CBD Category

Part
01
of three
Part
01

CBD Category - Distribution Channels

CBD products are usually available through five main distribution channels. These include dispensary and delivery services, online, smoke shops, health food stores, and doctors’ offices. The details of our findings are outlined below.

OVERVIEW OF THE US CBD MARKET

ONLINE OR DIRECT TO CONSUMER


INDIRECT CHANNELS

RESEARCH STRATEGY

We have leveraged a combination of leading publication on market insight and reports, industry database to curate the main distribution channels and market size of CBD products in the US.

To provide a detailed overview of the main distribution channels for the CBD category in the US, we have classified the path by which CBD products travel to arrive at the intended consume into online or direct to consumer, producer to retailer to consumer and manufacturer to wholesaler to retailer to consumer. Furthermore, we consulted leading publication like Bloomberg, market insider, investing news to provide an overview of the main distribution channels for CBD.

We found that CBD products are typically sold through five main distribution channels — dispensary and delivery services, online, smoke shops, health food stores, and doctors’ offices. Of these channels, online provides the highest profit margin because it cuts out the middleman. In addition, we found that the retail distribution channel is emerging because the passage of the US farm bill played a major role in the demand for CBD products. Meanwhile, the online or direct to customer distribution channels has already been established because direct-to-consumer, traditionally has been the distribution channel of choice. Moreover, in legal states, many medical dispensaries offer hemp-based CBD products that don't require physician certification for purchase. Again, we consulted market reports, to provide the market share and geographical scope of these distribution channels.
We also consulted leading publication to provide an overview of how manufacturers are trying to take advantage of the growing CBD product with an aggressive push for distribution agreements among key CBD product players. Strong global distribution channels will be essential in creating early consumer brand awareness and developing revenue streams for the time when CBD products will hit the market, especially with larger mainstream retailers. Moreover, rapid Growth of CBD Infused Products Market may Spur Consolidation of Distribution Channels. The key market players such as CV science, America premium water corporation, 1993 Industries Inc., Kona Gold Solution are preeminent supplier and manufacturers of CBD category product and are key players because they have higher market share and popular brands in the US CBD market.
From seed to sale, the company offers a unique approach to compliance and transparency. All Canna Hemp products undergo rigorous testing to ensure the purity and safety of its CBD. The CBD is lab tested by independent certified laboratories to ensure that it is THC-free and contains no harmful chemicals or pesticides.
Leafly, the world's largest cannabis information resource, named Canna Hemp CBD Relief Cream "Best Topical" in its list of Best in State. CBD Relief Cream is the Company's best-selling topical — a transdermal pain relief cream for fast-acting, targeted relief to areas of discomfort, combating inflammation, arthritis, joint pain, backaches, muscles spasms, strains, bruises, cramps, and headaches. For instance, the 1993 industries company's Canna Hemp X™ CBD sports recovery cream for athletes won "Best Topicals for Pain"
Furthermore, we consulted industry database, market analysis to provide an overview of the market size and growth for the CBD market. We found that the estimate made is based on the assumption that the FDA will create a legal pathway for the CBD market, which is currently not considered a legal dietary ingredient in food, beverages or supplement on a federal level, although several states explicitly permit sales. Clarity from FDA would give leading companies and retailers a green light to enter the market with the arrival of CBD-infused indigestible from blue chip brand in top-tier retailer would lift the social stigma surrounding CBD uses as well as concerns about product safety and legality.
Part
02
of three
Part
02

CBD Category - Key Players

The top three CBD distributors in the United States, based on their revenues, are 1) HempMeds, 2) Hemp Depot Limited, and 3) Folium Biosciences Inc.

TOP CBD DISTRIBUTORS IN THE UNITED STATES

1) HEMPMEDS

A) Overview:

  • Based in Poway, California, HempMeds generates an estimated $48 million in revenue, according to ZoomInfo.
  • First launched in the year 2012, in the United States, the company serves as one of the biggest distributors of natural CBD hemp oil products.
  • The company provides an assortment of CBD goods in the form of tincture sprays, pure hemp oils, vaporizer pens, capsules, topical products, and anti-aging items for one's skin.
  • Additionally, the company utilizes science to regularly innovate and create brand-new CBD products and allot substantial resources to product development, cannabinoid research, and professional education.

