Cannabidiol (CBD) is the part of the cannabis plant that doesn’t get you “high” like the THC side of the plant. It is typically used for health reasons instead of for recreational purposes. The CBD products are either derived from industrial hemp plants or marijuana plants.
The Hemp Business Journal estimated that the CBD market will grow to a $2.1 billion market in consumer sales by 2020 with $450 million of those sales coming from hemp-based sources. That’s a 700% increase from 2016. In 2015, the market for consumer sales of hemp-derived CBD products was $90 million, plus another $112 million in marijuana-derived CBD products which were sold through dispensaries – bringing a total CBD market to $202 million last year.
Matt Karnes of Greenwave Advisors is even more optimistic about the growth of the CBD market saying, “In terms of the CBD market size, I estimate an almost $3 billion market by 2021. Right now there are 15 states that allow CBD only — this is in addition to the 28 states plus DC that have legalized medical marijuana.”
There is also evidence that traditional marijuana users are willing to give CBD a try. Outco, the largest licensed cultivator in Southern California learned that 38% of users and non-users said they wanted to learn more about CBD oil. They too believe that the market is poised for growth.
Not only is the market projected to grow by leaps and bounds, but it has already been targeted by industry insiders. According to Headset Research data, in Washington state alone there are over 800 CBD products in the marketplace. This makes it difficult for consumers to know what is what when they are trying to buy CBD products. In addition, CBD products, although suggested to improve a variety of health problems, can’t actually make those claims. So most labels on these products are intentionally light on details and this can make it pretty difficult for a shopper to know what to buy.
The government’s approach towards CBD is equally confusing. The Federal government is unclear as to oversight of these products. CBD isn’t specifically defined under the Controlled Substances Act, however the Drug Enforcement Agency (DEA) believes it is a Schedule 1 controlled substance and took The Hemp Association to court over that designation, but they lost in 2003. The Industrial Hemp Farming Act of 2015 would amend the Controlled Substance Act or CSA to exclude hemp and thus hemp-based CBD. Still some hemp-based CBD products are sold in every state believing they aren’t subject to the law.
Medical Marijuana Inc. said that there were $65 million in hemp-based CBD sales in 2015 and that they are the current market leader with over $800,000 in retail CBD sales per month. Their CBD sales have grown from $3.4 million in 2013 and are expected to be $9 million in 2016.
Portion originally published: Forbes.com