The Billion-Dollar Business of CBD (Cannabis)
The fine balance between law, market and science is disturbed by the phenomenon of products containing Cannabidiol (CBD) these days.
There are CBD products all over the place and so many myths and testimonials about Cannabidiol’s medicinal properties that it’s virtually impossible to back it all up by science.
Such experiments sometimes require years to conduct before the public is supplied with the digested data.
On the other hand, the business of products based on CBD is skyrocketing as more and more people opt for natural and herbal remedies instead of products of the pharmaceutical companies.
CBD is allegedly used to alleviate pain, treat anxiety and depression, strengthen the immune system, fix sleep and eating disorders, induce weight loss and even treat Parkinson, cancer, and epilepsy.
It’s surprising that it (still) doesn’t cure AIDS, but hey… give it time.
On one side of the spectrum, there are conspiracy theories, or maybe even facts, that the big pharma holds back and manipulates the information on CBD that the media presents us with.
On the other side of the conspiracy, spectrum lie narco cartels which supposedly power the independent media to advertise the medicinal use of Cannabis and thus CBD.
It has become a question of ideology and bribe. Even the scientific community falls apart with more and more scientists pleading for the use of CBD.
Third conspiracy theory implies that the pharma and the private plantations are actually working together.
Complete decriminalization of cannabis would supposedly lead to elimination of expensive medicine and would also cause a major decline of CBD product’s prices.
lf it is legal, why would you pay tons of bucks for something you can grow on your lawn?
The services of undercover dealing industries would become obsolete.
These are just some of the questions concerning the business of CBD, however, the whole enterprise gets more and more complicated since CBD is actually in a gray area when it comes to the law.
CBD’S LEGAL STATUS
CBD is a natural chemical component of hemp and cannabis that’s not psychoactive. In other words, it won’t get you high.
Since it doesn’t contain the illegal psychotropic component THC that’s found in cannabis, CBD is not explicitly prohibited by law.
Of course, its legality fluctuates from one state to the other as there’s still no consensus on it.
The 2018 Farm Bill decriminalized the production and sale of extracts of hemp and hemp itself. According to federal law, hemp can’t contain more than 0,3 % of THC.
Anything above the stated percentage is classified as marijuana and it’s thus treated as a schedule 1 drug by the Drug Enforcement Administration which makes it illegal.
The problem in production is that a crop can accidentally grow marijuana stacked with THC because of pollination and reproductive processes.
Unexpected pollination can easily happen in outdoor fields because cannabis pollen can travel for miles (that’s why there’s so much of it in the wilderness and why it’s relatively easy to grow).
If your CBD comes from a marijuana plant instead of hemp, it’s illegal. If your CBD contains too much THC (more than 0.3 percent), it’s illegal.
Because the extraction process for CBD and THC is similar, CBD can easily be mixed with THC or pesticides if extracted improperly so that’s one more risk to the business of the CBD production.
The reason why CBD is in a gray legal area is also because its sale as medicine is prohibited by law.
However, since the FDA doesn’t regulate the safety of dietary supplements, CBD manufacturers sell it as that.
A danger of such a discrepancy is that many supposedly CBD based products may contain many other unknown elements.
It’s also unclear what the exact effective therapeutic does of CBD are and in relation to which medical conditions.
Currently, pharmaceutics employs CBD in making a seizure drug Epidiolex which is the only legal CBD based drug, used for treating epilepsy seizures, mostly in kids.
Since the law is too slow to catch up with scientific breakthroughs and even science tends to lag behind practical knowledge, complete decriminalization of cannabis is expected.
One more reason for it is the fast-paced growing business of CBD.
EXPANDING BUSINESS OF CBD
There are basically two events which went hand in hand that have kicked off the business of CBD products.
Those events were the approval of the first CBD-based medication with doctor’s prescription and the passing of the Farm Bill or the Agriculture Improvement Act of 2018 which removed hemp from the Controlled Substances Act.
