What Caused the Rapid Growth of the CBD Industry?

Cannabis enthusiasts are not the only demographics that welcomed the legalization movement with opened arms. Businesses over the country found themselves surprised by the financial potential the herb possesses.

Cannabis found its way into food and beverage industries, cosmetics, pharmaceutical companies, and many more. But the backbone of this exploitation is not in the famed THC.

THC is the component that causes the famous “weed high.” The cannabis industry is going strong because of another chemical element: Cannabidiol (CBD).

Today, you can't walk down a street without seeing at least one shop or bar offering CBD products. It seems like everyone is contributing to the rapid growth of the CBD market. This begs the question: How big is the industry?

Numbers

The most natural and most obvious way to analyze a market is to run it by numbers. In this case, the analyses are tricky because of the changes in the legal status of the herb. The first CBD profit projections were made in 2014.

Back then, economists predicted this industry would reach around $2B by 2022. By 2017 its worth stood at around $367 million. This meant that the industry experienced a growth of 40%. In 2018 the US government issued the Farm Bill, which was a game-changer for CBD.

The source information for the 2014 prediction is outdated by this point. With the introduction of the Farm Bill and new reports of the market, economists now predict that the CBD industry will reach $22B highs.

The initial successes of the first CBD business ventures and the Farm Bill of 2018 motivated investors to take the industry more seriously. They recognized the potential and are no longer shy to buy stocks of emerging and established CBD based companies.

Breaking Stereotypes

In some people's eyes, cannabis has a bad reputation. They associate the plant with the typical stoner persona. This individual would spend his days in his house with a bong and pipe next to them, surviving on Cheetos and playing Jimmy Chong movies on repeat.

The truth is that the CBD industry gets its strength from medicine. This component of cannabis does not place the user in a euphoric state, i.e., a high. CBD affects the endocannabinoid system (ECS); something all humans and some animals have.

This system regulates our:

• sleep
• mood
• appetite
• memory
• reproduction
• fertility

CBD proved to help with inflammation and insomnia, amongst others. Thus we can conclude that there is more to cannabis today than just heading to buy pot.

The Costs

Despite all the positives, the CBD industry has its downsides. As in many other business ventures, the costs of these projects can scare off some investors.

Some companies cannot grow their plants because of legal boundaries. This lack of control is not appealing to most potential stock buyers.

Companies have to rely on “freelancers” for weed supply, and some of these people proved themselves unreliable. Manufacturers require a certain amount of CBD in their herbs, and sample tests are usually positive. But when they send a larger amount, the lab test results state that the herb is below the required standards.

The Green Gold Rush

The legalization of cannabis created a new and exciting industry overnight. The first predictions were more than encouraging. The exploitation of the CBD market and the introduction of the Farm Bill in late 2018 forced economists to reconsider their first calculations.

The previous success motivated investors over the world to take the herb seriously. Economists believe that the CBD industry will reach a worth of $22B by 2022.

CBD found its way in a variety of markets. Reaching from cosmetics to medicine, it seems that everyone has a use for CBD projects. This chemical component has a healthy reaction to our endocannabinoid system, helping with issues such as inflammation and appetite problems.

No industry comes without its risks. Clashes with the law and shady plant providers scare off some investors. But despite these setbacks, this industry shows no sign of slowing down.