CBD: it spans product categories, retail channels, regulatory landscapes – and even species. Last month’s webinar covered the current cannabinoid market as it relates to pain management as well as pet care, both within the dispensary channel (CBD from marijuana) and in the general retail market (hemp-derived CBD). While pain management and pet care might seem like disparate angles from which to talk about cannabinoids, they actually do have some common ground. The wellness market is booming, as consumers’ approach to health care shifts; similarly, the pet industry has grown consistently as pets take on an increasingly heightened role in the American household. Both cannabinoid-based pain and pet products cross retail channels, with availability in medical and adult-use dispensaries as well as across general market retail channels. And, across pain management and pet care, cannabinoid-based products are a welcome supplement (or alternative) to other forms of medical or wellness-based solutions. Here we’ll look at some of the main takeaways from the webinar.
Legal cannabis is growing
- Acceptance and levels of legalization are growing throughout the U.S. With increased mainstream acceptance of cannabis on an attitudinal level (roughly 80% of U.S. adults agree that marijuana use should be legalized in some form), legal cannabis markets continue to expand here in the United States. Coast-to-coast adult-use legalization is now a reality, and by 2024, 15 adult-use markets in the US will surpass $1B in annual spending, and this momentum is only going to build.
- BDS Analytics projects a $41 billion global marijuana market by 2024. This is in reference to the legal, regulated marijuana market alone – i.e., not including hemp-derived CBD. The U.S. is driving, and will continue to drive, the global cannabis marketplace well into the next five years. In fact, most of the top 20 global markets are U.S. states.
- The total U.S. cannabinoid market will grow to $45 billion in 2024. Here, we’re looking beyond the legal, regulated dispensary channel to also include hemp-derived CBD within general markets. to the equation. Much of this will come from THC cannabinoids in licensed dispensaries; general retail and pharmaceutical CBD will make up about $14 billion of the total U.S. cannabinoid market.
- Within legal cannabis spending, CBD sales are growing faster than total dispensary sales. CBD share within the dispensary channel has grown from 2% to 11% between 2014 and 2018, and BDS Analytics projects CBD sales within the dispensary channel to reach about $2.1 billion in 2019. Total U.S. CBD sales – across the legal dispensary channel and general market – are expected to reach $20 billion by 2024.
The prevalence of CBD in pain management and pet care is best understood within the context of broader consumer trends
- The wellness market is booming. Consumer mindsets, and their approach to their health has shifted from a reactive sick care approach to more proactive self-care. Our partners at IRI have sized the self-care market at $450 billion – fueled by consumer response to rising out-of-pocket costs, prescription drug prices, and access to more information than ever that empowers them to take their health into their own hands via self-care and wellness practices.
- The pet market is booming too. According to the American Pet Products Association, the U.S. pet industry is expected to exceed $75B in 2019, up 30% vs. 2014. Almost 90 million U.S. households own pets (more than 60% of which are younger-generation households).
- Pet trends are mirroring (human) consumer trends. At the general market level, retailers across channels are leaning into wellness and self-care to some degree. Many of the trends we’re seeing at the consumer level are manifesting at the pet channel and across pet products as well – e.g., natural, organic, better-for-you, expanded services.
Pain management is a top reason for cannabinoid product use – but it’s not the only reason
- Most cannabis consumers in legal medical and adult-use states do consume to manage pain. While 60% of cannabis consumers cite pain as a reason for consumption, cannabis use is multi-faceted among pain-management consumers: close to 70% also consume for recreational/social purposes, about 40% for general quality of life.
- Hemp-derived CBD consumption is largely driven by health/medical needs. Consumers of hemp-derived CBD report consuming for a variety of both physical and mental health and wellness purposes. However, pain relief is the most common reason for consumption by far (32% of consumers), followed by sleep at 10%.
- When it comes to pets, hemp-derived CBD products play a more general role in health. Purchasers of hemp-derived CBD pet products cite general health problems, avoiding prescription medications, and overall quality of life ahead of pain management when describing their purchase motivations.
The rise of CBD impacts general market categories, and it’s important to learn from dispensaries
- Consumers are using cannabinoids specifically to avoid prescription (Rx) and over-the-counter (OTC) medications. Pain-management consumers report decreased use of OTC and Rx medications as a result of treating pain with cannabis. Similarly, significant proportions of this consumer segment report using cannabis specifically to avoid OTC and Rx use. This trend plays out within cannabinoid pet products as well.
- The dispensary channel dominates CBD product sales today. Thus, the importance of this channel should not be overlooked. High-CBD products made up more than 10% of dispensary channel sales in 2018, up from 5% in 2017, and these high-CBD products at dispensaries often are the first to emerge on the general market. It’s important to acknowledge that the dispensary channel is not just about high-THC (i.e., intoxicating) products.
- Pet products are a growing part of the legal dispensary channel. The pet category grew 17% at the dispensary level between Q2 2018 and Q2 2019, generating about $5 million in sales through June 2019.
Most importantly, there is a LOT of room for education
- More than half of U.S. adults don’t know the difference between CBD and THC. More than 50% of U.S. adults either did not know (or answered incorrectly) when we asked about the differences between CBD and THC, or about the effects of products containing hemp-derived CBD. Opportunities exist for retailers and manufacturers to serve as a trusted advisor to consumers who are new to, or curious about hemp-derived CBD products. It’s important to be mindful that, as cannabis continues to move into the mainstream, there is a much wider audience beyond the experienced, core consumer.
Contributed by Kate Senzamici, Eastern Regional Development Manager
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