Updated: Dec 24, 2019
America’s cannabis, hemp, and CBD markets are growing quickly. They’re America’s fastest-growing industries, but projections for their potential vary significantly.
Due to the early stage of the cannabis, hemp, and CBD markets, and their legal, regulatory, and marketing challenges, I’ve questioned for years how it’s possible to accurately project revenues for what is a start-up or at best, an early-stage industry.
When the U.S. government banned hemp along with cannabis in 1937, much of the rest of the world didn’t. Other countries continued to have uses and markets for hemp fiber, whether for rope, paper, textiles, extracted plastics, animal feed, or building materials. In the U.S., it was a different story. Because of hemp’s illegality, America developed alternative products for most of the same uses.
Since the signing into law last year or the Farm Bill, which legalized the growing of hemp, markets are beginning to slowly emerge for US-produced hemp fiber.
Projecting the future of the market for CBD is also very challenging. While many view much of the CBD market as a short-term fad, I don’t. While it’s clear that many American consumers who try CBD, may not purchase CBD or CBD products again, as more major brick and mortar retailers sell CBD products, the increased availability will help propel growth.
When one looks at all the projections for hemp and CBD, there is a significant variance between various projections. Some of this is due to not being able to compare “apples to apples.” Some are projecting revenues for only hemp fiber, others for CBD in the U.S., others for CBD globally. Another complication is that there are two different U.S.CBD markets, hemp-derived CBD, and CBD produced and sold by state-licensed marijuana businesses.
The following are some of the many hemp and CBD market projections, and the date when the projections were announced.
In 2016, The Hemp Business Journal estimated that the hemp-derived CBD market would reach $450 million by 2020.
In February 2019, the Wall Street firm, Cowen and Company, indicated that retail sales of CBD consumer products in 2018 were between $600 million and $2 billion, which is quite a range. Cowen also indicated that by 2025, retail CBD sales would generate $16 billion in sales annually.
In May 2019, The Hemp Business Journal revised their projections and indicated that the CBD market could grow to a $2.1 billion market in consumer sales by 2020, with $450 million of that amount generated from hemp-derived CBD.
Also, in May 2019, a global hemp market report, projected that the market for hemp fiber would increase to $280 million by 2025, from their calculations of $190 million in 2018.
In July 2019, the Brightfield Group, a market and consumer intelligence firm focused on cannabis and CBD, projected that the market for hemp-derived CBD would reach $23.7 billion in annual sales by 2023. Brightfield indicated that the growth would be propelled by the increasing popularity of hemp-derived CBD due to an increase in sales for health and wellness, as well as increasing product availability in the market.
In August 2019, a report by Grand View Research, Inc. projected that the global hemp market would reach $10.6 billion in annual sales by 2025. This projection included hemp-derived CBD, CBD sold through U.S. state-licensed marijuana businesses, and as a prescription pharmaceutical, Epidiolex.
The U.S. Department of Agriculture (USDA) recently projected that U.S. hemp sales could reach $25 million by 2020, and $100 million by 2022. I’m certainly not one to question official U.S. government statistics, but the USDA’s projections are significantly smaller than any other projections by private sector firms.
Not to be left out, Consumer Reports recently projected that the CBD industry would reach $2 billion in annual sales by 2021, with growth driven by the “fitness consumer.”
What are my conclusions? I just don’t see how anyone can accurately project the size of the hemp and CBD markets. The industry is just too early-stage and one that is facing numerous business, legal, and regulatory issues. In a few short years, as the hemp and CBD industries start to mature, projections of the market will become more credible. Until then, one thing is clear. The hemp and CBD markets are growing at a very fast rate, and without a doubt will become billion-dollar industries.
About FC Global Strategies
FC Global Strategies (FC) provides strategic services and programs to early-stage and entrepreneurial growth-oriented companies and is focused on the cannabis, hemp, CBD, and renewable energy sectors in the US and globally. (www.fcglobalstrategies.com)
These services and programs include:
Development, implementation, and review of growth strategies.
Identification of global opportunities leading to the structuring of cross-border transactions.
Development of programs to increase operational efficiencies and profitability.
Providing operational due diligence for institutional investors
Development and implementation of turn-around strategies
FC Global Strategies affiliate, FC Global Events, sponsors Hemp Boot Camps. These one-day events a
re held throughout the United States and are focused on:
Farmers who are growing other crops who want to grow hemp.
Farmers currently growing hemp who are seeking insight to increase efficiency and profitability.
Entrepreneurs interested in developing, producing, and marketing products that include CBD.
Investors seeking to better understand the new investment opportunities in the hemp and CBD industries.
Jeffrey Friedland, CEO
FC Global Strategies LLC
Tel. +1 646 450 8909