CBD Is Taking the Cannabis Industry Mainstream
Over the next few years, consumers will start discovering their favorite CBD brands, which eventually will make them natural customers of that brand's THC products.
It’s hard to imagine that just a few years ago, no one outside of the hard-core cannabis community knew about CBD. Today, it’s the one of hottest health products on the market. In 2018, sales of CBD hit nearly $600 million, and they’re projected to grow to $22 billion in just a few years more.
CBD, or cannabidiol oil, is the nonpsychoactive chemical in cannabis plants. CBD won’t get you high, unlike its cousin, tetrahydrocannabinol (THC). That’s important because it means CBD has been granted some privileges at the federal level refused so far to THC.
The most important of those was passage of the 2018 Farm Bill, which decriminalized the agricultural production of hemp, one of the main sources of CBD. Just a few months before that, the U.S. Food & Drug Administration approved Epidiolex, the first CBD-based drug, for the treatment of seizures. That in turn led to the Drug Enforcement Administration moving CBD to the Schedule V drug list, making it the same as cough syrup and antidiarrhea medicine, rather than heroin and methamphetamines as it was previously under the Schedule I category.
All these shifts basically make CBD the Trojan horse of cannabis – meaning, CBD is welcomed in places THC can’t go, like the Estee Lauder’s Origins makeup line, Amazon’s warehouses and the aisles of Petco. In fact, CBD products can be sold even in states where THC-laden cannabis remains under prohibition. Companies will be able to establish relationships with retailers, build brand awareness with consumers and be ready to add THC to their product lineup when it eventually becomes legal at the federal level.
The first step to creating a brand is making sure your product finds its audience. But that’s hard to do when your product is illegal in some (or all) forms in different parts of the country. Witness the recent controversy over Acreage Holdings’ attempt to buy a Super Bowl ad featuring people who had been helped by cannabis. If you can’t advertise on TV (or in print or online in some places) it’s incredibly challenging to build a brand. People who want to know more about cannabis have to seek out dispensaries, if they’re even available in that state, and educate themselves about different brands.
CBD is finding ways around those problems. Tilray Inc. recently signed a $100 million deal with Authentic Brands, whose portfolio includes Juicy Couture, Nine West and Jones New York, to develop and distribute cannabis products. Initially, that will mean CBD items such as foot creams and mints in retail stores and malls across the country. Eventually, it could mean those same brands expand into THC products. Companies like Constellation Brands, makers of Corona beer, and tobacco giant Altria are also getting into the CBD game with billion-dollar investments.
Deals like these are helping CBD producers build the necessary infrastructure, such as sales and distribution networks, which can be exploited for products that contain THC once it’s legal at the federal level. The same is true of production and retail spaces, which can even be built in places where cannabis is illegal, then repurposed once prohibition is lifted.
CBD also is leading the way in breaking down any remaining stigma associated with cannabis in the mind of the general public. As more and more CBD products find their way to shelves across the country, mainstream consumers are gaining a greater familiarity with CBD and its properties and uses. That growing ease with cannabidiol oil is leading to a rethinking of cannabis itself. It’s evolving from a slightly shady recreational drug to a useful lifestyle product and superfood that relieves pain, fights inflammation and lessens the effects of cancer treatments. Ultimately, as the last of the stigma fades away, more consumers will enter the market, and having become experienced users of CBD, it will be easy to expand their palate to include a trusted CBD brand’s new THC products.
That’s just the beginning. There are myriad more subtle ways that CBD is helping to normalize cannabis. Thanks to the 2018 Farm Bill, the U.S. Department of Agriculture is now allowed to fund hemp research with government grants. Growers are eligible for federal crop insurance to protect their investments, and in some cases, even to federally subsidized crop insurance. States are offering tax incentives to CBD companies to build or renovate factory spaces. All these financial relationships are setting the stage for a time when the prohibitions against THC are lifted.
The growth of CBD could also lead to easing of financial restrictions on cannabis. Right now cannabis producers can’t work with banks, which means much of the business still takes place using cash. But it likely won’t be long before hemp growers and CBD producers can walk in and open a bank account – or buy an online ad. Facebook, Instagram and Google ban cannabis ads on their platforms.
Over the next few years, consumers will start discovering their favorite CBD brands, which eventually will make them natural customers of that brand’s THC products.