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The CBD Effect: The Growth and Future of Legal Cannabis and Cannabinoids Webinar

Our “The CBD Effect: The Growth and Future of Legal Cannabis and Cannabinoids” webinar took place on April 30, 2019 and was hosted by Jessica Lukas, Vice President – Consumer Insights.

 

Watch the webinar or review the presentation to learn our views on the CBD retail landscape as it sits today, and our thoughts on where the market is headed.

 

 

CLICK TO DOWNLOAD PRESENTATION

 

 

Video Transcription

 

Jessica Lukas:

 

Let’s go ahead and get started. For those of you who’ve attended our webinars in the past, some of this will be a quick refresher. While we will be focusing most of the time on CBD and speaking specifically to hemp derived CBD, we have to think about the total legal cannabis or cannabinoid marketplace. Historically, that was the regulated dispensary channel. Now we’re talking about a much larger cannabinoid marketplace as hemp derived products emerge in the general marketplace. So a few things to call out, always important to remind everyone that when we talk about the growth of the marketplace and the size of the marketplace, we’re talking about legal cannabis growth and legal cannabis sales. This is important as a reminder because legal cannabis is new. Cannabis is not new. If we were, and we’ve done this and our models include it, but if we were to account for elicit sales as well, growth rates, sales volumes would look much different.

Legal Cannabis is a game changer

 

The growth rates would be much smaller than what we see when we’re talking about the legal landscape, so it’s just a great reminder whether you’re looking at BDS Analytics data in partnership with Arcview or you’re looking at other sources of data as you think about the size of the market place, it’s really important to understand the assumptions that go behind those numbers. Which kind of drives us into the next conversation, but it’s important to remember legal cannabis, total cannabinoids are and will continue to disrupt every consumer industry. We’ll touch on this in detail specifically as it pertains to the wild world of CBD, specifically hemp derived CBD. The last point that is just a really good reminder is just remember that this is constantly evolving.

The story, the regulations, the brands, the products, the players, the landscape, policy is constantly changing, and when we see a new market become adult use legal within the regulated channel, you know, it typically takes a year to two years, potentially even longer for that market to stabilize. As we think about the passing of the farm though and now the FDA determining how they’re going to regulate cannabinoids, specifically CBD as a food additive, it’s not crazy to expect this to be a fairly long and lengthy process. We’ve seen that as Colorado moved to legalization and Oregon and Washington and California and now in Canada. It’s not an overnight stabilization. It typically takes some time. Just keep in mind we’re staying on top of this. We’re trying to constantly be ahead of things, but I would just urge you to keep up and stay involved and come to us with any questions.

Legal Cannabis is Growing

 

So with that, let’s talk about the legal cannabis landscape. Probably many of you, if you’ve been on our webinars or seen us speak, you’ve seen this.

25 percent CAGR to 30 billion legal global cannabis spending

 

What we’re looking at here is BDS Analytics and Arcview’s projections out to 2022 for legal global cannabis spending. So by 2022, you see the size of legal regulated cannabis at about 30 billion globally. Important to keep in mind, this does not include the hemp-derived space. I’ll get to that shortly, but again, the legal regulated cannabis spinning globally 30 billion by 2022.

bds analytics US and global legal cannabis spending forecast

 

If we break that down, you see the US is and will continue to be the largest driver of the marketplace. California having a major impact on this, but as we see more and more states come online, that’s where the growth comes from. So US driving growth, and within the US it’s adult use driving the growth in the US. You see Canada here represented in red, a smaller portion of the marketplace, and then you see rest of world. Important to call out that our models are constantly being updated to account for policy changes, regulation changes, new markets coming online, so we’re constantly reassessing not just the US and Canada, but also over 30 plus countries globally in sizing this marketplace.

top six legal cannabis markets in the US bds analytics

 

Further, I’m not sure where all of you are calling in from, but really important to call out that this isn’t kind of the wild wild west anymore of legal cannabis. We are talking about many different states and markets moving to legalization. You know, Washington, Oregon, California, Colorado, Nevada. We’re talking about legalization in the northeast with Massachusetts coming online, Maine, Vermont, Michigan, key states where we’re expanding. Florida, Massachusetts, Michigan as I mentioned, Illinois, New York, New Jersey, and then obviously federal legalization in Canada. We’re talking about total, full national play with both cannabis, regulated cannabis and also hemp derived CBD.

