CBD, How Profitable is it?
CBD is growing in America and there is a lot of money that’s been made and much more that will be made in the coming years as CBD reaches further into mainstream markets. According to Statista (a business market research provider) says that in 2014 total CBD sales in the US from all sources were $108 million and are projected to grow to as much as 1.8 billion by 2022. It’s these kind of numbers that gets so many excited from those looking to enter the market and start a career or major investors looking to become apart of the “gold rush”
In this article we’ll go over the retail market and CBD trends as well as spending habits of consumers and the demographic breakdown. Finally how the future of the CBD industry looks.
CBD Sales in 2017 and 2018
The trend for CBD is growing in America in terms of sales and it’s steadily building momentum. The economic growth is often compared to a “gold rush” and it’s hard to say the analysts are wrong when you start looking at the numbers. In total CBD sales Statista has reached $358 million in 2017 and $512 million in 2018. These numbers are staggering and if you haven’t paid attention to the CBD market these numbers will tell you that you need to. Of the $358 million and $512 million in total CBD sales CBD Hemp accounts for $190 million and $238 million respectively of total sales.
The sales break down into four major categories:
- 64.5% come from internet sales
- 17.8% from smoke shops
- 9% from specialty retailers (dispensaries)
- 5% from healthcare practitioners
So far internet sales dominate total CBD sales and this is primarily that there is a better variety of CBD type products found through individual brand websites. Dispensaries do have a variety of CBD products but there are many high quality CBD products that have a better reach to their clientele via the global reach of the internet. In the future internet sales will dip as more retailers become more comfortable offering their customers CBD products as well as developing their own versions of popular existing products.
Farming (manufacturing) and Retail markets
The US is currently the largest importer of Hemp products but over recent years as production of the plant has increased both with an ease on regulation and more farmers entering the market. In 2018, the federal government passed the “2018 Farm Bill” which deregulates Hemp products with .3% or less total THC content from the controlled substance list. This has given farmers access to specific government farm loans and crop insurance. Both of these are vital for farmers entering the market and expanding, as well as security from natural weather derived crop failures. In 2017 imported Hemp products decreased by 57% and in 2018 that decreased by another 20%.
As supply of American grown Hemp has increased it has coincided with a drop in the price of CBD extracts, like distillates and isolates, and has fueled THC brands to branch out and expand into a vibrant Hemp CBD market. Now with over 850 CBD products on the market it’s not hard to see that the pet and animal market has flourished as well. In 2017 alone pet specific products reached $13 million in sales and is expected to grow with the industry to a staggering $125 million by 2022.
The Average spending of CBD and THC customers parallel each other well with a lean toward more spending on CBD products vs THC. While most CBD consumers do tend to also purchase THC products they are however more willing to open up their wallets on CBD as we can see from the chart. Nearly 70% of of CBD customers are spending between $21 and $160 dollars per month on products that make them feel better. This pricing region is the core area that most retailers and manufacturers are using to develop their products to hit their markets. Furthermore 80% of consumers are intaking CBD at least once a week and over half have bought 1-2 CBD products over the last two weeks. Many CBD users have crossover ailments and they take products that will help multiple symptoms. With over 71% and 64% of people who take CBD products saying that they use it to help with their anxiety and insomnia respectively, we can see a strong trend towards consumers finding relief in CBD products. CBD has also been shown to help with pain and inflammation especially when applied to the skin and this is because the CB2 receptor is also found under the skin. 55% of CBD users are also buying their products for pain and inflammation relief.
Women come in at over 75% of founders or managers of CBD brands. This is a staggering number but falls in line at least with other wellness brands and industries as having women in large majority ownership. In America, 40% of people are interested in trying CBD products and currently 7% or 23 million are currently using CBD products daily. The highest use of CBD products is adults between the ages of 18-34 at 45% and CBD Hemp is 50% of the total CBD Market. With a lot of product cross over here’s the main CBD product category breakdown
- 44% use CBD Oil and Tinctures
- 26% use CBD Topicals
- 22% Use CBD Capsules
- 19% use CBD infused Beverages
CBD Industry Future
We see the CBD market growing as more people become more familiar with the products and accustomed to seeing them in everyday stores. This will be aided by the emergence of True CBD brands that have standardized dosages and mainstream marketing. Some of the standardization will be in the form of better and more complete FDA regulations, certifications and the overall standardization of products.
With these improvements we’ll see job development increases by as much as 21% by 2020 and this will come primarily from increased cultivation, manufacturing and retail. Big retailers entering the market will also help standardize CBD products as well as employment opportunities.