What is CBD?
As per the data published on the US National Library of Medicine, CBD is derived from the Cannabis Sativa plant. This plant has two variants called hemp and marijuana. Both of them contain CBD.
The hemp oil is extracted from the seeds of hemp plants (also known as Cannabis Sativa) while CBD is extracted from flowers, stems, and leaves, among others. It has high CBD content and contains 0.3% or less Tetrahydrocannabinol (THC). Marijuana contains 30% THC which can produce mind-altering effects. However, the legalization of marijuana in some states has propelled the demand for marijuana-derived CBD products.
They can be extracted through various methods such as olive oil, carbon dioxide (CO2), and ethanol. Among all, the CO2 extraction method is considered as the gold standard technique in the CBD market.
3 Types of CBD Available in the Market
1. Full Spectrum CBD
Full-spectrum CBD products have high content CBD and a low percentage of THC. In 2020, this segment is expected to account for approximately 33% of the market share. Most of the companies sell full-spectrum CBD products as it contains a complete range of cannabinoid and terpenes which helps them to produce entourage effect which maximizes the therapeutic effects of CBD products.
2. Isolate CBD
If compared to the full-spectrum type, isolate CBD does not contain any THC. These products are for the people who want to try CBD and do not want any ingest any THC. Well, the benefits of isolate CBD do not differ from full-spectrum CBD products. As per the research, this segment is expected to expand at a CAGR of at least 30% during the forecast period 2020-2027.
Previously, it was believed that CBD isolate is more effective than the full spectrum; however, this theory was debunked after a study from Lautenberg Center for General Tumor Immunology said that the full spectrum provides higher relief.
3. Broad Spectrum
Broad-spectrum is a mixture of isolate and full-spectrum CBD. As this type of CBD contains various cannabinoids, it can produce an entourage effect. In 2020, the broad spectrum segment is speculated to account for almost 30% of the share in the CBD market.
Benefits of CBD
• Reduce chronic pain (pain management)
Various studies have shown that CBD has the capability to reduce pain after surgery. In addition to this, few human studies have suggested that it is effective for the treatment of arthritis and sclerosis. For instance, Sativex, a cannabis-derived medicine, is used to treat muscle stiffness and spasms.
• Anxiety and Depression
According to the World Health Organization (WHO), more than 300 Million people suffer from depression while as per data from Singlecare.com says around 6.8 Million have generalized anxiety. To treat these mental disorders, doctors prescribe pharmaceutical drugs. In recent years, doctors are shifting to CBD products. For instance, CBD oil has been utilized as a natural approach to treat anxiety and depression.
• Reducing side-effects of cancer
Even though there is no solid evidence on cannabis preventing the spread of cancer, there are few human studies that have concluded that CBD can reduce symptoms related to cancer. It is found that CBD can aid in reducing chemotherapy-induced side effects such as nausea and vomiting. Some animal studies have conveyed that it has anti-cancer properties.
• Heart Benefits
As per the data published on Healthline, CBD is linked to several benefits for the heart and respiratory system which also includes lowering the blood pressure. CBD helps in reducing anxiety which ultimately helps in maintaining the blood pressure. High blood pressure can cause heart attack and stroke while usage of CBD can benefit the individual.
• Other benefits
There are human studies that say that CBD can help to treat sleeping issues and schizophrenia. In an experiment, CBD was found to reduce the incidence of diabetes and significantly plummet inflammation. Capitalists and researchers are investing millions of dollars in the potential benefits of the CBD and also exploring the ways to commercialize the product.
History of CBD
According to the historical data, the first documented use of cannabis in form of medicine was utilized in 2737 BC by Chinese Emperor Sheng Hung who infused into the tea. It was not before 1839 when Irish physician and medical researcher, William B. O’ Shaughnessy, studies the benefits of CBD in the medical applications. In his study, he discovered that it can be used as an anesthetic.
Fast-forward in 1940, the British Chemist discovered the structure of cannabinoid while two years later, American-based chemist, Roger Adams, successfully isolated the first CBD. His research led to the discovery of Tetrahydrocannabinol (THC). Finally, after years of research, a bill was passed in 1978 that recognized the benefits of CBD in medical applications. In 1996, California legalized the use of medical marijuana.
4 Industry Trends of CBD Market
As per the detailed report published by Growth Market Reports, the global cannabidiol (CBD) market size was around 395.2 Million in 2019 and is anticipated to surpass USD 3,400 Million by 2027, expanding at a CAGR of at least 30% during the forecast period 2020-2026.
