The Future of the CBD Industry
Within our rapidly changing world, entrepreneurs and investors can find a steady and consistent promise in the growing CBD industry.
Even with the slow change in laws worldwide, the cannabidiol (CBD) industry is changing the way consumers deal with wellness and self-care. Today, a significant number of people are choosing a more holistic approach to these outlets.
The wellness industry boasted a $4.5 trillion market in 2018, according to the Global Wellness Institute’s statistics and facts.
This means entrepreneurs can find success with new products and services to enhance consumer experiences. Moreover, despite the state of our current economy, even if the CBD industry is affected, it will still make investors considerable profits based on its substantial growth.
CBD brands can expect to see a promising ROI from an industry that grew at a rate of 700% in 2019 in the U.S. alone, according to the Brightfield Group. The group predicts that this market will garner as much as $27.3 billion by 2023.
In 2019, the industry was estimated at $7.1 billion USD for the global market and should reach $9.3 billion by the end of 2020 as projected in a CBD market report by Grand View Research.
The second-largest CBD market, Europe is also experiencing an explosion of consumer purchases of CBD products. While the younger generations of Europeans definitely are key consumers, 77% of Europeans surveyed believe everyone should have access to CBD products.
With access to almost any form of information at their fingertips, consumers are educating themselves about anything and everything. Nowadays, wellness sits atop the list of concerns for much of the world’s population.
In order to deal with these concerns, many people are actively searching for more information about CBD products and there’s mounting research that indicates increased interest in the CBD industry.
Recent research showed that in April 2019, 6.4 million searches for CBD were made on Google’s search engine. In this peer-reviewed JAMA Network Open research letter, there was a 160.4% increase in searches for CBD from 2017 to 2018.
Popular Products and Services
A 2019 Consumer Reports survey shed light on which CBD products consumers preferred. Most bought their CBD in the form of edibles. That equated to 35% of consumers purchasing some form of CBD-infused food or drink.
The survey also revealed that drops and vaping devices made up 30% of consumers' preference when purchasing CBD products.
BDSA Analytics reported that gummies are one of the most popular edibles among consumers with $147 million in sales in 2019.
Investing in these CBD products could set anyone looking to make a profit on the right path.
ROI in the CBD Industry
A high return on investment (ROI) usually involves a good amount of risk. When starting any business, entrepreneurs must understand the risks involved with their specific market. Although the CBD industry has a potential of risks due to regulations and start-up costs, there are many ways in which investors can mitigate these challenges.
For example, partnering with an experienced and reliable CBD white label distributor can help resellers and retailers save time and money on their initial launch. Additionally, these partnerships can provide expert guidance when navigating the complex legal regulations of the industry.
This means that business owners can sail past the “high risk” and start seeing the “high return” quicker and easier than anticipated.
the CBD industry, there ’s definitely risk involved, yet the industry is set to thrive when considering the increase in demand.
Investing in the CBD Industry
While dispensaries used to be one of the most common ways for consumers to purchase CBD products according to the 2019 Consumer Reports survey, our world drastically changed in the year 2020 with COVID-19 and all of the restrictions involved.
Considering that more and more consumers are using the Internet to purchase their products, transitioning to an e-commerce CBD company makes sense.
On average in 2017, approximately 20 new companies ventured into the CBD industry with the product being central to their business, according to Future Market Insights CBD Market Analysis. Most of these companies were start-ups offering food, cocktails, lotions, and a variety of other CBD-infused products.
Whether you’re an entrepreneur looking to form a partnership or an investor looking into other options, it’s always important to educate yourself as much as possible.
Before settling on any investment, evaluate these key components:
The Source of the Hemp
Find out where the CBD is sourced. For instance, one of the best places to grow and manufacture CBD is in Colorado. The state’s landscape and weather make it a perfect place to cultivate a quality product from the start, according to the article The Best and Worst States to Grow Hemp.
The Manufacturing Process
After cultivation, there’s the processing, extraction, refinement, and isolation of the CBD. Learning more about this process will give you a better understanding of the kind of CBD oil that the consumer will receive upon purchase.
One of the most important parts of the manufacturing process involves the extraction method. Many manufacturers prefer the CO2 extraction method because it produces CBD in its purest, most potent form, according to the CBD Awareness Project’s article, How are CBD Products Made?
In such a competitive market, quality matters more than ever. If consumers don’t receive the expected benefits from one brand of CBD, then they’ll surely move on to another brand.
Third-party independent laboratory testing adds legitimacy to the quality of a company’s CBD oil because the industry is full of companies making questionable claims about the value of their products.
If the company provides its consumers and investors with a variety of products, then it has the potential to tap into all different types of markets within the CBD industry. In growing markets with so many possibilities, it’s valuable to invest in companies that offer an array of edibles, tinctures, smokables, and more.
Many companies offer entrepreneurs much more than quality CBD products, including branding and marketing services. If this is the case then knowing how a company handles these other services becomes another important criterion to examine before making any investment.
Regulations, Legalities, and Challenges
Although the 2018 Farm Bill deemed industrial hemp legal in the United States, the laws differ from state to state. So, even though hemp-derived CBD with .3% THC or less is legal at the federal level, some state laws may have their own agenda.
Worldwide, the laws regarding CBD production, distribution, and use become even more complicated and confusing.
Because of this, it’s worthwhile to learn more about these legal issues if you plan to invest internationally. Alternatively, finding a partner that is well versed in these matters and can guide you through the potential legal hurdles is invaluable.
Still, North America and Europe currently dominate the market, producing 3/4 of the product worldwide, according to Future Market Insights CBD Market Analysis.
Therefore, wisely choosing where to invest will narrow down the possibilities and take the edge off of high-risk investing.