CBD: Cannabidiol Breaks Out of the Legal Dispensary Channel

The latest Cannabis Intelligence Briefing from Arcview Market Research and BDS Analytics: CBD: Cannabidiol Escapes the Dispensary details CBD’s move from legal cannabis dispensaries to the general retail market. At present, the bulk (65%) of the $1.9 billion in annual spending on CBD products in the U.S. takes place through licensed dispensaries in legal cannabis states.

Dispensaries have the unique advantage of being able to offer CBD products with higher concentrations of THC—appealing to consumers who subscribe to the “entourage effect” concept that CBD, THC and other cannabinoids work better in concert. Dispensaries also have the advantage that cannabis-derived CBD has been legal in the channel in each individual state since state legalization, while general retail channels have had to wait for the legal framework around hemp-derived CBD to be constructed.

CBD has begun to account for a noticeable share of sales in legal cannabis dispensaries in BDS Analytics’ GreenEdge™ retail tracking. High-CBD products accounted for just 2.5% of total sales in legal cannabis dispensaries in 2014, the first year of adult-use sales in Colorado. But by the first half of 2019 that share had increased to 10.9% in all states tracked by BDS Analytics.

However, there is still a lot of confusion surrounding CBD. In the latest round of consumer research completed by BDS Analytics, 47% of U.S. adults 21-plus in fully legal states responded to the statement “There are no differences in the effects of CBD and THC” either incorrectly or did not know. Similarly, 52% responded to the statement “Any product containing hemp will cause effects such as feeling high, relaxed, sleepy, etc.” either incorrectly or did not know. Confusion is rampant. Public education is greatly needed.

Consumers are clearly interested in CBD, and retailers are rapidly stocking their shelves with CBD products. However, the FDA has been clear that the new regulations do not represent blanket approval to include CBD in any and all consumer products. It is not an approved food additive, and product makers cannot make any claims about the curative properties of CBD. This has not stopped manufacturers from creating and marketing CBD-infused foods and other consumables any more than doubts about CBD’s legal status between the 2014 and 2018 acts dampened entre­preneurs’ spirits.

In the absence of clear guidance, some U.S. states have moved ahead individually on CBD, as many have also done on legalizing cannabis, circumventing federal regulation and allowing CBD as a food additive in their own statutes.

Today, general retail accounts for CBD spending of just $624 million. That is forecast to rise to $12.6 billion in 2024, as more retailers begin to stock hemp-derived CBD products and the issues around legally selling food and supplements that include CBD are resolved by the FDA and other regulatory agencies. Prescription CBD in pharmacies will account for $2.2 billion in spending by 2024.

The proliferation of CBD outside of the legal cannabis dispensary channel will be largely dependent on how the FDA ultimately decides to regulate CBD as a food additive or supplement. Even so, seven states have already enacted regulations allowing the compound in foods and supplements, and we expect more states will take a cue from the legal cannabis industry and go their own way on regulating CBD, regardless of what the FDA decides.

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