1. Legalization of CBD in various countries
Marijuana was earlier abused as a drug substance among the population. However, with the changes in the regulatory framework and policies, the consumption of medical marijuana has increased exponentially over the years. This has improved the distribution of the CBD in various states which has ultimately propelled the growth of the CBD market.
For instance, it has increased the number of online and offline portals for all the CBD-based products. Various health and wellness retailers such as CVS Health, Walgreens, and Boots Alliance have started to sell CBD-based products. The wholesome overhaul is anticipated to reward investors with high ROI in the coming years.
2. Pharmaceutical Industry: A Lucrative Opportunity
Pharmaceutical companies are heavily investing in the development of CBD-based products. In 2018, the U.S. Food and Drug Administration (FDA), approved the first pharmaceutical drug derived from CBD. There are more than a hundred classes of cannabinoids and CBD is one of them. As per ClinicalTrials.gov, more than a hundred clinical studies are undergoing to study the impact of cannabis which includes CBD.
In 2018, C2 Pharma launched an initiative to deliver GMP compliant CBD to pharmaceutical companies. Along with the initiative, it has announced an R&D program to bring 10 new APIs into its product portfolio. Currently, pharma companies are looking forward to formulating CBD which can be readily absorbed by the body.
3. CBD infused Food & Beverage Products
According to the Greenwave Advisors, a marijuana research firm estimates that the CBD foods market is expected to reach USD 3 Billion in valuation by 2021 Meanwhile, BDS Analytics, a market research firm, predicts that the CBD-infused food and beverages market will reach USD 5.9 Billion by 2024. As CBD does not contain THC, the WHO has considered as safe to be used in the products. They have gradually found its place in cold brews, kombucha (tea-based beverage), cocktails, and other edible products.
Various food & beverage brands are closely monitoring and planning to enter the CBD market while some of them have already launched their products. For instance, Relax Brands is offering CBD infused drinks that are alternative to sugary drinks available in the market. “We provide an amazing top-quality product with a great amount of CBD inside, 15mg, which is the highest on the UK market, because we know consumers are concerned with the efficacy of CBD products,” Relax said.
4. CBD infused beauty and skincare products
CBD has impressive antioxidant and anti-inflammatory properties which makes it popular in the beauty and cosmetics industry. According to Joshua Zeichner, director of cosmetic and clinical research at Mount Sinai Hospital, CBD may decrease the oil production “when applied topically.”
Various skincare brands are infusing CBD in their products which is helping them to gain a competitive edge in the market. They are producing a variety of serums, cleansers, creams, and lotions out of hemp-derived CBD. As per the research, the CBD cosmetics market is expected to surpass USD 580 Million during the forecast period 2020-2027. Some studies claim that it can be effective in fighting acne and can also aid in treating psoriasis.
CBD Market Future Market Analysis 2020
The coronavirus crisis has undoubtedly impacted the distribution of CBD across the globe. Farmers across the globe have witnessed disruptions in the distribution owing to the lockdown. However, it is anticipated that this industry will fully recover in the next 12-24 months.
The growing awareness about cannabis farming and the increasing number of programs to assist them in growing the hemp plants is anticipated to augment the growth of the CBD market. Moreover, the CBD benefits to improve the immune system has increased the demand for CBD products in North America and Europe.
According to Growth Market Reports, the medical segment accounted for more than 45% of revenue and is expected to create ample opportunities for the new entrants and emerging players in the CBD market. Meanwhile, the pharmaceutical segment is expected to grow at a higher rate during the forecast period. The increasing research and investment in pharmaceutical applications are predicted to spur the growth of the market.
On the basis of the distribution channel, the market is segmented into Business to Consumer (B2C) and Business to Business (B2B). The B2B segment is further segmented into hospital pharmacies, retail pharmacies, and online stores. In 2019, the B2C segment accounted for the largest market share and is anticipated to continue the trend during the forecast period.
4 Top Companies & Their Developments in The CBD Market
Various companies are entering into strategic collaborations, agreements, and also focusing on product developments to leverage their position in the market. Here below the are the top companies in the market that occupied a major market share in the CBD market:
1. Canopy Growth Corporation
The company based in Ontario which was formerly known as Tweed Marijuana, Inc. has gained a huge market share in the last seven years. The Canada-based company has not listed its range of CBD products but has provided many blog posts to acknowledge the website visitors with information on CBD medicinal properties.
