Report: CBD Market To Hit $22 Billion By 2022
Sales of the hemp-based compound will surpass those of legal cannabis.
We've long suspected that hemp had more economic potential than legal cannabis. Now there's data to prove it.
According to a new report released today by the Brightfield Group, the hemp-derived CBD market will reach sales of $22 billion by 2022, outpacing cannabis sales, and surging from $591 million in 2018 -- that's a five-year CAGR of 132 percent.
What a Difference A Bill Makes
The surge in profits is largely due to the 2018 Farm Bill proposed by Republican Mitch McConnell, which would effectively re-legalize hemp farming (which is currently legal in some states while illegal in others) on a federal level and processing in the United States. The Farm Bill would allow byproducts like hemp-derived CBD to be legal. And even if the Farm Bill ends up DOA due to political polarization, "the will for hemp legalization is unchanged and a similar Hemp Bill will be expected to pass after the 2018 elections," according to Brightfield forecasters.
Last year, hemp legalization was considered to be further away than it is today. Thus, many of the projections on the size of the market and related numbers have changed substantially. Assuming hemp will be legalized within the next few months the Brightfield Group came up with very different projections, applying a methodological approach that "incorporates information gleaned from hundreds of manufacturer, industry and distributor interviews and calls, detailed consumer sales and survey data drawn from thousands of hemp CBD users, as well as statistics and insight collected from extensive desk research…"
Under these new assumptions, the firm expects:
"The CBD market is the most fascinating market I've ever covered," said Bethany Gomez, Director of Research for Brightfield Group, in an interview with Green Entrepreneur. "Despite all the hurdles, [the] legal gray area, and restrictions on distribution, marketing, and even credit card payments, CBD has grown by more than 80 percent over the past year.
"In the absence of large companies and large-scale marketing campaigns, this industry has emerged due almost exclusively to word of mouth advertising," she added. "Nearly half (47 percent) of all CBD consumers first heard about the product from friends or family, while less than 10 percent heard about it from the news or traditional advertising."
Other Growth Drivers
The federal legalization of hemp is not the only factor driving such impressive growth in the hemp-derived CBD industry.
According to the Brightfield Group, additional main drivers would be:
- Increased investment.
- The popularity of hemp CBD versus pharmaceutical products as wellness trends continue.
- The evolution of distribution channels.
- The expansion of the offering – driven by more product types and constant innovation.
"New consumers are being greeted by an explosion of new product innovations that can be purchased through many different types of retailers," said Gomez. "When we researched the market a year ago, it was predominantly tinctures being sold either online or through smoke shops. Now we're seeing such a wide range of new products ranging from CBD face masks and soaps to pre-rolled CBD joints, bug repellent, to pet treats, fruit roll-ups, and lemon water.
"Natural food stores can't keep it on the shelves and CBD can now be found at massage spas, gyms, and through an army of direct sellers. But where the large-scale growth will come over the next five years is through mass market retailers."
Gomez notes that thus far, retailers like Whole Foods, Target, 7-Eleven, and Walmart have been waiting patiently in the wings for the federal approval to carry these products. "But once descheduling takes place and these products are fair game, this will open up the market and change the industry almost overnight."