The business of CBD oil, success and expansion around the world

In 2020, the global CBD market size was valued at 2.8 billion USD. Due to many countries recently making the substance legal, such as the UK and Australia, the market is considered to be in an early stage of growth – and likely to reach 3.5 billion USD in 2021.

Demand is high and rising, and the market is expected to grow at a compound annual growth rate of 21.2%. CBD oil UK has welcomed it with legally open arms since 2015 with business growing rapidly since.

 business of CBDThe business of CBD has become highly competitive already, with many small sellers putting their own branding on the same products. The reason for this is because it’s a marketer’s dream, with low barriers to entry, and branding comes easy to this industry: It’s recently legal, it’s been touted for being a miracle cure for an endless list of illnesses, and with no side effects. And it’s cannabis-derived, which certainly has another selling marketing point for those campaigning for decriminalisation.

So, what is CBD oil exactly? Whilst the substance is extracted from the cannabis plant, the THC is left behind, meaning it contains none (or negligible) amounts of the psychoactive compounds that are attributed to being high, paranoid, or schizophrenic development.

So, this is a “soft” version of cannabis, where people can revel in its benefits without the worry of its cognitive effects, something even the boomers have gotten behind. Whilst CBD oil sellers cannot explicitly claim direct health benefits unless they’re formally licensed, they certainly don’t shy away from grand claims.

The American trend

It’s often claimed that when America sneezes, Britain catches a cold, and it’s even more prevalent when it comes to cultural trends. The US has such a monopoly on global culture via social media that influencers around the world have taken to CBD. This is both in the form of product placement and just being in fashion, but we are seeing endless videos citing CBD helping with anxiety, acne, joint pain anti-cancerous properties, and many more claims.

Scientific research is still in its infancy, but early studies look promising. The miracle cure stories are perhaps the most emotive, where many people with chronic pain from an obscure illness have had their lives changed from CBD.

It’s no surprise that the UK is following this trend, and CBD stocks are on the rise. Small sellers have had an extremely lucrative start to the industry, which was similar to the way E-cigarette took off. However, because the CBD oil industry is fairly unregulated in Europe, it’s become increasingly important that customers buy from reputable sellers.

This makes the industry very interesting from an investor’s standpoint. We’re likely to see the industry become less democratised over time, with a handful of winners. Some big-name production companies are Medical Hemp, Deepnature Project, Max Hemp, Formula Swill, and HemPoland.

There is so much more room for growth too with CBD companies because there is endless integration into other products. Because of its marketing pull and the allure of “anxiety relief” among other claims, CBD Lattes, CBD food, CBD pet food, CBD skin cream have all become a thing.

The pandemic has also led to a wave of demand in healthcare products, as well as CBD. The public has likely reflected more on health over the pandemic and has had the free time to become more exposed to the benefits and trends of CBD. Once the research becomes more mature, we will likely see big pharma produce and sell CBD and try muscle out smaller business. The challenge for investors, though, is to keep on top of regulatory changes and scientific literature.