B) Competitive Advantage

2) HEMP DEPOT LIMITED

A) Overview

B) Competitive Advantage

  • The company's products enjoy numerous high credibility industry certifications that make them a go-to solution for the consumers and provides a competitive advantage. Some of Hemp Depot's certifications are the Denver Public Health and Environment (DHE) certification, CHPHE manufacturing license, the U.S. Hemp Authority certification, and the Colorado Department of Agriculture (CDA) seed registration and industrial hemp registration.
  • One of the key differentiating factors of Hemp Depot is that it also provides custom formulated CBD concentrates and oils that contain the precise amount of active cannabinoids requested by consumers. Hence, its customized solutions enable consumers to obtain CBD products as per their medical prescriptions or need.
  • Also, it adheres to one of the highest product quality standards in the industry. Its CBD oils are derived from the cannabis strains BaOX and Otto II and undergoes examinations in labs ran by third parties. The oils are also insured and certified.
  • The company enjoys a solid customer base and supplies full spectrum hemp oil and CBD oil for sale to the top industry trademarks such as Pure Pet, Cibadol, and Tru Organics. This fact adds to the credibility of Hemp Depot in the industry and helps it become a ‘go-to’ destination for CBD purchasers.

3) FOLIUM BIOSCIENCES INC.

A) Overview

  • Primarily based in Colorado Springs, Colorado, Folium Biosciences produces about $15.2 million in revenue.
  • Established in the year 2014, it has operated in the CBD market almost since its inception. The company is completely vertically integrated and undertakes purification, extraction, and processing of its CBD products at its approximately 300,000 square-foot facility in southern Colorado, which is registered by the FDA.
  • In North America, the company serves as the biggest vertically integrated distributor, manufacturer, and producer of hemp-derived CBD and deals in a wide variety of CBD products.
  • The various products distributed by the company include CBD Oils, Tinctures, CBD Cooling Gell Roll On, CBD Infused Moisturizing Creams, CBD Gummies, CBD Heating Gell Roll On, CBD Pellets for animals, CBD Vapes, and CBD Infused Relief Wraps, among others.
  • Its goods are grown within Colorado under stringent guidelines, along with 100% organic farming procedures.

B) Competitive Advantage

RESEARCH STRATEGY:

Our research began by scouring through the various media articles from Forbes, Business Wire, Bloomberg, Reuters, WSJ, Business Insider, etc; research reports on the cannabis/CBD industry in US from Market Radar, Forrester Research, Deloitte, Mckinsey, etc. and CBD blogs such as CBD School, Cannabidiol Newsletter, Pure Relief, CBD International, etc. The idea was to find an existing list of key CBD distributors in USA based on revenue or market share. While we were able to identify some lists of key distributors of CBD in the United States from sources such as Medium, CBD Hemp Guru, and Joy Organics, none of them provided any ranking based on revenue or market share. Also, some players in the lists dealt in CBD oils only rather than the full spectrum of CBD products.

We used those lists as our starting point and visited the various companies mentioned to filter the ones which deal in a variety of CBD products such as oils, creams, capsules, sprays etc rather than a single CBD product say oils. Afterward, we used this list to locate the revenues of the individual players. Since all the players operate as private entities, there were no revenue details available through their websites, filings, presentations, or management commentary. Moreover, no third-party broker/research reports were available for any of the companies. Hence, we could not cull any firsthand revenue information.

Next, we altered our approach to leverage various company databases such as Crunchbase, ZoomInfo, Hoovers, Craft, etc., to locate the estimated revenues for these companies as the next best solution. To ensure consistency, we gathered the revenues across all the players using a single database.
We then ranked the players based on their available revenues and provided the requisite details on overview and competitive advantage for the top three CBD distributors within the available standard time frame.

As a result of limited data, we were unable to locate market share details for any of the companies after employ the research strategies mentioned above.

Part
03
of three
Part
03

CBD Category - Trends

The four trends in the CBD category include CBD-infused beverages, growth of CBD skin care market segment, CBD-fueled massages and treatment, and smokable CBD products are replacing tobacco cigarettes.

