The Introduction

The Farm Bill brought immense change to the industrial hemp world, legalizing CBD and opening the floodgates for a brand new industry. While the start of 2019 was dominated by companies well-positioned to enter the space – vape companies, for example – Q2 gave way to large retailers like CVS and Walgreens, signaling to the rest of the country that CBD is going mainstream.

2019 is shaping up to be a massive year for CBD, leading to just over a $5 billion industry by end of year – a 706% increase over 2018. By 2023, Brightfield Group estimates that the total U.S. CBD market could reach $23.7 billion. CBD’s first year is going well so far. But what are the key barriers? While the FDA held a meeting on May 31st, 2019, aimed at helping the agency collect more information from the public to inform its policymaking, there are still numerous steps that need be taken in order for businesses to have clear, legal pathways for market entry.

Other steps have been taken across the country to provide clarity and consistency to citizens, business owners, and government agencies. One barrier that the industry is beginning to overcome is consumer education and awareness. With increased product availability, growing wellness trends, and the proliferation of numerous product segments, consumers have greater access and awareness to more CBD products that fit their needs.

This consumer awareness has led to rapid revenue increases for CBD brands, drastically changing the business landscape and who sits at the top of the market. As CBD has transformed from a niche product to a full-blown, more normalized (and less stigmatized) mainstream wellness product available in various known retail channels, it is reaching tens of millions more consumers across the age, gender, regional, and political spectrum. What is Driving the Massive Growth for 2019? Historically, online sales have been the primary distribution channel for the CBD market. In fact, nearly two-thirds of sales were online in 2017.

Today, however, the primary cause of market growth is the entrance of chained retailers. Large pharmacy, retail, and grocery chains are entering the market with a wide variety of large-scale pilot programs. Given their reach, scalability and mainstream familiarity, those in this distribution channel are expected to garner 57% of market revenues in 2019. Over the short- to medium-term, we expect expansion across both pharma and grocery as well as the emergence of supercenters, gyms, pet stores, natural food chains, and other big box retailers.

The Report

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