CBD projections in the US into general retail

 

All right, so this is what I believe most of you are looking for. So as we think about this total cannabinoid landscape, as I mentioned, let me just go back quickly. 22 billion in the US for regulated cannabis by 2022. As we think about the total cannabinoid landscapes, so now we’ve evolved from a marketplace that cannabis and cannabinoids, the only retail channel for that is the dispensary, to an expanded availability over the coming months and years, going outwards beyond just the dispensary channel to general market channels. Hemp-derived CBD products being available already today across eCommerce, food, drug, mass, grocery, natural grocer, supplement stores, spas, salons, pets, vets. The list goes on and on, and as we watch the passing of the farm bill and new and different products emerge, and brands and retailers getting behind this in the general market, this set of cannabinoid sales expands rapidly. Important to think about this as we look at the total US cannabinoid revenue opportunity by 2024. In purple, we’ll start down at the bottom. In purple 24 billion. This is THC dominant products sold in licensed dispensaries in the US. Now we go up to that bright green color. This splits into two components. Now we’re talking other cannabinoids. Let’s focus specifically on CBD because that’s the one we’re talking about today.

This bright green is going to break down into general retail, so this is outside of the dispensary being a $13 billion opportunity, so think hemp derived CBD products, and then 5 billion being the kind of other dominant cannabinoids outside of THC products being sold in dispensaries. Then the last piece, that little turquoise bar at the top, the 2 billion, that’s actually the prescription drugs, so with the approval of Epidiolex, expanded kind of assessment of that as well as other potential prescription medications, we get to a total cannabinoid landscape of 45 billion in the US by 2024. Important to call out the dispensary channel is still a key here, and we have to consider the dispensary as a bit of a lead indicator to what happens in the marketplace over time. That’s important. We see that across many different industries as well. If you think about the rise of natural and organic foods and products, really the lead indicator of success has been the natural grocery channel, vitamin supplement shops. We’ll see that same thing happen with the dispensary channel becoming a smaller portion of sales as it pertains to CBD products, as you can see here in this green split, but still a key channel to consider as you think about the expansion opportunity, the growth, the indicators of success over time.

Legal Cannabis is evolving to CBDs

 

Let’s talk quickly about the evolution of the marketplace.

cannabis legalization stats bds analytics

 

I’m sure many of you have seen these slides before. 80% of the population in US and Canada, adults 21 plus agree there should be some form of legal cannabis use. Relevant to the CBD conversation, you can see a large percent of acceptance that the application of cannabis products as it pertains to medical benefits. Interestingly, despite Canada passing federal legalization, consumers in the US or even more convinced of the medical benefits in the medical application. A lot of this is driven to how markets in the US have evolved over time from restrictive medical to more open medical, to then being adult use legal, and the general population in the US has come to accept that process.

legal US cannabis user stats

 

As we think about consumption specifically, and this is of regulated cannabis, and we’ll get to the hemp-derived section of this shortly, but really quickly just need to level set on what we’re talking about here. 32% of adults 21 plus in fully legal US states have consumed cannabis in the past six months. Below that, you can see we’re also segmenting the adult 21 plus population into non-consumers, and then we break those out into acceptors and rejectors. Acceptors are those who don’t currently consume but are open to it. Really important group to understand and consider as we think about the growth of this industry, both the regulated dispensary channel in the general market as it pertains to hemp derived CBD products. There is a large number of acceptors and rejectors of regulated cannabis that are open to hemp derived non-psychoactive, non-intoxicating product offerings. Acceptors hold a bit of key of longer-term growth in the marketplace.

