Sales are estimated to reach $1.8bn by the end of 2021, and grow to $5bn by the end of 2026. CBD-Intel explores the drivers behind the US CBD market.
Despite the backdrop of a complex and unstable regulatory framework, much growth is forecast for CBD in the US over the next five years, which CBD-Intel estimates will culminate in a $5bn sales opportunity in 2026.
Oils currently take up the most market share, at 40%, with capsules and topicals following, taking up 14% and 12% respectively. Concentrates and flower take joint last place at 1% of market share each.
Fast-forward to 2026, however and the picture looks very different. Capsules will have overtaken oils, to lead market share at 25%, followed by topicals at 19%. Oils are anticipated to drop to third place at 18%.
This change is driven by the fact that CBD is becoming more associated with medicinal uses, for which capsules are a more readily recognised format because they offer the benefits of more controlled and consistent dosing, and being a cleaner-to-use product as oil droppers can be messy and fiddly to handle.
Cosmetics are predicted to rise from 7% in 2021 to 13% in 2026 and drinks will rise from 3% to 9% in 2026.
The vape category is expected to remain flat and then eventually decline from 8% of market share in 2021 to 3% in 2025, due to the conflicting positioning of CBD and vaping as a health product.
Overall, the main drivers of growth are the capsules, cosmetics and drinks categories. Both the cosmetics and drinks industries are engaging with CBD as cannabis is seen as a trend and potential disrupter of conventional consumer behaviour.
Other drivers of growth include the Assembly Bill 45 in California, which has recently passed the state legislature and now heads to the governor’s desk to be signed into law. Among other things, the bill would allow all hemp extracts – including CBD – to be consumed as food, drinks and cosmetics products, thus ending state prohibition of CBD products.
CBD awareness continues to grow as products are spreading to more consumer segments such as specialist cosmetics and home goods such as bedding linen.
Uses such as stress, anxiety, insomnia, and pain associated with different causes continue to drive the adoption and use of CBD – especially as people look for alternatives to opioids.
CBD, and cannabis in general, continue to enjoy the limelight as an alternative therapy or wellness trend.
Widespread adoption of CBD by major mass retailers, both on and offline, allows users more convenient access to products. This trend has been particularly driven by e-commerce during the pandemic.
Easy payment financing offered at point of sale allows customers to purchase higher value products and spread the cost more easily.
The body of research on safety and efficacy of CBD continues to grow, reinforcing confidence and opening the door for more use cases.
Despite all these positive market drivers, it’s still not an easy road to market for CBD.
Even though the legal environment has been pushed towards deregulation, there are still some legal issues limiting potential growth. For example, the US Food and Drug Administration (FDA) bill, which regards the approval of CBD products for dietary supplements and food, remains unsigned. This transmits a lot of uncertainty to producers and the rest of the market.
Moreover, there are still some barriers from traditional retailers and consumers towards CBD products. Although the industry has gained an introduction into many new consumer profiles, in some cases CBD products are still saddled with a bad image and an old association with illicit drugs. Of course, this varies a lot between different countries and different cultures.
And, finally, prices of CBD products have dropped considerably over the past few years, though for regular consumption it is still considered an expensive product, which may inhibit market growth.
CBD-Intel provides impartial, independent and premium market and regulatory analysis, legal tracking, and quantitative data for the cannabidiol (CBD) sector worldwide.
We provide our clients with the tools to navigate this fast-moving sector, tailor their business strategy, optimise resources and make informed decisions. In addition, we offer customised research and consultancy support.
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