CBD is Everywhere. Here’s What You Need to Know about the CBD manufacturing industry

A look at current trends in CBD manufacturing.

Cannabinol—or CBD, as it’s commonly known—is everywhere. It’s in vitamins and supplements, first aid products, personal care items and food and beverages. According to a Forbes Health Survey, 60% of 2,000 U.S. adult respondents have tried a CBD product. Of those same respondents, 58% say it’s safe to consume CBD and to do so in various forms, including edibles, oils, tincture, capsules and lotions.

But do they believe CBD should be legal? Forbes Health Editor Alena Hall says yes—and no. “Interestingly, even though the majority believe CBD is safer to consume than alcoholic beverages, 21% of U.S. adults think CBD should still be deemed illegal—and 19% remain on the fence with this issue,” writes Forbes Health Editor Alena Hall.

Then there’s the question of whether consuming CBD (vs. THC) is socially acceptable or not. Per the survey, 45% consider exclusively consuming CBD to be fine while only 16% think both CBD and THC consumption is totally appropriate.

It’s a confusing topic made more so by the fact that CBD can be derived from marijuana as well as from hemp, and depending on which derivative it is, the CBD product may be legal or illegal to consume.

As the questions and debate around CBD continue, we explore how the cannabinol market—a sector of the U.S. consumer packaged goods (CPG) industry—is fairing, what’s trending and what the future of the CBD manufacturing industry looks like.

How the CBD Market Is Doing

NIQ (NielsenIQ)—a leading consumer intelligence company—reports that, since the passage of the 2018 Farm Bill, the CBD market has experienced “significant growth.” By declaring hemp and hemp seeds an agricultural commodity and not a controlled substance, the bill opened the door to using CBD in non-food items at the federal level.

Unfortunately, the initial surge in CBD sales has stalled in 2023, mostly due to inflation. As the NIQ article notes, “During the latest 52 weeks ending March 11, 2023, sales of hemp CBD products declined 10% across the U.S. (in drug, food, mass and dollar outlets).” NIQ also points out that hemp CBD vitamins and supplements “had a 9.5% dip in sales,” and that other than beverages (which saw a 36.5% increase), every CBD segment (e.g., vitamins/supplements, HBL, pain relief, first aid, deodorant, bath/shower, hair care and facial skin care) has slowed their roll.

Even so, NIQ remains optimistic. “We expect to see more innovation with strategic expansion in certain categories. For example, in the beauty and personal care department, supplements and body products saw a surge of new CBD-infused products on shelves.”

And its optimism is supported by projections that the sales of cannabis in the U.S. could reach $57 billion by 2030, with the potential to reach $72 billion if more states legalize cannabis.

CBD Manufacturing Industry Trends

The potential highs and worrying lows of the CBD market are affecting trends within the CBD industry. 5WPR—an award-winning NYC public relations agency—says if sales within the industry skyrocket, then it’s likely that regulations and competition will skyrocket too. 5WPR also sees the potential for an increase in product variety as the “cannabis space becomes more mainstream” and suggests the customer base will grow as a result of changes in legislation.

Erwin Henriquez, a Consultant at Euromonitor International, notes in a CBD market article: “As cannabis starts to appear in the headlines around the world, both consumers and companies have started to show interest in experimenting with cannabis products. Including CBD as an ingredient is a perfect opportunity for this as it lets consumers and companies build cannabis into a broader consumption occasion landscape. This is the reason why it is important to understand the potential role CBD can play in the different fmcg [fast moving consumer goods] industries.”

Henriquez foresees hemp-derived CBD opportunities in:

  • Packaged goods (e.g., snacks) as an ingredient—not the main attraction.
  • Drinks by including CBD “in a broader spectrum of consumption occasions or pairing with other functionalities.”
  • Beauty and personal care by combining with competing ingredients.

He writes, “With limited potential as a stand-alone ingredient, CBD’s immediate future is as part of multi-ingredient formulations that help expand both the consumer base and functionality. CBD products are already looking into the future by expanding their functionality and claims by including more ingredients. On the other hand, multicannabinoid products that expand consumer options beyond just CBD could also help expand product cycles and avoid consumer burnout to just one ingredient.”

Where the CBD Manufacturing Market Goes from Here

Overall, the CBD market is in an interesting place.

With hemp and hemp seeds off the controlled substance schedule, CBD products are flooding the market. But even with the exciting opportunities awaiting those in the CBD manufacturing industry, there remains the question of legality at the state level (many states have legalized medical cannabis use, some have legalized medical and recreational use and many haven’t legalized cannabis use at all) and at the federal level. And the Farm Bill, which is expiring in September 2023, is being debated in Congress as we speak.

According to Henriquez, businesses within the CBD manufacturing industry can look forward to major opportunities. “Positive regulatory changes will create tailwinds for the industry and will make it easier for companies to innovate in this category as well as bigger companies jumping in.”

But he also says the challenges are real, including:

  • Lack of familiarity with CBD limits its growth potential.
  • Limitations on “specific claims, marketing, channel distribution etc [sic] make it difficult to connect with consumers and become ubiquitous products.”
  • Growing competition from the adult use market will continue.
  • Short product lifecycles and high prices “limit the category to the niche market.”

NIQ has similar thoughts on what’s next for CPG and CBD manufacturing and offers this advice to manufacturers: “As the market continues to evolve, companies must remain agile and adaptable, continually working to differentiate themselves from competitors and promote the potential benefits of CBD to consumers.”

At CannaBusiness ERP, we can help you become an agile, adaptable business.  Built in Sage X3 and configured by NexTec experts who have deep industry knowledge, our cannabis software has the finance, operations, governance, compliance, seed-to-sale, distribution, inventory and product recall features and functionality you need to succeed in today’s changing CBD marketplace.

Interested in learning more about the CBD space? Speak to one of our experts today.

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