Colorado cannabis edible sales

 

For those of you who are not familiar or as familiar with the industry, it’s important to remind everyone we’re talking about sophisticated product offerings that are branded. You can see the growth of branded products over time since 2014 in Colorado specifically. Just using Colorado as an example here, with almost 50% of sales coming from branded items. This is a bit misleading because it doesn’t incorporate a lot of branded flower, which isn’t a big marketplace in the in Colorado specifically.

So if we kind of break this specifically just to Colorado edible sales, almost 100% of the edibles being sold in Colorado are coming from brands that are wholesaled across different dispensaries. Again, just bringing to life the fact that we’re not talking about products being sold and unsophisticated packaging with minimal labeling. We’re really talking for the majority of products, they are sophisticated, mature, branded products like you would see in a food grocery store, drug mass convenience store.

Colorado cannabis marketplace stats

 

Further, as we look at the evolution of the marketplace over time, we see this evolution from the majority of dollar sales coming from bulk flower purchased by gram, ounce, eight, two in kind of the last quarter of 2018 flower being a much lower percent of dollar sales. A couple of drivers here. Important to remember, the price of flower is declining over time. In Colorado, we’re talking about a price of less than $4.50 per gram, so declining a price of flower, obviously impacting market share because of the stats you’re looking at right now are dollar share. Also important to call out the evolution and the growth of other categories, specifically concentrates driven by the vape marketplace but also edibles.

Colorado cannabis marketplace stats

 

You can see that here as we think about where in partnership a BDS Analytics and Arcview are projecting the size of different categories. By 2022, we anticipate to continue to see the flower portion decline with concentrates and edibles picking that up. Just to call out the numbers here, are specifically across the total US, whereas the prior slide was just specifically talking about Colorado.

50% of cannabis consumers are largely influenced by the convenience of the consumption

 

What’s really driving this change in behavior? So again, I told you one factor here is the declining price of flower, but we also have to consider the evolving nature of consumers, consumer desire, consumer needs, need states, occasions and functionality of products as an influencer. It’s important to call out that for the average cannabis consumer in fully legal states, convenience of the consumption for them is a top size influencer. What I mean by that is what influences consumers to purchase the brands and the products that they purchase at the dispensary?

50% of consumers are largely influenced by the convenience of the consumption when choosing a product. Thus it’s not surprising here. In green, you see vape dollar sales almost at a 70% year over year growth rate, and this isn’t accounting for new and different markets. This is keeping markets consistent. What’s that growth in those markets? Again, 70% growth of dollar sales year over year for vape, and you see an almost 30% growth in edible dollar sales year over year.

A driving force behind this, new and different product formats, more brands, more offerings. As I mentioned, this new and different product forms is really driving this. Different communication strategies, as well as this kind of evolution of the consumer marketplace with new and different consumers entering the market. What we know is non-consumers today, that acceptor group as well as recent adopters, those entering cannabis for the first time are more interested in discreet forms of consumption and are more actually more interested in trying out edible products first before jumping to inhalable.

cannabis consumers seek to trust products

 

With that, it’s important to keep in mind that all consumers, those who are experienced consumers that consume every day as well as newer consumers all seek to have a good cannabis experience. They seek trusted products, trusted experiences and oftentimes people are looking on to friends and family for recommendations. A lot of people purchase products based on it being something they have consumed before because again, they know the experience they had, they know what type of experience they’ll have, and therefore there’s comfort in that consistency of offerings.

Cannabis low dose market and stats

 

Therefore, keep in mind there’s a lot of things we have to consider here both in the dispensary channel and the general market as we think about cannabinoids and the interaction, THC, CBD products being sold in dispensaries, as well as the hemp-derived CBD products that are going to be available and are available in the general market. But as we think about this desire to have a good experience and trust and consistency and control, important to call out that over 30% of edibles consumers actually prefer lower dose products, so less than 10 milligrams.

