Cannabidiol (CBD) is one of the numerous compounds found in the cannabis plant. CBD oil can be obtained from two different species of cannabinoids: marijuana and hemp, which come from the same plant species called Cannabis sativa. Hemp-based CBD oil products have a lower delta-9 tetrahydrocannabinol (THC) concentration, while marijuana-derived CBD oil products have a relatively high concentration of THC.  Therefor, marijuana-based CBD products can be used only when they are prescribed by doctors while hemp-based CBD oils do not normally require a prescription.

CBD oil products have several benefits. They are known to cure various ailments in the human body. Over the years, the demand for CBD oil has increased in different parts of the world because of the growing awareness about the health benefits of CBD oil.

Global Hemp/CBD Market

These days, at least 47 countries cultivate hemp for commercial or research purposes. The largest producers of hemp are currently Canada, China, Chile and France whereas the USA is the largest importer of hemp products, receiving most of its seed and fiber from Canada and China, respectively.

Hemp acreage in North America and the European Union countries reached record levels in 2017, nearly 180,000 acres and about 90,000 acres respectively, which could put global acreage at more than 330,000 acres. The global hemp industry is projected to reach $5.7 billion in 2020 with the U.S. hemp market representing 32%.

The North American market also dominated the global CBD oil market in 2017, followed by EMEA and APAC. Technavio’s market analysts estimate that the global CBD oil market will grow to almost $2.7 billion by 2022 with an estimated CAGR of more than 31 % (2018-2022).

The latest trend in the market is growing influence of online retailing for both business-to-consumer (B2C) and business-to-business (B2B) operations. The increasing popularity of e-commerce businesses worldwide has granted vendors with an opportunity to enhance their profit margins and revenues. E-commerce reported for nearly 15% of the global retail sales in 2017.

U.S. Hemp/CBD Legalization

Hemp

In June 2018, the U.S. Senate passed its 2018 Farm Bill and in December 2018, President Trump signed the bill into law to make hemp legal for the first time since the 1930s. The bill removes hemp from the Controlled Substances Act, effectively legalizing the plant federally and allowing it to be grown, processed, and sold as an agricultural commodity. Individual states will be authorized to draft their own regulations governing hemp cultivation.

CBD

In all, 32 U.S. states allow licensed sale of medical marijuana, which includes the use of CBD oil. Ten states permit both legal and recreational marijuana sales and consumption. In some U.S. states, CBD is treated as its own substance. There are four states that completely outlaw CBD: Idaho, Kansas, Nebraska, and South Dakota.

In September, 2018, the U.S. Drug Enforcement Administration announced that certain drug products that have been approved by the Food and Drug Administration (FDA) and which contain cannabidiol (CBD) will be considered Schedule V drugs. Specifically, this order places FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols in schedule V.

The farm bill completely removes from the drug schedule all hemp plants and derivatives with much higher THC levels, 0.3 percent.

U.S. Hemp Industry

The Hemp Industries Association (HIA) reported total U.S. retail sales of hemp products of nearly $700 million in 2016. HIA claims that U.S. hemp retail sales have grown by about 10% to more than 20% annually since 2011. Mostly, this growth is attributable to sales of hemp-based care products, supplements, and foods. Together, these categories accounted for more than two-thirds of the value of U.S. retail sales in 2016.

Hemp Business Journal has also reviewed sales of clothing, auto parts, building materials and various other products, and estimates the total retail value of hemp products sold in the U.S. in 2017 to be at least $820 million, including hemp foods (17%); personal care products (22%); textiles (13%); supplements (5%); hemp derived cannabidiol or CBD products (23%), consumer textiles (13%); industrial applications (18%); and other products such as paper and building materials accounted for the remaining 2% of the market.

Hemp imports to the United States – consisting of hemp seeds and fibers often used as inputs for use in further manufacturing – totaled $67.3 million in 2017, 57% decrease in seed imports from 2017, and the first half of 2018 puts the import market on pace for a 20% decrease. This descending trend is expected to continue as the U.S. hemp market continues to mature.

From 2017 to 2018, the number of acres licensed for hemp cultivation in the top 10 hemp-growing states (Montana, Colorado, Oregon, Kentucky, North Carolina, Tennessee, North Dakota, New York, Vermont, Nevada, Wisconsin) doubled – while the number of hemp producers grew by 185% over the same one-year period.

According to the Global State of Hemp Report, the hemp industry is expected to grow with a combined annual growth rate (CAGR) of 18.4% from 2018-2022 to become a $2.5-billion industry.

U.S. CBD Market

After the adoption of the 2018 Farm Bill, CBD producers, in particular, will have much greater incentive to use hemp as their main source for CBD.

The U.S. market for CBD products hit $367 million in 2017 – including both hemp and marijuana-derived sources – while the hemp CBD market has reached an estimated retail value of $190 million.  In 2018, hemp-derived CBD products sales accounted for about $390 million.

New Frontier Data estimates hemp-derived CBD market to reach $1.3 billion in 2022, representing a 27.2% 5-year CAGR, however, after hemp legalization, legal market for CBD is projected to be worth more than $20 billion by 2022, according to research firm Brightfield Group.

U.S. hemp-derived CBD sales forecast, $ billion

  • after hemp legalization
  • before hemp legalization

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Hemp/CBD Business, Legalization and Opportunities in Europe

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