewing gum. Axim received a patent for CanChew last month. Medical Marijuana owns 47% of Axim stock.
The products are certainly not cheap. The Kannaway starter pack that includes the Pro-X, AM Awake drops and PM Restore drops costs $250. Consumers that haven’t tried the product should also be aware that CBD tastes pretty bad. While some regular users say you get accustomed to the bad taste, others suggest mixing it with a drink to make it more palatable.
Headset research also noted that since the product is not regulated in the same way as THC, CBD producers can import industrial CBD oil. “Many order large vats of CBD oil that are produced from Chinese industrial hemp and cut that into their products. This makes it difficult for those who grow and extract CBD locally to compete and consumers aren’t currently educated enough to have a preference for ‘homegrown’ CBD products.”
It is up to consumers to do their homework and check with these CBD companies to learn what products they should buy and where the company gets its CBD extract. It is also a bit or a trial and error process. Users will only know if the product works for them by giving it a try.
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