The 2018 farm bill was historic. The legislation legalized the cultivation and sale of industrial hemp and its derivatives, ending decades of prohibition and launching an insanely lucrative industry. Cannabidiol (“CBD”), one of the many chemical compounds produced by the hemp plant, swiftly gained immense mainstream popularity thanks to anecdotal claims of its health benefits. As initial studies found that cannabidiol had potent medical properties, the demand for CBD surged even more, and plenty of sellers jumped into the CBD market to cash in on the demand.
However, authorities still haven’t crafted a comprehensive regulatory structure for the nascent CBD industry, resulting in a confusing regulatory environment. Although the farm bill technically legalized the sale of CBD with less than 0.3% of THC, different states have their own CBD policies, especially regarding acceptable THC levels. THC is the chemical agent in marijuana that makes users feel “high,” and most states require that industrial hemp has minimal levels of the cannabinoid. Furthermore, players in the CBD space face tough marketing and advertising restrictions and aren’t allowed to market CBD products as dietary supplements.
Varying regulations in different states are the biggest barrier to the cannabis industry at large, says Brigette Thomas, an industry research analyst at IBISWorld in Los Angeles. Without standardized CBD regulations, companies cannot expand into other states and increase their market share.
Despite these challenges, the demand for cannabis products is at an all-time high. Nandhini Roy Choudhury, the senior research manager for food, beverage and consumer goods for Fact.MR says Americans are becoming more accepting of medical and recreational marijuana. An estimated 63% of Americans already have access to medical cannabis, and Fact.MR projects that the number of registered users will continue to increase.
CBD still remains one of the most popular cannabis products. According to a 2020 report by Euromonitor International titled “Cannabis in US,” CBD sales increased by 20% in 2020. There were 14.8 million active CBD users in the country in 2020, up from 13.2 million in the previous year. While the report says that the number of CBD users has rapidly increased since the farm bill legalized industrial hemp, CBD companies are working to convert people who try CBD once into return customers.
Cannabidiol-infused beverages may be the products that turn the CBD sector into a juggernaut. The potential for CBD beverages, both alcoholic and nonalcoholic, is virtually limitless, says LifeTonic founder and CEo Russek Thomas. While seltzers and sodas currently dominate the segment, we will soon see the introduction of CBD-infused teas, kombuchas and even probiotic beverages, as well as many other offerings from leading segment companies, including BevCanna Enterprises Inc. (CSE: BEV) (OTCQB: BVNNF) (FSE: 7BC).
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