The immediate future is bright for the hemp marketplace.
The data company Brightfield Group estimated that companies selling hemp-derived cannabidiol (CBD) generated $170 million in revenue in 2016. But in a new study published by Brightfield, the group estimates the hemp CBD market could become a billion-dollar marketplace within the next three years.
Though the data is located behind a paywall, a Forbes article revealed many of the compelling statistics. For example, the report states that 64.5% of hemp CBD sales stemmed from online sales while 17.8% of products were bought in smoke shops. Coming in third were dispensaries with 9% of sales, as health stores and doctor’s offices rounded out the top five.
The top 20 brands averaged sales of $2.1 million per year per company for 2016. However, some brands are much more successful with sales of $9-12 million. CW Hemp, made by CW Botanicals owns 7% of the market, followed by PlusCBD Oil made by CV Sciences with 5% of the market. The next three names are tied with 2% market share and they are Elixinol, HempMeds by Medical Marijuana Inc. and CannazALL by Hemp Life Today. An indication of the fragmentation of this market is that 79% of the market is made up of companies with very low sales comparatively.
“Essentially everyone is trying to do hemp, but only a handful are doing it well,” Bethany Gomez, the Director of Research at Brightfield Group, told Forbes. “It’s seen as easy because it can be sold online but, with restrictions on traditional marketing, it is very difficult to connect with your core consumer and even communicate why they need your product.”
Hemp-derived CBD is an approachable product for many users. However, as consumers become more familiar and comfortable within the cannabis marketplace, they sometimes will opt for cannabis-derived CBD. This is especially true in states that have legalized recreational marijuana.
So the immediate future is bright for the hemp marketplace. But Brightfield noted that hemp makers will have to fight in maintaining their place with consumers as more states legalize recreational marijuana.