#1 TREND — CBD-Infused Beverages

  • This trend focuses on CBD-infused beverages such as coffee, tea, alkaline water, and other digestive liquids.
  • According to a 2019 report by Mugglehead, "The excitement surrounding CBD-infused coffee lies in the potential for a new functional drink; one that raises alertness levels without putting you on “edge”."
  • The Alkaline Water Company that sells premium bottled water under the brand named Alkaline88® has made news when it announced hemp-infused Alkaline88® water. However, they won't sell any until it "obtains all the legal permits required to do so (FDA and otherwise)".
  • Alkaline Water Company partnered with Water Source One and "it has already secured a deal that brings a patent-pending process that can bring true water-soluble, full-spectrum features of bioactive natural hemp extract molecules to U.S. consumers."
  • According to Visual Capitalist, CBD-infused beverages is among the fastest-growing market segment in the cannabis industry.
  • The report observes that the growth of CBD-infused beverages has been heavily fueled by rapid product innovations that have opened a new gate for new audiences wanting to try CBD, since drinking something is an easy, natural and accessible way to apply CBD.
  • Additionally, the presence of big players and influencers in the market segment such as former NFL player Terrel Davis and singer Willie Nelson who have already launched their own CBD-infused beverages has played a fundamental growth in the market.
  • The main benefits attributed to the popularity of CBD-infused beverages include the ease of administration, high availability, functional benefits of cannabis, and controlled usage.

#2 TREND — Growth of the CBD Skin Care Market

  • According to FMI, a market intelligence and consulting firm, the CBD skin care market which is currently valued at $645 million is projected to expand at a positive CAGR of 33% through 2027.
  • A 2019 market report by Future Market Insights reported that the "consumption of CBD skin care products will be particularly high in cosmetics" due to the growing awareness of medical benefits of the products.
  • CBD skin care products have been increasing and have extended to creams & moisturizers, serums, sunscreens, cleansers, and oils, thus potentially providing different application solutions that address a large audience of different needs in skin care.
  • Some medical benefits of CBD in skin care products include boosting skin hydration, treatment of acne, reduction of inflammation and treatment of skin-related conditions such as eczema, dryness, and psoriasis.
  • One example of a CBD skin care product is the "Mannuka CBD Calming Eye Balm"

#3 TREND — CBD-fueled Massages and Treatment


#4 TREND — Smokable CBD products

  • According to a report by Brightfield Group, the smokable hemp market experienced a growth rate of 250% from 2017 to be worth $11.5 million in 2018 representing about 2% of the overall CBD market."
  • Another survey report by Brightfield Group that surveyed over 5,000 CBD users reported that 24% of the respondents had used smokable hemp products to help them quit tobacco smoking while at least 41% of the quitters of tobacco smoking had completely replaced tobacco with hemp CBD.
  • What has been fueling this trend includes the fact that consumers can smoke CBD products without the effect of getting high and yet benefit from the relaxing effect.
  • Additionally, consumers perceive smokable CBD products as a better alternative to tobacco which is known to increase the risk of cancer.

Research Strategy:

In order to determine the trends in the CBD category in the US, including product formats and legal trends we focused our attention in searching for innovative techniques used to manufacture CBD products as well as innovative CBD products that have been trending in the US. We ensured that we searched for the most recent trends for 2019 as well as those that featured in 2018. While we were able to identify some trends regarding CBD products, it was worth noting that some CBD products such as CBD massage treatment and CBD beverages have not been widely approved in some states across the US, but due to the "increasingly lax stance towards CBD-infused product" as reported by Mugglehead, there is a high probability that more CBD-infused products will be available to more Americans in the future.
Sources
Sources

From Part 03
Quotes
  • "With the success of the 2018 Farm Bill in the rearview, investors are already setting their sights on what’s next: CBD-infused beverages."
Quotes
  • "According to leading market intelligence and consulting firm, FMI, the CBD skin care market value is expected to expand at a CAGR of over 33% through 2027."
Quotes
  • "CBD oil’s been making a splash on the wellness scene this year."
  • "Known for offering a mildly relaxing effect, CBD oil’s now turning up at the very places where people go to bliss out: Spas. Wellness centers around the country have taken treatments to new highs by infusing spa treatments, like massages and manicures, with CBD oil. "
Quotes
  • "Hemp producers say the trend is giving them a new marketing opportunity, a CBD product that doesn’t require extraction, which makes it a less expensive product to make – as long as you have room to dry flower."