The CBD oil market is growing at a rapid pace. In 2018, the global CBD oil market was valued at $590 million and is projected to reach $22 billion by the end of 2022.
That represents a compound annual growth rate (CAGR) of 74%.
Investors are taking notice of the CBD oil market’s potential. In fact, almost one-third of Americans say they’re interested in trying CBD products, according to a recent Brightfield Group/SPINS study.
So, what’s driving this market?
The Brightfield Group/SPINS study found that the majority of Americans are using CBD products for wellness purposes such as pain relief, anxiety reduction, and better sleep.
CBD oil is also being used to treat more serious medical conditions like epilepsy and Crohn’s disease. In June 2018, the FDA approved Epidiolex, a CBD-based drug used to treat two types of childhood epilepsy.
The passage of the 2018 Farm Bill made it legal to grow hemp in the United States. Hemp is a type of cannabis plant that contains high levels of CBD and low levels of THC (the compound that gets you high).
Before the 2018 Farm Bill, most CBD products on the market were made from imported hemp. Now that domestic production is allowed, we’re seeing an influx of new brands and products.
Today, it’s the end of 2022. The FDA has not yet regulated CBD products. As Area52 says that “In 2012, Colorado and Washington shaped history by becoming the first two states to legalize marijuana for recreational purposes”, the harmless cannabidiol CBD still hasn’t been approved and regulated by the FDA for its medicinal properties.
A Look at CBD Oil Sales through Last couple of Years
The CBD oil market size was estimated at USD 1.2 billion in 2019 and is projected to reach USD 3.6 billion by 2027, growing at a CAGR of 15.8% from 2020 to 2027.
The increasing demand for CBD oil as a medicinal product is driven by the numerous therapeutic properties associated with cannabidiol, such as analgesic, antiemetic, antioxidant, antipsychotic, and anticonvulsant effects.
Furthermore, cannabidiol is recommended for treating different conditions, such as anxiety disorders, chronic pain, epilepsy, and sleeping disorders which is a lucrative market and it’s in constant demand.
CBD Oil Sales by Region
The sales of CBD oil products vary widely by region. In 2019, North America accounted for the highest share of total global sales, followed by Europe and Asia Pacific.
The large share of North America can be attributed to the widespread use of CBD products in countries in the region, such as Canada and the U.S.
The legalization of cannabis-based products and growing awareness about their therapeutic properties are also driving the market growth in North America.
CBD Oil Sales by Product Type
Tinctures were the most popular type of CBD oil product sold in 2019, accounting for nearly 40% of total global sales. Tinctures are liquid extracts that are designed to be taken orally. They are typically made with an oil or alcohol base and flavored with natural ingredients like mint or lemon. The popularity of tinctures is due to their ease of use and discreteness—you can take them anywhere without drawing attention to yourself.
Capsules are also a popular product type, accounting for nearly 30% of total sales. Capsules are similar to tinctures in that they are designed to be taken orally; however, they offer a more convenient way to take your daily dose of CBD since they come in pre-measured doses.
CBD oil itself is also a finished product and the total sales of CBD oil accounted for nearly 20% of the total market. CBD oil is typically sold in oral applicators, making it easy to take your daily dose.
Topicals were the least popular product type, accounting for only about 10% of total sales. Topicals are products that are applied directly to the skin and can come in the form of creams, salves, or oils. They are typically used to target specific areas of the body for localized relief.
CBD Oil Sales by Distribution Channel
Online stores were the most popular distribution channel for CBD oil products in 2019, accounting for nearly 60% of total sales. This is due to the wide availability of CBD products online as well as the anonymity and convenience that online shopping offers consumers.
However, brick-and-mortar stores are expected to grow at a faster rate than online stores over the forecast period due to increasing awareness about CBD products and their benefits among consumers who prefer to purchase these products from physical stores.
The Financial Opportunity in CBD Oil
With the increasing demand for CBD products comes a corresponding increase in revenue for companies that are able to get these products to market. In 2018, the global CBD market was valued at $620 million. By 2025, it’s expected to reach $3 billion.
That represents a compound annual growth rate of nearly 40%. For comparison purposes, the overall cannabis market is only expected to grow at a compound annual rate of 24%. So investing in CBD oil now could lead to huge financial rewards down the road.
Conclusion
The CBD oil industry has experienced explosive growth over the last year thanks to the legalization of hemp-derived CBD products in the United States.
Tinctures were the most popular type of product sold in 2019, accounting for nearly 40% of total global sales, while online stores were the most popular distribution channel, accounting for nearly 60% of total sales.
With continued growth projected for both the industry and individual product categories over the next few years, now is an opportune time to invest in this rapidly growing industry!
