What is the future of the CBD industry?
Unstoppable growth
CBD sales in the US are soaring and reaching high numbers. It is the fastest growing segment of the market and the same progress is expected in the coming years. By 2025, sales are forecast to reach up to $25 billion, more than triple that of 2018. The rapid and explosive growth of the CBD market is also being seen outside the US.
Most companies focus on CBD, but as the potential of other cannabinoids derived from hemp is gradually revealed and research suggests their potential benefits, the range of products will expand. The focus will be on minor cannabinoid constituents such as CBG (cannabigerol), CBN (cannabinol), CBC (cannabichromene) or HHC (hexahydrocannabinol).
The endless wait
The rules in the US are quite strict regarding CBD. To some extent, other countries copy them. Everyone has their own approach to hemp and hemp products, but there are problems with funding or promotion almost everywhere.
While CBD is legal in the US, it is difficult for entrepreneurs to find suitable financing, raise capital and access mainstream banking services. Even though cannabidiol falls into the category of a safe and effective substance, as confirmed by the WHO, the FDA's position restricts the CBD trade. A trio of 2021 laws, such as the Safe Banking Act, the Consumer Protection Act and the Cannabis and CBD Market Stabilization Act, are set to lead to cannabidiol gaining the classification of a dietary supplement. This will free up a number of previously prohibited marketing and distribution channels, leading to greater visibility, promotion and, of course, sales of cannabis products.
Thin ice
Once companies are able to sell CBD as a food supplement, the number of brick-and-mortar stores will increase sharply and even the large chains will not be able to resist this range. This will be an opportunity for retailers, but also for growers or laboratories. For all those who have a stake in the journey of cannabidiol (or other cannabinoids) from seed to sale.
It is understandable that many people or companies would like to get into the cannabis business but are hesitant because of the strict regulations. If the rules are indeed relaxed and CBD expands the ranks of dietary supplements, the industry is poised for exponential growth. But it will probably also affect the price, as the increased supply and demand of CBD will make it significantly more expensive. But this is true for the US.
In the Czech Republic, access to hemp and hemp ingredients is notoriously complicated. The classification of products into a specific sales category (such as a food supplement) carries with it certain restrictions. Strict restrictions also apply to the marketing and advertising of CBD products. However, we will discuss this in a separate article. In general, products with up to 1% THC are allowed (effective from January 2022). The sale and import of technical hemp is regulated by Act 167/1998 Coll. and the use for industrial or foreign processing by Section 21. On the other hand, all hemp products must be accompanied by laboratory analyses and protocols. However, solicitation for consumption is taboo for any cannabis product (regardless of THC content).
The power of acquisition
Multinationals have long fingers, yet they are shying away from the CBD business for now. But the relaxation of strict restrictions will probably entice them and they will try to play with a well-known name in particular. Because of their size, they have the option of diversification (spreading their investments independently) where they will see CBD as a separate product line.
It is hard to know which companies are considering a similar approach, but Procter & Gamble, Johnson & Johnson, Coca-Cola and Unilever are all in the game.
Awareness
People are getting more and more interested in CBD (and the whole hemp business). They are seeking information for themselves, rather than absorbing the necessary facts from the media.
On the other hand, this puts more pressure on CBD companies. They have to put more emphasis on quality, regulatory compliance and oversight of analysis and testing. Potential users will go for the best value for money and there will be no room for weaker or fraudulent sellers on the market. Those that survive will then finally see a return on their initial investment.
Summary
The CBD industry has been one of the most progressive for several years now, with multi-billion dollar turnover. But vendors (and other companies connected to the CBD trade) have to overcome countless obstacles, such as the inability to communicate the potential effects or funding. On the other hand, it looks like changes and looser trading rules are in sight.
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