Three Reasons CBD will Overtake THC in Legal Cannabis Market

The legalized marijuana industry is growing at a rapid pace, with a projected $13.6 billion increase in revenue. It’s expected to reach $85 billion in revenues by 2030. Not all cannabis products are created equal.

There are two main types of cannabis-derived products.

1. THC-based: Made with tetrahydrocannabinol, the primary psychoactive component of cannabis. THC is more tightly controlled and gives users a high. Marijuana, a high-THC strain of cannabis, is legal.
2. CBD-based Made with cannabis, which is mostly medicinal and not psychoactive. CBD is more popular because it doesn’t give you a high. Although CBD can be extracted from cannabis, the majority of CBD products are made from hemp (cannabis plants containing less that 0.3% THC).

 

• THC-based products are legal in California since 1996.
• CBD-based products really started to take off after the 2018 Farm Bill significantly expanded legalized hemp uses.
• US CBD sales are expected to exceed $1.9 billion by 2024.

 

In the next five-years, will CBD sales surpass those of high-THC products? Here are three reasons we think so.

 

1. CBD is easier to regulate than THC

Because CBD isn’t psychotropic, CBD products are much easier to legalize. It’s much easier to sell a product once it has been approved by a regulatory agency, such as the U.S. Department of Agriculture and the Food & Drug Administration.

 

• The stock price of GW Pharmaceuticals soared by 36% in two months after the FDA approved Epidiolex , a CBD-based epilepsy treatment drug, hit the news on March 2018.
• The 2018 Farm Bill legalized regulated hemp production. It was defined by the USDA as a cannabis crop containing less than 0.3% THC. This is what many CBD products, such as oils and gummies, are eligible for.
• The 2018 Farm Bill passed, and the CBD industry’s growth was projected at 562%.

 

Epidiolex, the only CBD product that has been approved by FDA as of today’s writing, is currently available in all but 11 states. CBD is currently allowed in food Another 16 states allow it, but with some restrictions. The market is so wild, as shown in the map below of US cannabis legalization, that many companies hesitate to promote and expand their products for fear of being caught in a state’s regulations.

 

But an amendment to the Federal Food, Drug, and Cosmetic Act proposed at the beginning of 2020 would define CBD as a dietary supplement, paving the way to allowing it in food products. Movement on the amendment is currently stalled because of the pandemic, but if it eventually passes it could reshape the marketplace.

2. Growing CBD Niches: Edibles and Skin Care. Pet Products.

While many people are familiar with the benefits of inhaling marijuana, there is growing consumer interest in CBD-infused edibles and skin care products. These products can all be made with CBD or THC, but the relaxed regulations make them easy to stock in supermarkets or other major outlets.

 

• A 2019 Ipsos poll showed that more than half of respondents indicated they would likely consume CBD in their food.
• Analysts believe that the CBD edibles market could reach $22 billion by 2022. Gummies, in particular , will sell $6.94 Billion globally by 2025.
• Global CBD skin care market is expected to reach $959 Million by 2024. This will surpass its 2018 value of 35%.
• The market growth for CBD products for pets could surpass $1.7B by 2025. This may not surprise considering 74% CBD buyers own pets.

 

Cannabis edibles all around Profit margins are much higher They are more popular than products that can be smoked. Hemp-derived products sell better than marijuana-derived ones. They promote wellness and not high. The chart below shows that the sales of CBD products derived from hemp will almost double those of marijuana-derived CBD products by 2022.

 

 

3. CBD has the edge because of cultural and marketing differences

Cannabis has a cultural baggage. Until recently, it was considered anti-cultural and associated with illegality, even though decriminalization is now common. Hemp-derived CBD products, however, are a completely different story. Although they lack the THC required to create a high, their advantage lies in their legitimacy on the mass market.

The chart below shows that CBD is more popular than THC for its health benefits, with more people citing control over inflammation, seizures and anxiety as the main reason they switched to CBD.

And a look at the demographics of CBD vs THC users reveals perhaps one of the most vital reasons for the projected ascendance of the former: the female consumer.

 

• CBD is preferred by more women (55%) than it is by men (49%).
• Women account for 85% all consumer purchases and a staggering 93% of all over-the-counter medication purchase .
• It is believed that up to 75% CBD brands have female founders and general managers.

 

Research shows that CBD companies can increase their appeal to women if they continue to market to them.

 

Blended CBD/THC Products: The Entourage Effect

Terpenoids, or terpenes, are substances that can be extracted from cannabis. Some researchers believe that THC’s psychoactive effects can be tempered by terpenoids. They also believe that terpenoids may have an “entourage” effect on THC, CBD and terpenes. This is because the hybrid compounds are more effective, but produce less severe side effects than the “pure” ones.

These cannabis blends could be the “wildcard” to change everything. They combine the best of CBD and THC with a variety terpenes.

The validity of the entourage effect at the moment is still being debated. The curious can still purchase “sampler packets” from companies such as Care by Design Hemp, which contain products with different ratios.

The bottom line

Legal cannabis-derived products will be legal for the foreseeable future. What will be the dominant product on the market? THC or the much more domesticated CBD. Sometimes, a popular hit is from a sexy source.