The CBD market is currently one of the most lucrative and fastest-growing industries in the United States. As scientific support and public interest continue to grow, the demand for CBD oil continues to increase. Investors are well aware of this and have begun funding research into future uses of the hemp plant. For any investor looking to diversify their portfolio and acquire new assets, the CBD oil market is an excellent opportunity for growth.
What Is CBD?
Before any person decides to invest money into a market, they must know what they are investing in. So the question remains, what is CBD oil? CBD or cannabidiol is one of the 113 types of cannabinoid receptors found in the hemp plant. What makes CBD appealing is that ingesting it doesn’t cause any psychoactive effects attributed to the THC found in cannabis.
CBD has become very popular in recent years due to the full range of ways it can be used. Ingesting CBD may help promote feelings of tranquility and may support a peaceful state of mind. CBD products have begun to be used as alternatives to other products, which may help encourage feelings of ease. With the world becoming more challenging, people are looking for new ways to combat stress.
The CBD Market Situation in Recent Years
Due to its varied uses and ways that CBD oil can be used, entire industries have emerged in just a few years. Things such as CBD edibles have become incredibly popular for their wild assortment of flavors and varieties. From chocolates and elixirs to baked goods, CBD treats have skyrocketed in popularity. With new ways and methods continually being developed, we expect the CBD industry to become even more prevalent. Many companies have a diverse offering of products available on the market.
It is no secret as to why investors are rushing to invest in the CBD oil market. The Hemp Business Journal estimates that the CBD market will grow 700% by 2020; this growth will generate a $2.1 billion market. These CBD market projections reflect an upward trend in the market, considering it was valued at only $205 million in 2017. These numbers reflect the growing demand, and as federal regulators become more open to the varied uses, CBD industry growth will only continue to gain momentum.
Factors to Consider Before Investing in CBD
In such a fast-moving industry, it is important to consider various factors before making deciding to invest in CBD. Below are the top 5 factors to consider:
- CBD Users Are Not THC Users- It is essential to keep in mind that CBD users are not people who ingest cannabis to get high. The demographics targeted are people within the medical community as well as the recreational user who do not want any psychoactive effects. Therefore, it’s important to know the difference between target audiences.
- Legal Nuances- The only way to know whether CBD is legal is by knowing the source where the oil was derived. Fortunately, the 2018 Farm Bill gave the cannabis industry a considerable win by making all hemp and hemp-derived products legal in all 50 states. Be prepared to keep up to date with all cannabis and regulation laws in the USA.
- Production Techniques- Different cannabis companies have invested in various production techniques and methods that are better than traditional extraction methods. Being able to research the methods used by different companies and what sets them apart ensures a quality investment. The CBD market size provides a wide variety of companies in which to conduct further research.
- CBD Yields Higher Margins- Cannabis products on the market, which contain CBD such as oils, capsules, and topicals, sell higher on the market. Traditional flower is sold cheaper, and CBD users are willing to pay more money for quality oils, ensuring a higher ROI on investment. Apeks Advantage is a company that uses carbon dioxide (CO2) as a solvent for better oil extraction. You can find about this process here: https://www.apekssupercritical.com/extraction-systems/
- Choosing the Right Company- When looking for the right company to invest in, it’s essential to find a quality trusted brand. One of the best companies out there at the moment is Green Roads, an award-winning CBD company based in the U.S. Finding a well-trusted brand to invest in like Green Roads, will ensure you are investing in a reputable company. You can get more information on the Green Roads website.
In What Ways Can You Invest in CBD Market?
There exist a variety of different ways in which one can begin investing in the CBD market. One of the simplest ways to start would be by investing in a local retail store that specializes in hemp-derived CBD oil. If the retail world doesn’t excite you, you can invest in a CBD oil distributor. One of the benefits of investing in distributors over local retailers is that distributors don’t require a license to sell.
Any Downsides to Investing in CBD Stocks?
Like any new industry, the CBD market is faced with challenges that could potentially be downsides to investing in CBD stocks. Below are the top 3 downsides:
- FDA and DEA – One of the victories with the landmark 2018 Farm Bill was that it made CBD products legal in all 50 states. Unfortunately, the hemp industry faces an uphill battle against the FDA as they continue to assert control over all hemp and CBD products. The FDA still classifies it as a drug ingredient causing uncertainty to many investors.
- Lack of Historical Data- With the CBD industry being so new, there is relatively little historical data to work on. Some investors believe in investing in stable and trusted companies that have over 10 years of constant returns. This presents a challenge to anyone willing to take a calculated risk and bet on the CBD market, reaching into the billions by 2020.
- Financial Services- Even if the CBD industry doesn’t face prosecution from the federal government, they make encounter trouble with banking institutions. Many banks have decided to not engage with elements of the cannabis industry over fears of breaking federal laws unknowingly.
What Are the Market Projections for the Future?
The future of CBD and projections for growth seem very positive in the long run. The CBD market is expected to impact a diverse amount of industries such as food, beverage, and cosmetics. Many analysts are expecting a considerable dent caused by the cannabis industry in the coming years. BDS Analytics and Arcview Market Research both project that the CBD sales will surpass $20 billion by 2024. It has been estimated that the compound annual growth rate that is to be expected from the CBD market is 49% by 2024.
Another positive factor attributing to the positive market projections is the average age of the consumer. It has been noted that on average, the majority of CBD consumers are age 40 and statistically more likely to have full-time jobs. This ensures a steady market and a trustworthy consumer base.
In conclusion, the future for the CBD industry looks bright. There has never been a better time for investors looking to get into this growing market. The estimated future projections on revenue clearly show the beginnings of one of the largest emerging markets in the 21st century. Investing in CBD can be beneficial to the future economy of the United States, as well as people seeking alternative solutions to help support their wellness.