They’re telling us this, and when we look at the retail sales tracking data, you see this kind of hold true. Not only are there new more products being offered to consumers with low and microdose THC, consumers are buying these products. Microdose, so two and a half milligrams or less, dollar sales up over 100% year over year. Low dose, typically five milligrams, up 70%, and just for reference, just showing you again that almost 30% growth rate for edibles. You can see edibles are growing year over year at a very strong rate, but these low dose and microdose growing even stronger. What does that mean? Consumers are looking for control. They’re looking to be able to dose themselves accordingly throughout a day or in a given situation. Further, when they’re looking and seeking for products in the dispensary, 40% of edible consumers have chosen products based on the CBD content, and of these almost 30% prefer ratios of 10 to 1 CBD to THC or higher. What we find in our retail sales data, high CBD dollar sales of edibles are up almost 70% year over year.

So again, just changing dynamics. The answer is no longer that consumers just want the highest potency of THC. There’s a lot of reasons why people are consuming, and they’re looking for different products to fit different occasions, different need states. You see that play out here.

Again, right now we’re talking just about the dispensary channel, but it’s really important for everyone within the cannabis industry and outside the cannabis industry to understand that we’re now talking about a cannabinoid marketplace, and now there’s many different channels in which consumers can interact and purchase these products, the dispensary channel being the one with the most history. Again, we have to look there first to understand how has this evolved over time so we can predict what’s going to happen when the markets open beyond e-commerce and beyond the natural supplement in grocers as we see more and more products emerge in the general market.

Also important to call out in the purple, where only a few brands are touting these benefits, faster onset and shorter duration also play here. This is a space that we’re going to see a lot of changes happen over the coming months and years.

The last point I want to call out is the idea, for many, and many consumers also believe that when THC is present in a product, it makes the CBD that much more effective. As you think about the market opportunities for CBD products, you have to consider who are the consumer segments, both those shopping in dispensaries and not? What are they interested in, how educated are they, and where is that market opportunity?

cannabis consumers stats about trust BDS analytics

 

All right. Again, trust matters, consistency matters. Consumers want a good experience. We see this over and over and over again. Even among cannabis consumers, over 40% wish more products were labeled for the mood and effect. Among non-consumers, the biggest hurdles for consumption among non-consumers is that it does not fit their lifestyle, or that they don’t like how it makes them feel. So when you think about hurdles of consumption, I would say those are best case scenario.

With education, product availability, messaging, consumers or non-consumers need to understand that these products offer different experiences, and there’s a lot of different THC dosages out there. Now with a lot of products in dispensaries, almost every single major edible brand has at least one SKU that is a high-CBD offering. Most of them have three to four different offerings, and now you’re talking about very different offerings for the consumers.

legal cannabis mood and effect labeling stats

 

That’s where we get into a lot of these products and brands promising experiences. We call this mood and effect labeling. Showing some examples, Kikoko, the number one beverage brand in California right now. Canndescent, you have Stratos, which is a pill product in Colorado, offering promised experiences.

Interestingly in our data set, I thought this was worthwhile calling out, in our data today, we have identified 286 unique moods being offered to consumers. I’m not saying that they’re all fully different, but they’re using different terminology. They typically fall into three to four buckets. You have energize, you have sleep, you have relax and unwind and calm, and then you have relief. Those are the four biggest buckets, but within those four, again, a lot of different communication strategies being done across states, across brands, to offer up these moods.

Important to call out that in 2018, and thus far 2019, about 5% of dollar sales for cannabis products in dispensaries are coming from mood and effect branding, and that has grown drastically over the last three years. In 2017, that number was closer to 1.5%. In consumers, because of a lack of understanding, education, don’t really understand, not every consumer, but I would say the average consumer doesn’t necessarily understand strains, growing processes, extraction techniques, cannabinoids, terpenes, and therefore mood and effect branding is easy to understand. You can see here that almost 40% of cannabis consumers are influenced by mood and effect labeling when selecting a product.

