The cannabidiol (CBD) market has grown exponentially over the last decade, from an cannabinoid derived from an illegal plant to a chemical compound that can now be found in a number of different consumer markets.
A large proportion of this growth has been seen in industries such as cosmetics, health products, skin care, and pharmaceuticals, but more industries are starting to use CBD in their products every year.
This fast-growing market has led to a number of predictions about what the market could be worth in the next few years.
One recent prediction, made in March 2019, came from New York-based investment bank Cowen & Co., who predicted that the CBD market would be worth $16 billion by 2025.
This was based on a study of 2500 people, 20 percent of whom had sampled a CBD product in beverage form, and 7 percent of which has used CBD. Vivien Azer, the managing director and research analyst at Cowen & Co., said pragmatism was also used to inform the firm’s revenue projections of the CBD market.
According to BDS Analytics, however, this prediction does no go far enough. In May 2019, they said that the collective market for CBD sales is expected to exceed $20 billion in the United States by 2024—a whole year earlier than the predictions made by Cowen & Co.
“We’re witnessing CBD maturing from a cannabis sub-category into a full-blown industry of its own,” Roy Bingham, Co-founder and CEO of BDS Analytics had to say on the matter, “Our growth forecast for the CBD market, across all distribution channels, predicts a compound annual growth rate of 49 percent by 2024.”
To make informed predictions, these results take into account all products that have been sold through a number of different channels, including through licensed dispensaries, pharmaceuticals, as well as in general market retail, which includes café’s, smoke shops, grocery stores and pharmaceuticals.
Interestingly, BDS Analytics predicts that the majority of CBD product sales will soon be made by general retail stores as opposed to specialized cannabis dispensaries as is currently the case.
This can be contributed to the large amount of mainstream companies currently announcing their own private label CBD products, like the CBD skincare products Sephora recently announced they would start selling in their stores.
The fact that the FDA’s opinion is slowly changing on the use of CBD, and that it has been legalized for recreational or medical use in most US States, will also contribute to the continued growth in the CBD market over the next five years. The recent announcement from the TSA that CBD oil is now allowed on planes will also help towards legitimizing the industry as a whole.
While BDS Analytics acknowledge that consumer use of hemp-derived CBD products in the US is still only ~15% today, there is substantial consumer interest for alternative forms of the chemical compound, such as ingestibles and topicals.
According to BDS Analytics, CBD stands in a unique position on the supplement and nutraceutical market because, as part of the active ingredient in cannabis, it has a large history of health and wellness uses with anecdotal evidence to prove this.
CBD oil is also one of the few natural remedies with scientific basis for at least some of the claims that have been made about the health benefits CBD products can provide consumers with.
With this being said, BDS analytics do acknowledge that the market insights are reliant on the education and understanding of the drug.
“CBD sales have exploded in the past several months, but there’s still a long way to go when it comes to consumer, retailer, and manufacturer knowledge,” said Jessica Lukas, Vice President of Consumers Insights at BDS Analytics, “56 percent of adults 21+ do not know or are confused about the differences between THC and CBD.”
The good news is that improvements in educating the US population is already happening. As aforementioned, many brands are choosing to use or sell products that contain CBD to their consumers, meaning a certain level of education needs to be provided to avoid confusion.
The main difference between THC and CBD is, of course, that CBD is non-psychoactive, making it a safe option for almost anyone to take to alleviate symptoms and improve their lifestyle.
As this education continues, so too will the speed at which the market grows. Depending on how this goes, we may even see the market growth exceed the current latest figure of $20 billion by 2024.