With CBD, Cannabis Wellness Market Goes Big
Nick Kovacevich Contributor MarketsI write about business and the legal cannabis industry.
In this April 19, 2018, photo Maxwell Reis, beverage director adds a few drops of Cannabidol CBD extract to a mixed drink at the Gracias Madre restaurant in West Hollywood, Calif. The hemp-derived CBD extract is popping up in everything, from cosmetics to chocolate bars to bottled water to bath bombs to pet treats. (AP Photo/Damian Dovarganes) ASSOCIATED PRESS
Cannabidiol oil-infused products have opened up a new space for cannabis.
Before Melissa McCarthy stepped out on stage last week at the Academy Awards wearing a bunch of stuffed rabbits, she reportedly took a moment to rub her feet with CBD oil to help with the pain associated with the fashionable, but distinctly uncomfortable, ultra-high heels worn by celebrities.
McCarthy isn’t alone in turning to CBD-infused products to treat minor aches and pains. In fact, this year’s Oscars gift bag was full of CBD products. Sales of CBD are predicted to hit $22 billion in three years.
Much of that projected growth is coming from CBD’s newly minted status as a health and wellness product, where it’s treated as a lifestyle oil that relieves pain, fights inflammation and provides consumers with a general sense of well-being, all without the “high” effects that can come with CBD’s sister extract, THC. Until recently, cannabis was looked at as medicinal- or adult-use. With CBD, a third cannabis category — wellness — is emerging.
It’s even catching the eye of retail analysts at Wall Street firms such as Piper Jaffray. Recognizing that stores, such as Sephora, are now dedicating significant shelf space to CBD, one analyst said that she expects to see a lot of growth in the “beauty and the bong” industry.
As the CBD market grows, it will pave the way for THC products (for adult-use). Today, cannabis companies can establish relationships with retailers and build brand awareness with consumers through CBD. They’ll then be ready to add THC to their product lineup when prohibition eventually is lifted.
For now, CBD is being infused into face creams, bath bombs, makeup and dozens of pet products. Proponents say it works on everything from headaches to aching joints, relieves anxiety and skin conditions, and relaxes and rejuvenates all parts of the body. It’s even said to soothe hemorrhoids and stop menstrual cramps. A large part of this expanding category is the edibles market, where CBD is being touted as a superfood as it’s infused into products such as honey, salad dressing, baked goods, snacks and a whole host of beverages.
CBD is going so mainstream that even consumer-goods and media maven Martha Stewart is jumping in. Stewart announced last week that she’s teaming up with Canopy Growth to design and produce new CBD lifestyle products. She’s starting with a line for pets and then plans to introduce products for their human friends.
Cannabis company Tilray also recently signed a $100 million deal with Authentic Brands Group, whose portfolio includes Juicy Couture, Nine West and Jones New York, to develop and distribute cannabis products. Initially that will mean (hemp-derived) CBD items such as foot creams and mints sold in retail stores and malls across the country. Companies like Constellation Brands, makers of Corona beer, and tobacco giant Altria are also getting into the CBD game with billion-dollar investments.
Part of the spike in interest can be attributed to passage of the 2018 Farm Bill, which legalized production of industrial hemp, transforming it into a mainstream agricultural product. It’s certainly led to Tilray’s recent $314 million (U.S. dollars) purchase of Manitoba Harvest, the largest hemp company in the world.
Importantly, the farm bill also explicitly allows hemp-derived CBD products to cross state lines. These changes were followed by removal of hemp-derived CBD oil from the federal government’s Controlled Substances Act, meaning it has been decriminalized across the country at the federal level. That grants CBD privileges at the federal level refused, so far, to THC.
But it’s not entirely smooth sailing. The Food and Drug Administration has yet to issue new rules or guidelines regulating the sale of edible CBD products, leading some jurisdictions — including Maine, Ohio and New York City — to force vendors to pull CBD-infused edibles and beverages from shelves. In December, FDA Commissioner Scott Gottlieb released a statement indicating that CBD products were not legal in edible or supplement form — unless they received FDA approval.
The industry wants CBD listed as “generally recognized as safe,” so it would be classified similarly to vanilla flavoring and caffeine. Joining the industry in this push are at least a dozen lawmakers, who have asked the FDA to reconsider its policy on CBD in food so that it can be manufactured and sold without FDA approval. Gottlieb has shown signs of softening his position. He recently told Congress he would hold the first public hearings on CBD in April, en route to developing formal guidelines.
However the hearings play out, CBD-infused products aren’t going away. Today, nearly 7% of American adults use CBD products. That number is expected to grow to 10% over the next several years, and as CBD continues gaining popularity, it will continue to attract even greater numbers of new consumers into the market.
