Why CBD Products Are Getting Cheap

Price wars, a supply glut and an epidemic have driven down the costs of one-time premium products, with the hemp-derived cannabidiol, a non-psychoactive cannabis compound touted as a health and wellness partner.

The growing affordability of CBD was one of the key trends highlighted by Brightfield Group, which conducts market research for the emerging CBD sector, with its latest US CBD market report published on Tuesday.

Bethany Gomez of Brightfield Group said, “There is a consistent price reduction.” “At this point, we are not expecting that will change.”

Brightfield analysts expect CBD product sales to grow by 14% to $ 4.75 billion this year. According to Brightfield data, with a growth of 568%, the industry’s growth rate cooled significantly from its blistering pace last year when sales were $ 427 million to $ 4.15 billion in 2018.

According to the report, more people are buying CBD, and because of the epidemic, about 40% of the 5,000 CBD consumers surveyed by Brightfield in June said they had increased their consumption. However, Price falls across the industry Brightfield said that reduce the overall market price increase.

The CBD boom came on the heels of the December 2018 passage of the Agricultural Reform Act last year, known as the 2018 Farm Bill. That law removed low-THC cannabis and its derivatives from the Controlled Substances Act. Marijuana – which is also a variant of the same plant, but contains high levels of psychoactive THC (tetrahydrocarbonabinol) – a schedule I, federally illegal substance.

While the Farm Bill left a lot of discretion to the US Food and Drug Administration to develop guidelines for the CBD, the agency that regulates medicine, food, cosmetics and additives has yet to formalize a policy.

CBD producers effectively believed that the farm bill gave their offerings a green light and products containing hemp-derived compounds – such as face creams, sports drinks, pet treats and tinctures – on the Internet and in brick-and-mortar stores Was publicized. Major retailers such as CVS and Walgren started carrying CBD cream, balm and oil, and CBD companies started competing for their businesses.

“It’s Econ 101,” Gomez said. “If you have a market for CVS with 3,000 brands, they will do anything they need to do.”

He said the pricing war started in the second half of last year, with sticker prices dropping by 20% to 30%. The products were cheaper after the Gir hemp crop, resulting in an excess of raw materials.

Those prices have fallen further in recent months due to Kovid-19 economic pressures and public health-related retail closures.

One of the oldest ganja CBD companies, Bluebird Botanicals reduced its prices nearly 10-fold since launching its product in 2013, but has been stable since 2019, with the company’s chief executive, Brandon Beatty, giving CNN Business Told. Beatty and his colleagues are “currently declining in numbers and considering” the price drop due to the epidemic.

Prior to the Kovid-19, Tennessee CBD company Cat Naturals had reduced its prices by up to 30%, founder Kat Mustfield said. Since the epidemic, the company offered a 40% discount to individuals receiving social support benefits such as unemployment or disability.

The CBD oil tincture dropper bottle, which averaged about $ 80 and sometimes upwards of $ 100, is now selling for about $ 40 to $ 45 per bottle, Gomez, whose group conducted CBD market research, said .

CBD is not currently regulated like a dietary supplement, but if it is approved to be marketed as a supplement in the future, vendors may uncover structure and function. Claims its potential benefits.

This capability, however, rests on the FDA.

The agency’s steps toward developing a regulatory framework include listening to public comment, conducting research and testing on CBD products.

The FDA said in a March 2020 update about efforts to regulate CBD, “the agency is taking steps to improve the efficiency of regulatory pathways for the proper marketing of cannabis and cannabis-made products to protect public health” Committed to. ” An FDA spokesperson told CNN Business that the office has no update beyond its March statement.

The lack of clear regulatory guidance combined with strong-expected price compression and potential Kovid-19 economic pressures led to a decline in Brightfield’s future sales expectations for the industry.

Brightfield now expects to have a $ 16.8 billion industry by 2025, which is lower than expected at around $ 24 billion.


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