The CBD Market Has Grown By 557% in the Last 3 Years
By Alan PaulMarch 12, 2019 in CBD Blog
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The number of CBD oil users has grown rapidly both in the US and worldwide over the past few years, making it a growing business sector for companies in the United States, and easily accessible for users.
Both the usage and sales of CBD are expected to have an even higher increase in the next couple of years with the recent passing of the Farm Bill by President Trump towards the end of 2018.
This Farm Bill contains a clause that legalizes hemp, the strain of the cannabis plant that does not contain enough THC to have psychoactive effects on someone who takes in its extracts. CBD is made from this strain of cannabis therefore, is legal in most states.
The production and sales of CBD had been quietly flying under the radar in 2014 and before, with a very small market size. It is only recently that its use has spread out to more people, and indeed the mainstream public, shocking many in the process with the increasing CBD oil market size and growing sales.
The Growing CBD Market - Analysis
In 2015, a mere four years ago, the market for CBD products derived from hemp stood at about $90 million. This number increased to around $170 million in 2016 according to Brightfield Group, thereby rising by 88.9% (!) in just 12 months.
The CBD market analysis for 2018 shows that CBD sales have massively increased to around \$591 million, according to the latest figures, that’s a rise of 557% (!). This is driven by the ever growing popularity and demand as people come to both realise and celebrate the positive effects of CBD.
It would also be important to note that the sales of hemp-derived CBD increased in such a large way without any real formal marketing efforts. These products were not sold to people in Walmart or Target, but most CBD sales were online or in chemists and smaller stores.
The spread of CBD benefits, and the lack of downsides has largely been spread by simple word of mouth and online forums, which has since gained momentum and spread the news across mainstream media and other sectors.
Publishing the results of a recent CBD user survey, NDNR backed up this point:
The majority of users learn about CBD from the internet or from family or friends (40% and 35%, respectively). Only 10% of all users, and 11% of those using CBD to treat a medical condition, learn about CBD from "a physician or naturopathic doctor."
The legality of CBD products and hemp in general is still under discussion, and its production and purchase is still slightly limited in some states today. Such hurdles have previously limited its potential sales, but an elimination of these hurdles is expected to have a really positive effect on the CBD market sales, and forming a new generation of users.
Future of CBD Sales
Different research and data analysis companies have provided their predictions for the CBD industry in the coming years. Experts from the Hemp Business Journal predict that hemp-derived CBD products sales will reach \$646 million by 2022.
Brightfield’s predictions though are more ambitious, as they expect to have about \$22 billion in sales by 2022. This number sounds very far fetched (to some), and it presents a possible 700% increase in sales.
It could, however, be reality based on the notion that the hemp plant is now legal in the states, where it wasn’t before. The number relies heavily on how future legislation will go in different states as some still have restrictions in the use and production of the plant, and also look at how incorporating genuine marketing strategies will positively affect the market of CBD from hemp.
Of course another factor will undoubtedly be the impact of more and more people not only hearing about the benefits of CBD, but trusting them as well. In certain circles there can still be a stigma attached to the topic of CBD. This is partly due to its immediate association to cannabis, and partly down to a lack of knowledge and education on what is still a fairly recent topic.
The predictions are also based on the idea that legalization of hemp products will lead to multiple uses of the products, and the growing user numbers will be able to embrace CBD freely.
The industry is no doubt gaining traction, and is expected to grow even higher if Brightfield’s report is anything to go by. This is bound to lead to an increase in production of the hemp plant within the US, thus having even more people growing the plant to meet the demand for the product from CBD oil users.
Why CBD oil sales have grown
While the legalization of the hemp plant is a major reason behind the crazy growth of the market for CBD products, it is not the only reason. CBD products offer a great alternative to traditional medication according to studies.
It has a wide range of benefits ranging from the reduction of anxiety to chronic pain, to support with sleeping, and even epilepsy among many others.
With an increasing interest in wellness for people not just in the United States but worldwide, more people are open to the idea of new or alternative medication.
As the wellness industry keeps growing, providing a ready market for CBD products. CBD products have proven to be natural, depending on the form it is taken in, and it works quickly, from as little as five minutes to about thirty minutes after using it.
It was not as widely known as it is now that it is legal, and that more people are not only using but also talking about it.
Perhaps the second biggest selling point that differentiates it from marijuana-based products is the lack of a psychoactive effect on an individual. That an individual get relief from pain without necessarily getting the high that is caused by the THC in marijuana products seems to bid well with the people.
It is also taken primarily for health-related reasons. An individual can now begin to get a prescription of the product from a medical practitioner or simply get it without a prescription but due to an illness all the same. This provides a growing CBD market size based on people with different conditions as it makes managing these condition much easier.
Lastly, is the shift in attitude towards the product and the plant it is derived from. Before, all strains of the cannabis plant were considered drugs, and were rendered illegal in the States. It is not until recently where the hemp plant was differentiated from the marijuana plant, and removed from the list of schedule 1 drugs.
This change in thought has greatly affected its sales as people are more open to the concept of buying CBD, without associating it with other drugs like marijuana.
Are there risks to the CBD market?
As more people move towards production of the hemp plant, there could (in theory) eventually be a risk of excess production which would lead to a reduction in prices of the product. Such a scenario would affect the CBD companies, farmers and investors as well.
However this is minimised by the growing rise in users that we have witnessed over the last four years. The sales of CBD are only expected to rise over the course of the next three years, negating any risk of over production. Especially as the production of CBD evolves beyond tinctures and expands into further edibles and indeed alcohol.
The other risk associated with the hemp-derived CBD businesses is the legalization of marijuana. There are currently states that have legalized its recreational use including California and Maine, and more are likely to follow them as well.
This poses a threat to the market for CBD that comprises of people who use hemp-derived CBD over marijuana-derived CBD simply because the former is legal while the latter isn’t.
Although as discussed, CBD has grown in popularity partly due to its lack of THC, so none of the psychoactive effects linked with marijuana. It is safe to suggest that CBD and marijuana users have a different desired outcome, once again protecting the future of the CBD industry for producers and users.
Although the idea and concept of CBD is still fairly recent, at least in our mainstream lives. It’s safe to say that the number of users, and therefore the sales of CBD are expected to continue to rise at a strong rate.
As further tests and studies are carried out, it is expected that further uses and benefits of CBD are proven to be outlined. Opening up the possibilities of new users embracing the benefits that CBD can provide.