Since passage of the Farm Bill of 2018 which legalized the production of hemp, entrepreneurs, innovators and established CPG companies have been quick to jump on what is already turning out to be the next “boom” industry. The landmark bill formally removed hemp from the Controlled Substances Act, which had until now, made no differentiation between cannabis, and non-psychoactive hemp and hemp derivatives.
As a result of this new legislation, cultivation, transportation and sales of hemp and hemp-derived products are legalized. A new industry emerged almost immediately in what may be characterized as a “gold rush.” Startup CBD companies have issued lucrative IPOs and early investors cashed in quickly. CBD has opened a door of opportunity to hundreds of business, such as the best weed dispensary winnipeg has to offer, and should help boost the economy in countries which have embraced legalization. Farmers struggling due to a combination of a trade war with China and decreasing demand for what used to be high-dollar crops like tobacco, are now growing hemp.
The CBD industry is unlike any other, with players ranging from small entrepreneurs, larger and well-funded startups with IPO or private equity money, as well as established companies in the mainstream consumer packaged goods industry. Businesses such as private label skin care organisations that are CBD based are booming into the skin care industry. The last time we saw such an all-encompassing business boom was the so-called “dotcom boom,” which saw new Internet companies coming out of nowhere, built on business plans written on the back of cocktail napkins and funded by overenthusiastic venture capitalists, sometimes with more money than common sense. Still, despite the sometimes irrational enthusiasm of the dotcom boom, some of the companies that came out of that time are still with us today, and despite the subsequent crash, the dotcom boom led to innovations and technologies that have permanently changed how we work, play, shop and conduct business. There are dramatic parallels between the dotcom boom and the CBD boom, which today has given way to countless entrepreneurial opportunities, wealth creation and a new and highly effective way of treating common ailments like chronic pain, headaches and nausea. It is, perhaps, the most revolutionary treatment since Bayer invented aspirin in the 1890s. Perhaps adding to the success of these companies is that people are more likely to bulk buy their products to satisfy their needs for a long time. They may contact them for CBD Wholesale if they need to order a number of items at the same time.
Market projection
Without a doubt, a “CBD boom” is emerging, and with any boom, there will be a shakeout as the strong survive, the weak fall by the wayside, and better-funded players buy out the poorer ones. One thing is for sure though, this growing industry shows no signs of abating.
Already, major players are emerging, with large, vertically integrated publicly held firms like Cronos Group (NASDAQ: CRON) taking market share in both CBD and legal cannabis, and major online resellers like Nug Republic dominating the online sales market by offering one of the best-curated collections of CBD products available. That being said, they are not only the ones who are dominating the CBD market. There are other online dispensaries like Cheap Bud Canada (interested people can search for the best dispensary toronto online to locate stores like these) who are also known to be acquiring popularity in the cannabis industry. However, their increasing popularity can be attributed to the good quality and affordable CBD products that are available on their website.
The benefits to those who are putting their money into CBD are already evident. Early investors in Cronos are already reaping the rewards, and those who invested $1,000 in its IPO would now see their investment worth $78,920.
Even the most conservative analyses of the global CBD market predict growth at a CAGR of 11.2 percent through 2026. There may be a market correction though, as the inevitable shakeout of the weaker players moves forward, and overproduction in the farming segment results in an oversupply of hemp. Already, hemp prices have fallen by 80 percent since the summer highs of last year, with the price of hemp moving from $40 per pound in July, to less than $8 per pound in January, a factor that will result in lower costs for consumers, but farmers who have gone all-in on hemp may need to reconsider their options. Despite the market correction though, it’s still not all bad news for hemp farmers. Even at $8 per pound, it remains much more lucrative than standard crops like corn or wheat. Also, farmers will benefit as more industrial uses of hemp supplement its strength. Already, it is being put into use for industrial materials like hempcrete, with talk of its practicality as a source for biodiesel fuel.
Some things to look out for
Some of the challenges the CBD market is facing today include a rapidly growing demand, which has to be balanced against a new supply chain and manufacturing environment which is still working out the details of regulation and FDA approvals. Because these things are still in the early stages, the industry’s sales and marketing engine must move quickly to capture market share from a rapidly growing number of increasingly well-funded competitors, while also treading lightly in terms of making claims in anticipation of forthcoming FDA guidance.
Other issues impacting the CBD industry include the imperative of developing customer trust, especially in light of a general lack of FDA oversight and regulation. The proliferation of CBD products in nearly every type of retail store imaginable, from corner gas stations and bodegas to major retail chains, means that consumers need to take extra measures to make sure they are buying a brand they can trust. As a result, known brands from already-established CPG companies are more likely to make inroads into this market, and a recent survey noted that consumers are much more likely to purchase CBD from a known brand. More reputable CBD brands and resellers are embracing the concept of product transparency with clear labeling, and assurances from unbiased third-party testing facilities. The CBD industry, despite some current questions about FDA oversight, a potential oversupply and exuberant speculation, is here to stay and it is a major force in the economy, driving jobs, retail growth and wealth. Overall, the CBD industry is good news for the economy, consumers, investors and entrepreneurs alike. An industry “boom” is still going on an will continue for at least the next two to three years before the weaker players fall by the wayside and the stronger ones dominate, and CBD becomes a ubiquitous and widely used over the counter remedy and supplement.