I see a couple of questions popping up. I’ll address it now. Happy to address this at the end if anybody has further questions, or feel free to reach out. Will this stay? Will mood and effect continue to be allowed to be communicated in this fashion over time? I think that’s yet to be determined. In Canada, this is not allowed. Obviously there’s very little branding and messaging allowed at all. The packaging has to be very clean. But there is no allowance around mood and effect messaging or branding.

Further, in the general market, this typically isn’t allowed either across new and different product formats. As we think about hemp-derived CBD as a food additive, it will be very interesting to see how the FDA decides to regulate this. In most cases, if these claims are being made, there will need to be some testing behind that if they’re even allowed. Today within the regulated dispensary channel, there are no requirements. This is kind of an open playground for brands to do what they want without any testing to prove out that they actually perform the way they’re promised.

Cannabis consumption reasons and stats

 

But again, thinking to the consumer specifically, it makes sense and it’s helpful. The reason it makes sense is because consumers are looking for different benefits dependent on the time of day, the day of the week, and their need state. There’s a portion of the cannabis consumer population consuming for recreation and social benefits, and a portion for health or medical. These numbers are among fully legal states.

You see this overlap as well of people consuming sometimes for social rec, sometimes for health or medical. Now all of a sudden you consider all of the different need states and occasions. They are multipurpose, multifaceted, and on a Friday night with your significant other, that’s a relax, unwind, recreational, social occasion. After a long run on Saturday, that might be a recovery occasion and more health or medically based. Then maybe dealing with menstrual cramps or headaches on a Wednesday, now we’re talking fully a health/medical application. So consumers are choosing product forms across inhalables, edibles, topicals, and utilizing different cannabinoid makeups to address their need states and occasions. Again, with this mindset of consumers are looking for an end benefit, that’s why the mood and effect makes sense.

Really important to call out as you look at the trend over time, as markets move from illicit, and when I say markets, US state markets, move from being illicit to CBD-only to restricted medical to open medical to fully adult use medically legal, the percent consuming for recreational and social remains relatively flat over time. Where you see a lot of growth for any individual consumer is now seeing more application that is health or medical or wellness-related.

So you go from an illicit marketplace where people say, “Yes, there is application for cannabis as it pertains to consumers who are struggling with serious illnesses, cancer, MS,” to overtime with greater product availability, product assortment, consumers identifying use cases for themselves that go beyond the relax, the unwind, the high, the buzz, to more functional application. So there’s a lot of growth opportunity not just in social and recreational, but also reaching these new and different need states that consumers might not have thought of cannabis as an alternative before. That’s why it’s not just about THC anymore. We’ve got to consider this wild world of CBD.

Cannabis consumption reasons and stats

 

If we think about the general marketplace, so this is hemp-derived CBD specifically. When we asked consumers what are they purchasing, and this is not within the dispensary, and we forced this to be re-percentage to 100%, the majority of products being purchased today fall within ingestibles and topicals. Ingestibles predominantly driven by sublingual products because those are what’s mostly available to consumers. So predominantly oils and tinctures and droppers, some pills, capsules, and tablets. With food and beverage, definitely a huge opportunity over time, but just less available to consumers today. That is growing.

US general market CBD stats bds analytics

 

Within the topical application, as you think about anti-inflammatory pain management benefits of CBD, the creams, the balms and the salves kind of living there, and whether you call that skincare, beauty care, healthcare, first aid, it depends who you talk to, how do they categorize that? But there’s where a lot of the play is today. We’re going to see big plays in terms of more beauty care and skincare application, especially within CBD, but also as we start considering other cannabinoids. With 22 registered cannabinoids, and I’ve heard somebody recently in a presentation say there’s a belief there’s over 400 different cannabinoids. THC and CBD are just the start of this.

