14 Jul Hemp-based CBD market continues its enormous growth
(This story appears in the July issue of Marijuana Business Magazine.)
Just as the marijuana industry has exploded in recent years, so too has a sector that revolves around the plant’s non-psychoactive cousin: hemp.
In particular, demand for hemp-based cannabidiol has skyrocketed, especially since a 2013 CNN report about the success in Colorado of Charlotte’s Web, a CBD product that helped a young epileptic girl control her seizures.
That success and the resulting demand across the nation for more CBD-based health products helped give birth to a new industry that parallels the larger cannabis market.
Hemp-based cannabidiol products, unlike CBD-heavy marijuana strains, also can be legally ordered on the internet and shipped across state lines, further fueling growth.
The hemp CBD market has reached an estimated retail value of $130 million in the United States alone, according to a 2016 market estimate by Vote Hemp and the Hemp Business Journal. A spokesman for Vote Hemp also estimated there are likely 50-100 hemp cannabidiol brands, along with hundreds more growers and processors that focus on hemp-based CBD.
Part of the reason for the massive growth is that many businesses find it’s easier to simply purchase wholesale CBD extracts from another company that’s taken care of the growing and extraction process, and then re-bottle oils and tinctures with their own brand. The practice is called “white labeling,” said Mike Wong president of Provida Health.
“If someone wants to have a tincture, but they don’t want to make it themselves, they’ll contract us to make that tincture, and we’ll make that product,” Mike Wong said. “(But) instead of putting (the) Provida (label) on it, we’ll put theirs on it.
Learn about Private Labeling your own CBD brand with Provida Health.
Along with the growing presence of hemp-based CBD companies come increased profits. Not only that, but the market for American hemp products – unlike that of marijuana – is global.
That’s also true in terms of source material.
HempMeds, Elixinol and Bluebird Botanicals, for instance, get much of their raw hemp material from European growers, in large part because it’s still widely illegal in the United States to grow hemp. Provida is made from 100% US Grown Hemp.
Hemp’s status changed in 2014 with the passage of a new federal law that left the legality of production to individual states, but many states have been slow to adopt hemp cultivation. Because hemp isn’t as strictly illegal under federal law as marijuana, it also means hemp businesses can take orders online and ship pretty much anywhere they want.
TRENDS TO WATCH
Barriers to cannabis-related research in the United States have kept hemp-based CBD products and others from making specific claims to health benefits, since there’s a dearth of solid scientific evidence to back up any benefits from CBD or other cannabinoids found in either hemp or marijuana. But many in the hemp business believe that’s going to change.
Along with scientific exploration will likely come another boom in popularity and use of other cannabinoids.
“There are a huge number of cannabinoids that are being discovered,” Titus said. “I went to an event where some European researchers were saying they’d identified 144 different cannabinoids.”
Some companies already are obtaining their hemp from Colorado and Kentucky instead of from Europe, Canada or China (three of the major international hemp producers), and that’s likely to keep growing.
Hemp also presents a big opportunity for those in the agricultural industry whose crops may not be getting as large a price at market as they once did. That’s the situation in Kentucky, a deep red conservative state that has embraced the resurgence of hemp.
Such acceptance will have ripple effects for the larger cannabis economy, as well as for even more ancillary businesses, Titus said.