Even though the FDA still regulates products such as pharmaceutical drugs, food items, additives, and dietary supplements, CBD-based products could now be sold and advertised as supplementary derivatives.
Before these events, CBD was assessed to roughly make up a billion-dollar industry.
Now, the situation has changed for retailers and manufacturers who can choose to work alongside the regulations and grow crops for the pharmaceutics or take advantage of the legally gray area.
The Brightfield Group, a cannabis industry research firm based in Chicago, estimated the sales of CBD to grow to an impressive $22 billion by 2022.
Some of the Brightfield analysts project the market size to reach $24 billion in sales by 2023 which is a $2 billion increase in worth over a year.
The biggest part of these sales, around $16 billion is expected to come from chain-market retailers, and online and healthy food stores following with $3 billion in sales.
Only in 2017 legal hemp products over $820 million worth have been sold in the United States.
The most common products in use were CBD oil as a dietary supplement, which can also be administrated as a lotion, drops or even through an e-cigarette.
In 2017 hemp crops were grown in 19 states spreading over 26,000 acres of land. Approximately 1,500 licenses were issued for hemp growing and around 30 U.S. Universities have been approved to conduct research relating to hemp.
For a study of the American Medical Association in 2017, researchers tested more than 80 CBD products purchased from around 30 different online retailers.
Roughly 7 out of 10 products had different CBD levels than what the label reported. Roughly half of all the tested items had more CBD than indicated and around a quarter had less.
20 of the tested samples were proved positive for THC despite the fact that it wasn’t listed on the label.
Kelvin Harrylall, the CEO of the CBD Palace, a company that investigates CBD selling companies and creates a list of “safe” vendors, reports: “It’s tough to know what you are getting.
There’s a lot of dirty CBD facilities that aren’t trustworthy.
All of this just speaks of the FDA independent market growth. The market also grows beyond tinctures and oils. It sells products that supposedly improve health and overall wellness.
Some of these products are CBD-infused water, cosmetics, and even pet treats. The products have long spread to natural food stores, cafes, doctor’s offices, and beauty isles.
By June of 2018, the fast-growing industry has already hit the $591 million.
Epidiolex alone, as the first approved CBD drug for seizure disorders, recorded $32 million in sales during the first quarter of the year.
Bethany Gomez, the research director in the Brightfield Group says: “What we’ve tracked in the current year was an explosion of face masks, skincare and bug bites. CBD is used for everyone the vendors can think of, even for performance inducing in sports.”
On the other hand, women buy it for PMS and old people for arthritis. The industry has grown out of nowhere, based on social myths and urban legends of mouth-to-mouth marketing. For now, there’s no major market retailer coverage for the industry, but stay tuned.
People who have been doing market research for years report that this might be the craziest market they’ve ever covered.
According to the Brightfield Group, increases in every single sector that sells CBD are expected. The question remains of whether the small vendors will be able to resist the big pharma and medical companies dominance on the market once they decide to go all in.
It all depends on the specific approach of the retailer. A few years ago the public opinion was that the whole CBD industry is just a pipe dream.
Now there are a lot more serious companies that oversee the growth of CBD products in the market.
Heather Darby, a hemp researcher at the University of Vermont Extension reports: “Farmers and businesses scale up production quickly. About 2,000 hemps can be grown per acre generating around $50,000 and farmers are moving to a 50 acres production.
An investment bank of Cowen & Co based in New York released a study on the CBD market. Nearly 7% of the 2,500 polled interviewees said they had used CBD. Cowen analysts estimate that the revenue of the market will be $16 billion by 2025.
Phoenix Tears, a company based in Denver has recently signed an agreement with Retail Services of MarketHub (a distributor for 7-Eleven franchisees) to get the CBD products in around 4,500 stores by the end of 2018.
The agreement alone confirms that CBD’s status of a mainstream wellness product is apparent.
There are even CBD Training Academies that create crash courses to get you ready to run your CBD businesses and build partnership networks with other businesses that might help you further build your market.
