Predictions for the domestic CBD market indicate growth to $20 billion by 2024, with a Nielsen study saying that the market will reach to somewhere between $2.25 billion and $2.75 billion in 2020, even accounting for some unpredictability in FDA rulings.
Driving the industry’s growth is the fact that CBD products are increasingly being carried by major retailers, including Walgreens, CVS, GNC Holdings and Kroger, as well as larger online specialty retailers such as Nug Republic. As CBD grows to occupy a greater share of shelf space, we can expect intense competition between retail and online channels. Vape and tobacco shops and specialty CBD brick-and-mortar retailers emerged early in the game, but may lose ground to online sales as well as general retail outlets.
The combination of large retail chains entering the market, and rapidly growing demand, will put some pressure on CBD manufacturers however, and smaller producers, manufacturers and distributors may lose ground if they are not able to keep pace with an inevitable surge of progressively larger orders. Retailers will demand two things from CBD manufacturers: The ability to provide inventory as needed, and the ability to satisfy customers’ demand for a trustworthy product. The inventory question will need to be answered internally with improvements in management, supply chain innovations and investments in production facilities, and this will lead to greater investment on the part of private equity firms and investment bankers, IPOs and other capital functions. On the trust front, this will require producers to reassure consumers with things like clear labeling, product transparency and the use of third-party labs to provide unbiased reports on purity, ingredients and percentage of THC.