To say that CBD market growth is ‘promising’ would be a gross understatement. It is arguably one of the most exciting markets in the world at present because its potential for growth is enormous. Cannabidiol is one of the 100+ identified compounds in the cannabis plant and is known for not producing the intoxicating ‘high’ associated with THC.
This is one of the main reasons why CBD market size is set to soar in the next year. By the end of 2018, in fact, Canada will have joined Uruguay in legalizing marijuana for recreational use and multiple American states (including California and Colorado) have already made weed legal. However, it is still only legal in nine states plus D.C for recreational use, and 20 other states for medicinal purposes.
Also, there are relatively few countries around the world that allow marijuana to be consumed for any reason. Meanwhile, there is an increasing body of medical research which supports the use of CBD for a variety of ailments including anxiety disorders, chronic pain, and neurodegenerative conditions. As a consequence, CBD market size has grown at an incredible rate in the last few years. However, financial and CBD industry experts believe it is only the beginning.
CBD Market Analysis 2015 – Present
As one of the many useful compounds in the marijuana plant, CBD has been used to treat ailments for millennia. However, the individual compounds in cannabis remained unidentified until Dr. Raphael Mechoulam revealed the structure of THC and CBD in the early 1960s.
By the 1980s, medical researchers began discovering the positive impact of CBD on pain along with the endocannabinoid system (ECS), which was identified in 1988. In 1998, GW Pharmaceuticals was licensed to grow weed and create a synthetic drug featuring CBD, and in 2006, a medical facility called Harborside Health was created to isolate CBD. Three years later, the marijuana dispensary worked with Steep Hill Labs and found marijuana strains with high levels of CBD.
In spite of these huge achievements, the CBD market size remained small until 2015 when the total market was exceeded $202 million in worth. This figure was comprised of $112 million worth of weed-derived CBD products, and $90 million worth of hemp-derived CBD products. According to Brightfield Group, sales of hemp-derived CBD products almost doubled to $170 million in 2016. There are no accurate CBD market analysis figures available for 2017 yet, but experts have already suggested that it will become a billion-dollar market by 2020 or 2021.
CBD Market Growth 2018 & Beyond
Please bear in mind that there are different CBD market analysis figures to consider: Hemp-derived CBD products only, CBD products derived from weed, and the marijuana market as a whole. Brightfield released a report that was featured in Forbes back in 2017, and in it, the Group suggested that hemp-derived CBD market growth will see an incredible 55% per annum growth over the next five years (which means it will cross the billion-dollar threshold in just three years).
Moreover, Matt Karnes of Greenwave Advisors believes that the CBD market size will be even greater than what the Hemp Business Journal is forecasting. According to the Journal’s CBD market analysis, total CBD sales in the United States will exceed $2.1 billion by 2020, with $450 million of this figure comprised of hemp-derived CBD sales. Karnes thinks the CBD market will exceed $3 billion by 2021, as the cannabinoid becomes more readily available and new information is available to the mass population.
Medical Marijuana Inc. remains the market leader for the time being, although increasing competition is cutting into its profits. In 2014, for instance, it was the only major CBD company in America and enjoyed sales of $14.5 million – a staggering increase on the 2013 figure of “just” $3.4 million. Sales fell in 2015 but rose once more to $9 million, still an enormous drop. Meanwhile, a VC firm named General Hemp, which has a controlling interest in Medical Marijuana Inc., saw CBD sales of $34 million between 2014 and 2016 between its other CBD companies.
Which CBD Market Companies Are Making Moves?
CBD market size will only increase if major players get involved in the game and that’s precisely what’s happening at present. Important vendors include Medical Marijuana Inc., Isodiol, ENDOCA, Chineseinvestors.com, and Gaia Botanicals. Companies such as Aurora Cannabis, Elixinol, NuLeaf Naturals, CV Sciences, and Cannoid, however, are all making potentially big market moves at the moment.
In February 2018, for example, Chineseinvestors.com, Inc. announced that its foreign enterprise, known as CBD Biotech, is launching four new skincare products infused with hemp for the Chinese market. The firm is also releasing a state-of-the-art magnetic mask for the same market. This news follows on from the company’s successful launch of its hemp-infused skincare line, called the CBD Magic Hemp Series.
Meanwhile, CV Sciences announced plans to launch a range of products in a bid to take advantage of CBD market growth in the United States; in February 2018, the Nevada-based firm announced it would be exhibiting a wide range of cutting-edge CBD products, including PlusCBD Oil.
How Can Investors Take Advantage of the Increasing CBD Market Size?
CBD stocks are unquestionably one of the hottest in the marijuana market, if not the entire financial market. Given the fact that CBD market growth could exceed 55% per annum over the next five years, choosing a handful of top-performing stocks could give your portfolio an immense boost. Bear in mind that over the last 50 years, though, the Standard & Poor 500 has provided investors with an average annual return of 9.7% which is considered an ‘excellent’ ROI.
The annual return on the Dow Jones Industrial Average, on the other hand, has been “only” 5.8% over the last 100 years (when you add in 3-4% dividends, though, the total return is around 9-10%). Therefore, you should be looking to invest in stocks that offer an annual ROI of up to 10%, but there are CBD stocks capable of so much more. Here are a couple of interesting candidates: (Disclaimer: We take NO responsibility for the performance of these stocks, because the volatile nature of the stock exchange means the price of these stocks could fall as well as rise)
1 – CanniMed Therapeutics
This company is a Canadian-based licensed provider of medical marijuana and as of April 4, 2018, its market cap was just over Can$820 million (Canadian) and in January 2018, Aurora Cannabis agreed to purchase CanniMed for Can$1.1 billion. With the legalization of marijuana in Canada in 2018, we expect the market for all cannabis-related products to rise and buyers of this stock could be in on the ground floor.
At the time of writing, CanniMed stock was worth Can$31.61. While this represents a fall from its peak figure of Can$40.23 on March 6, 2018, it is still a significant annual increase. On April 5, 2017, the stock was worth Can$12.03 per share.
2 – Aphria Inc.
This firm is one of the industry leading traders of cannabis oil and is also based in Canada, which means a likely boost when marijuana becomes legal later in 2018. With a market cap of Can$1.77 billion (as of April 5, 2017), it is clear that Aphria is one of the major players. Unlike CanniMed however, Aphria is experiencing a recent downturn.
At the time of writing, its stock was valued at just Can$9.95 per share, less than half of its peak value of Can$22.89, which was achieved on January 9, 2018. With rivals experiencing gains of over 200%, though, why would anyone consider Aphria? The simple answer is that the stock is likely to be undervalued at present.
With the imminent legalization of weed on the horizon in Canada, there is an excellent chance that Aphria will climb to at least its original heights. Financial experts believe Aphria may continue to fall for a couple of months, though, so investors are urged to watch the stock’s price and only get involved if and when it begins to rise and shows some momentum.
Final Words on CBD Market Growth
All signs point towards the existing CBD market size as a mere drop in the ocean compared to what it could achieve within the next five years and beyond. It has already grown exponentially in the past three years, and with CBD’s medical benefits becoming better known (and with greater availability due to the relaxation of the law), there seems little doubt that the sky’s the limit. If you wish to invest in this phenomenon, we urge you to conduct thorough CBD market analysis and consult financial experts. If you pick the right CBD stocks, you could build an extremely nice nest egg for retirement.