If you’re looking to get a lead on the best current developments, take a glimpse here.
Here are also some leads on business advancements in CBD sales and market.
For the CBD oil companies reviews and rankings, look here.
POTENTIAL RISKS AND CHALLENGES OF VENTURING INTO HEMP GROWING INDUSTRY
First of all, starting a business in CBD industry requires a lot more than just growing crops and selling the products.
You have to have experts in the field of technology, biology, and chemistry and make sure that your products don’t contain more than 0.3% THC or you will get charged and shut down.
Because of its peculiar pollination (cannabis pollen can travel for miles), all it takes is one male marijuana plant to pollinate your whole crop and boost that THC which the law would view as illegal substance trafficking.
Now, keeping a greenhouse female comes easy, but growing a female crop outdoors is where it really gets tough. Cannabis is abundant in the wild so there are high chances of male plants pollinating your crop.
The other possible risk of your products and thus business going bad are poor extractions. Extractions that leave behind chemical solvents such as butane or pesticides can be harmful and dangerous.
There are potential risks in the market alone because no one can foresee how the law will change in the next couple of years and if the big pharma takes over the business, small business owners are done.
For now, although it’s a fast-growing business and you can see CBD everywhere from pharmacies to chain stores and gas stations where they sell CBD in pet-gummies, there are still states wherein you may have a problem with the law even where the use of medical cannabis is legal.
Other than that, there are many manufacturers that don’t uphold the labels so no one really knows what it is they’re selling.
TIPS ON STARTING YOUR OWN CBD BUSINESS
First things first – select a good name for your company. Your name should be easy to spell and easy to remember.
It’s wise to leave out any mention of cannabis, hemp or CBD in your name just to make sure you don’t have any problems with the authorities.
Also, select a name that can later allow you to expand your business because no one knows if you’re really gonna stick to selling CBD products until the end.
Start a limited liability company as it will cut your business expenses to the minimum.
Create a bank account and again, don’t mention what exactly your business is about. Let’s call it a health and nutrition business. Some banks are still hesitant to support CBD entrepreneurship as it’s unclear how it will fare with the law in the next decade. Even Shopify cards won’t process CBD products.
Design your logo
If you don’t plan on growing crops yourself, then select the right partner to supply you with the goods. Check out already existing and well-rated brands. The number one factor of your business is always the quality of the product.
You should start with the most popular products like oils, tinctures, and vapes before you start experimenting with vaginal suppository, pet-gummies and such. 500 mg tinctures are our personal recommendation.
Make your brochures and business cards. Don’t go all online. Grow your network, use social influencers, referrals, educational workshops in retirement centers and dorms or at health fairs, social gatherings.
Visit kiosks at the mall, spas, doctors, chiropractors, pet stores, massage therapists and all the places where your products could be of use.
The last but not the least – Get to the market ASAP. Sell, sell, sell! Don’t try to learn everything from the books – start selling as soon as possible and you’ll make all the necessary adjustments in your business later. You learn as you go!
In the end, if you still feel that you need some theoretic knowledge, you can find everything you need on the internet.
Even though the law is currently not that big of an obstacle, there are still many challenges to the successful business of CBD. The greater the challenge, the greater the revenue they say.
Every challenge means that there will be fewer people that will dare to invest in the enterprise.
In other words, the competition is still low and if you start early, you’ll be at an advantage.
There’s a big demand for CBD in the market and if the pace continues it’s going to get even bigger.
Big Pharma is bound to try and manipulate and regulate the whole thing sooner or later, but before it does, you have just enough time to run your small business with big passion and not go corporate.
If you don’t want to get corporate later, you can always sell your business to the suits.
On the other hand, you can continue growing your crops or reselling your products and supplying the larger chains of business.
At this point the business is huge and it’s not going to deflate anytime soon so it’s basically a gold mine if you have the guts, the stamina, and motivation to do it.
As for motivation, it can be either the desire to contribute to global health care or it can be a chase for the big bucks, but why not both?
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