CBD Products

There is already a strong demand in the U.S. for products containing Cannabidiol, or CBD, a natural chemical component of cannabis and hemp that’s non-psychotropic, meaning it doesn’t get you high. Companies offering CBD products have a tremendous opportunity, as proponents of CBD claim the substance offers anti-anxiety, anti-inflammatory, and pain-relieving effects. Consumers are already embracing CBD as a product to be incorporated into their daily lives.

Why it’s hot: CBD is popping up in a wide variety of products including oils, lotions, soaps, and beauty goods. The newest niche is the food and beverage industry, where businesses have added it to snacks, coffee, ice cream, and cocktails. By 2020, CBD is expected to make its way into yogurts, soups, and even salad dressings, according to a report on 2019 food trends from snack-maker Kind.

Skills needed: A strong knowledge base about the science of the cannabis plant and CBD is crucial. While the required skills vary depending on whether entrepreneurs are making CBD products for the food and beverage, health and wellness, or beauty and personal care industries, strong marketing ability will be crucial for any new entrant hoping to stand out from the competition.

Barriers to entry: Finding shelf space at retailers will be a challenge due to the heavy concentration of new brands.

The downside: Not all CBD products are legal in the U.S. Some 47 states–along with Puerto Rico and Washington, D.C.–have passed laws allowing at least some use of CBD. The passage of the 2018 Farm Bill is expected to make CBD legal in all 50 states, which could usher in competition from larger companies, making it harder for startups.

Competition: Considering that CBD didn’t exist as a product category five years ago, the competition is heating up at a rapid pace, with hundreds of CBD companies offering thousands of products.

Major players: Colorado-based CBD oil producer Charlotte’s Web Holdings reported $40 million in revenue in 2017 and nearly $18 million during the third quarter of 2018, up 57 percent year-over-year. Nevada-based CV Sciences, which sells CBD products and is developing a synthetic CBD‐based medicine for a range of conditions, reported sales of more than $20 million in 2017, an increase of 87 percent from 2016.

Growth: The U.S. CBD industry grew by nearly 40 percent in 2017 to $367 million, according to recent report from New Frontier Data, an analytics company specializing in the cannabis industry. The market is expected to reach $500 million in 2018 and $1.91 billion by 2022. Analysts at investment firm Canaccord Genuity estimate the U.S. market for CBD beverages alone will reach $260 million by 2022.

By Emily Canal & Graham Winfrey