The cannabidiol (CBD) products market in the United States was valued at 5.31 billion USD in 2021, a 29% total increase in value compared to 2019. However, in 2022, the market value decreased by 21% to reach 4.20 billion USD due to several factors listed below.
In 2021, e-commerce was by far the most valuable sales channel, accounting for 38% of total sales. It was followed by pharmacy and specialty retailers with shares of 18% and 9%, respectively. All other channels accounted for 34% of the market value in 2021.
Why Use CBD Products?
Cannabis is among the most widely cultivated illicit drugs worldwide. It contains about 104 different cannabinoids and around 750 different chemicals, the most popular of which cannabidiol (CBD) and tetrahydrocannabinol (THC).
Over the years, various studies link cannabis to the effective treatment of various medical conditions such as chronic pain, epilepsy, and multiple sclerosis. Both researchers and users hope that traditional treatment and medication of these medical conditions could shift to cannabis-based products.
However, the lack of efficient and large-scale clinical trials continues to hinder cannabis from becoming a legal medicine under US and international regulations. What makes it difficult to legalize cannabis is THC, its psychoactive ingredient. As a result, the absence of psychoactive effects makes CBD products the most widely used of all cannabinoids for therapeutic purposes.
Both THC and CBD are derived from the cannabis plant, but the difference is in how they affect the body. While both THC and CBD can provide users with similar therapeutic effects, CBD does so without the recreational effect associated with THC.
Researchers continue to study the potential of CBD to treat various conditions and diseases. However, studies supporting the benefits of CBD as a treatment for different conditions is limited. As a result, CBD products of unknown quality are marketed with unproven medical claims. Thus, more research is required to determine all effects of CBD on the human body.
Consumer Motivations for Use of CBD Products
CBD's calming property is its most sought-after effect and is generally among the main reasons for its widespread use. A poll conducted by OnePoll and sponsored by Forbes shows that 62% of respondents use CBD products to reduce stress and relax.
Pain relief and improved sleep quality followed with 60% and 58%, respectively. Anxiety disorders are a common psychiatric condition and a significant number of Americans suffer from mental health problems. Thus, it’s no surprise that 51% of respondents use CBD products to alleviate anxiety.
Other motivations to use CBD products include doctor recommendations (48%), recreation (35%), and curiosity (26%).
Regulation of CBD Products
In December 2018, the Farm Bill was signed into law in the United States. As a result, hemp and cannabis with extremely low concentrations of the psychoactive compound tetrahydrocannabinol (THC) were removed from the Controlled Substances Act.
Thus, hemp-based products that contain less than 0.3% THC became legal to sell in the USA. However, they still face the same requirements and standards as any other product regulated by the Food and Drug Administration (FDA).
Despite that, the FDA has yet to determine regulations for CBD products regarding their testing, labeling, and marketing. As a result, CBD companies have to navigate a complex environment of state and federal requirements. For instance, the FDA allows CBD in cosmetics, yet they are forbidden in food and dietary supplements. To make matter more complicated, a few states allow CBD in food.
Furthermore, CBD companies face issues with gathering capital and even basic services from banks and financial institutions. As a result, players in the cannabis industry eagerly await US Congress to pass several pieces of legislation, namely:
- Safe Banking Act of 2021;
- Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021;
- Hemp Access and Consumer Safety Act.
Passing these regulations will unclog restricted marketing and distribution channels. That will lead to big box stores like Walmart and Target to place CBD products on their shelves. The regulations will also enable new capital sources for numerous cannabis companies along with access to basic financial services.
CBD in the Cosmetics Industry
When we shift from CBD supplements to CBD cosmetics, things are slightly different. CBD is considered as an effective ingredient that provides antioxidant and anti-inflammatory benefits to the skin.
Scientific research reveals the possibility of cannabidiol to regulate the production of oil in the skin (as it may have an anti-inflammatory effect on the skin cells which produce sebum). It can also reduce inflammation like swelling, pain, redness, or irritation from skin conditions, such as eczema and psoriasis, while at the same time hydrating the skin.
What is more, cannabidiol is suspected to have anti-aging properties and has the potential to treat acne. As a result, hemp has earned its place in the beaty industry. Moreover, consumers’ ever-increasing interest in hemp-based products further drives beauty companies to develop new types of CBD cosmetics.
For instance, the US beauty brand Vertly produces a variety of makeup and body cosmetics containing CBD. For its products, the brand uses cannabidiol grown in Colorado and obtained by a supercritical carbon dioxide extraction process.
The extraction process uses CO2 to get the cannabidiol out of the plant. It is considered a sustainable method as it does not leave any harmful residues behind. The other ingredients the company uses are grown by farmers and herbalists in Northern California and the plant-based oils are obtained in slow-extraction processes.
Nevertheless, emphasis should be placed on educating retailers, as they need to make sure that their clients understand the products they purchase. Retailers must answer all kinds of questions from consumers, as many of them are confused about the use and benefits of CBD. Therefore, education is critical to ensure the successful distribution of CBD products.
The CBD products market may have hit a bump in the road in 2022. However, the market is expected to continue its steadfast growth as soon as the regulatory environment becomes clearer.
Thus, a comprehensive regulatory framework of CBD products from the FDA and unrestricted access to financial services through the Safe Banking Act are crucial for the unfettered growth of the CBD products market and the wider cannabis industry.