In December 2019, the company launched First & Free- hemp-derived CBD products which include softgels, creams, and oil drops. Fast-forward in July 2020, Canopy Growth announced the launch of an online CBD store specifically for the U.S. audience. Moreover, in September 2020, they introduced Martha Stewart- a new product line that focuses on hemp-derived wellness supplements. The product includes Martha Stewart gummies, oil drops, and softgels.
2. Aurora Cannabis
Aurora Cannabis is another Canadian-based company which has become the fastest-growing company in the CBD market. In its latest business updates, the company announced that it has appointed new CEO and it’s expecting revenue between USD 70 Million and USD 72 Million in its Q4 2020.
In September 2020, the company’s stock tumbled after it announced up to USD 1.4 Billion of goodwill impairment charges on its past acquisitions. Aurora hosted a conference in 2019 to announced an 8-years partnership with UFC to have advanced clinical research on the relationship between hemp-derived CBD products and athletes. In the same year, the company announced a new product with CTT Pharmaceutical Holdings. Together, they introduced CBD-infused sublingual wafers which are named “Dissolve Strips.”
Tilray is a pharmaceutical and cannabis company that is incorporated in the U.S. The company has a wide range of products which include dried flower cannabis, oils, drops, THC vape pen, and dried cannabis pre-rolls. According to German pharmaceutical paper DAZ, the company had to recall its products in Germany. They had to recall six batches of THC10: CB10 product again.
In January 2019, Tilray acquired Natura Naturals Inc., who’s a licensed cannabis cultivator located in Ontario. This will help the company to have an in-house high-quality supplier for its CBD products. Fast-forward in June 2019, the company bought boozy candy company Smith and Sinclair to develop CBD-infused edibles.
4. Medical Marijuana, Inc.
Medical Marijuana, Inc. has few brands under its umbrella which have an extensive variety of CBD products. HempMeds® which was established in 2012 was the first brand to offer hemp-derived CBD oil in the market. Over time, it added CBD-infused coffee, capsules, and edible oils, among others. They have a separate division for CBD distribution in Brazil and Mexico under the HempMeds® brand name.
Kannaway® is the company’s second brand that offers CBD oil products, hemp clothing, and hemp pet products. In addition to this, it also provides CBD-infused skincare, nutrition powders, vaporizers, and energy chews, among others. In September 2020, the company announced the expansion of its production and warehouse facility.
Other prominent companies in the CBD market include ENDOCA, Gaia Herbs, Hexo Corporation Elixinol, Cannoid LLC, Folium Biosciences, Aphria. In August 2020, Molson Coors and Hexo Corporation announced the launch of cannabis-infused beverages across Canada. Moreover, in May 2019, Gaia Herbs, one of the leading brands in botanical supplements, announced that it has started sales of hemp extract lines online.
Regional Market Outlook 2020
• North America
In 2019, the North American region accounted for the largest market share and is expected to continue its dominance during the forecast period. The two countries which are helping the region to stay ahead in the market are the U.S. and Canada. As per the 2018 Farm Bill which was passed in the U.S., hemp-derived CBD products are allowed to be sold in the country. Furthermore, the production and commercialization of cannabis have been legalized in Canada which has propelled the growth of the market in the North American region.
The major companies in North America are based in Canada while the steady legalization of cannabis in the U.S. is expected to offer market opportunities to the new entrants and emerging players in the market.
European Commission (EC) decision to consider CBD and other extracts under narcotics, can upheaval the wholesome market. It will not only hamper the current market but can restrict future research and developments. However, the rising demand for CBD in the general wellness and food & beverage industry is expected to trigger the U.N. Single convention to remove cannabis from restricted products. Amidst all this chaos, Swiss food giant Nestle launched CBD-based softgel in the European market.
• Asia Pacific
According to the Growth Market Reports, Asia Pacific is expected to expand at a higher CAGR rate in the forecast period. Currently, China is the largest hemp cultivator in the Asia Pacific region. It exports around 90% of its products to the European region including Japan. Besides this, the growing demand for personal care products in the emerging economies is anticipated to drive the growth of the market. The CBD market is speculated to boom in the Indian region owing to the escalating demand for CBD oil among the consumers. There is predicted to be a huge opportunity for new entrants in the Indian market.
The legalization of CBD across the globe is expected to play a huge role in market growth. Along with this, the continuous product developments and distribution of the CBD-based products are anticipated to propel the growth of the CBD market.