The estimate is based on the assumption that the FDA will create a legal pathway forward for CBD, which is currently not considered a legal dietary ingredient in foods, beverages or supplements on a federal level, although several states (see box below) explicitly permit sales, says Brightfield.
“While Congress could theoretically pass legislation overriding the FDA’s decision and permitting CBD ingestible sales… a much more probable scenario is that Congress will nudge (via fixed deadlines, funding cuts, etc.) the FDA to expedite its typical timeline and get a policy framework in place by mid-2020, allowing hemp CBD manufacturers and retailers alike to operate in full legal compliance and without fear of repercussions from federal agencies.
“Brightfield Group’s market forecasts are based on the assumption that this will be the case.”
CBD ingestibles in top tier retailers will remove stigma
Clarity from the FDA would give leading CPG companies and retailers a green light to enter the market, while the arrival of CBD-infused ingestibles from blue chip brands in top-tier retailers would “lift social stigmas surrounding CBD use as well as concerns about products’ safety and legality” and help the industry “distance itself from the shadow of the ‘stoner’ stereotypes,” claims Brightfield.
Land of confusion: 'Hemp oil' being used to describe two different things
In part owing to brands’ concern about attracting the attention of regulators, however, there is still confusion over terminology in the space, noted Brightfield.
In particular, it notes, “The term ‘hemp oil’ has come to be used ambiguously, in many cases referring to hemp-derived CBD oil, but most often referring to hemp seed oil, which is derived from hemp seeds [which don't contain CBD] and typically serves as a nutritional or protein supplement.”
The hazy use of terminology and the resulting confusion among customers have “worked to the advantage of some manufacturers and retailers, and to the disadvantage of others,” it adds.
“A quick search on Amazon yields over 900 results for ‘Full Spectrum Hemp,’ which includes both ‘hemp extract’ products (many of which contain CBD content but do not advertise this in order to avoid further scrutiny) and products marketed by companies producing much cheaper hemp seed oil and implying it has the properties attributed to CBD, thus fetching a higher price by preying on the lack of broader consumer education on hemp extracts.”
'Consumers are very confused'
The report echoes comments made at the IFT annual meeting and expo in June by Mintel, which noted that consumers are not clear about the distinctions between marijuana (cannabis plants that contain >0.3% of the psychoactive cannabinoid THC); hemp-derived CBD (from cannabis plants with <0.3% THC); and hemp seeds (which have no THC or CBD); with many assuming that anything with ‘hemp’ on the label will get you high.
Canada-based Blue Sky Hemp, which sells hempseed products (which don’t contain CBD or THC) but is also gearing up to supply hemp-derived CBD (which is concentrated in the flower), told FoodNavigator-USA: “People use the term ‘hemp oil’ to cover hempseed oil and oils containing CBD, so consumers are very confused.”
The evolution of the CBD market
Currently, tinctures dominate the ingestibles market, but that will change as more foods and beverages hit the market, predicts Brightfield, which says CW Hemp maintains the largest market share among hemp CBD companies (at 7.1%), followed by CV Sciences (Plus CBD Oil) with 6.4%, Green Roads (5.1%) and Medterra (4%).
“The importance of tinctures in the overall CBD wellness market is fading. In 2018, they made up over 34% of the market, and in 2019, that number will drop to 25%.”
The market for CBD-infused beverages, meanwhile, is set to generate $191m in sales in 2019, over 17 times its 2018 figure, it estimates. “CBD-infused drinks will see a 63% CAGR between 2019 and 2023.”
Where is CBD being sold?
As for retail channels, in 2019, chain retailers account for 57% of CBD sales, followed by online retailers at 22%, natural food stores at 8%, dispensaries and smoke shops at 4% apiece, with the remainder comprising independent pharmacy stores, multi-level marketers, and pet stores.
“While no major athletic facilities such as 24-hour Fitness, Planet Fitness, and Anytime Fitness have yet signed on to offer CBD products, independent and small chain gyms around the country are beginning to carry samples and offer CBD products for sale, and this channel, too, is set to grow as more facilities sign on,” predicts Brightfield.
Science and CBD
Clinical trials have found CBD to be “particularly effective at treating conditions of pain and sleep disturbance, spasticity, and in treating seizure conditions,” says Brightfield. “In several cases, clinical trials also found that using CBD can help decrease one’s dependency on other drugs, such as opioids or marijuana.”
According to results from a randomized clinical trial in healthy adults, supplementation with a hemp-derived, CBD-rich extract for six weeks led to significant improvements in sleep and reductions in appetite. Findings from the study, which used CV Sciences’ PlusCBD Oil, were presented at the 16th Annual Conference of the International Society of Sports Nutrition in Las Vegas last month.
Led by Hector Lopez, MD, chief medical officer at the Center for Applied Health Sciences, the study found that 60mg per day of PlusCBD Oil containing 15 mg of hemp-derived CBD for six weeks led to significant decreases in appetite, along with improvements in sleep quality and duration, and enhancements in 'quality of life' scores.
However, there is a general lack of data to support claims that low doses of CBD from hemp extracts used in foods and beverages can reduce anxiety, which is what most food and beverage brands are seeking to imply with their marketing. Most studies use higher doses of isolated CBD and focus on specific medical conditions such as seizures or chronic pain.
"Hemp CBD’s persistent popularity is in line with longer-term anti-pharma, health, and wellness trends that continue to drive consumer demand, which major manufacturers and retailers are extremely eager – and have already begun – to capitalize on."
Brightfield Group
The FDA recently re-iterated that CBD is illegal in foods, beverages and supplements, although it is focusing enforcement action on companies making “egregious” claims while it explores the regulatory pathway ahead.
In the meantime, several states have explicitly authorized the general sale of hemp-derived CBD products including Alabama, Kentucky, Colorado, Alaska (in licensed adult-use dispensaries and retail stores), Florida, Indiana, Illinois, Kansas, Maine, Maryland, Minnesota, Nevada, Oregon, Texas, Vermont, and Washington (at licensed cannabis retail stores and dispensaries).
(Several other states only permit its sale from licensed medical cannabis dispensaries for patients with a qualifying medical condition.)
Right now, California defers to the FDA regarding CBD as a dietary ingredient, but its legislature is currently considering Assembly Bill 228, which would permit for the retail sales of compliant CBD-infused food, beverages and supplements.
Natural products online marketplace Thrive Market has temporarily halted sales of hemp-derived CBD products after its merchant processor demanded it cease selling them amid uncertainty over their legal status, but says it is in conversations with a new processing partner to try to bring them back.