US CBD product categories bds analytics data

 

What’s interesting at looking at this client purchasing outside of dispensaries, general market, still a relatively small penetration, is that it does mirror pretty closely with what we see happen in the dispensary channel. With the dispensaries being around and selling CBD products for the last five years, it’s a great indication to look at the product assortment, what’s winning and what’s not, within the dispensary to predict what’s going to happen to some degree in the general market.

Within the dispensary channel, high CBD products account for about 10% of dollar sales in 2018. This is up from about 5% in 2017. If you look to the right, the different colors, you’re looking at the category split. Ingestibles, which includes both your sublinguals and edibles for those who care, beverages do fall under edibles in our framework. Then you have concentrates, predominantly vape falling here with a lot of vape offerings that are focused on the high CBD benefits.

What’s interesting with vapes, and I’m sure many of you know the brands I’m going to be talking about, in both Colorado and California specifically, there’s a lot of disposable vape offerings out there that really focus on the functional mood and effect benefits that are offering consumers one to one THC to CBD ratios kind of driving some of this volume. Then you see the topical application.

US CBD market by product category

 

This is all really important to think about total sales and how it splits by category, but I did want to show you just a couple of subcategory breaks so you could see the sheer size of CBD products as we think about different categories. While sublinguals and topicals are a smaller portion of overall dollar sales in dispensaries, the majority of sublinguals and topicals are positioned and sold to consumers for the CBD benefits. You could argue, and I could argue, that this actual 83% should be higher for topicals.

But I just want to be very clear how we categorize this in our data set. We do a lot of rigorous research to ensure we’re categorizing every single product SKU appropriately on these attributes, and we have firm restrictions that say these products have to be specifically calling out CBD. They have to be communicating it, messaging it, it needs to be on the packaging to be counted as a high-CBD product.

As you can see when we break out edibles and concentrates, a bigger portion of total dollar sales in the dispensary channel, therefore driving a bigger chunk of the pie. A smaller percent of those total sales are coming from high-CBD products. Important to think about it in terms of product assortment, what’s working, what consumers are gravitating to? If we broke out edibles specifically, so your sublinguals really quickly are going to be your tinctures, dissolvable strips. Topicals is going to be your creams, balms, salves. Edibles, as I mentioned, candy, chocolates, beverages and so on. A big portion of the high-CBD edible landscape is actually coming from gummies. Then you have concentrates, predominantly vape products.

CBD education is needed for consumers stats

 

With all of that said, and the groundwork laid, it’s important to remember that education is needed. I will continue to speak to the need for retailers and manufacturers to try to help educate the consumer population. When we talk about difference in effects in CBD or THC, among the general population 21 plus, almost 70% are wrong in thinking there are no differences or don’t know if there are or are not differences between CBD and THC. Further, a substantial portion of the population is also confused about the effects that they will have from consuming any type of hemp product. This is changing, and actually we’ll have updated data next week that I think we’ll see these numbers come down as the conversation of CBD is getting greater and greater in the general market.

But again, really important to think about dosage, education, communication, labeling in communicating and educating the consumer population. Especially as we think about general market retail locations taking on these products. How should they use them? How should they consume them? What is the right dose? How can we move more towards consistent labeling? Again, a lot of confusion and having every product labeled differently is not helping the general consumer better understand this.

Legal cannabis is now hemp-derived CBD

 

All right. Let’s get into specifically a lot of the hemp-derived CBD data. Again, this is a free webinar. We have so much more to offer. If you have questions, let me know, and there’s much more to come from us on this topic as we expand everything we do to cover total cannabinoids globally.

total cannabinoids consumer stats in legal cannabis markets

 

As a reminder, quickly, I showed you before that 32% of adults in fully legal regulated markets are cannabis consumers. If we layer in total cannabinoids consumer, so also accounting for a smaller subset of the population that is consuming hemp-derived CBD products, you see that number jump to 37%. Almost 40% of adults 21 plus in fully legal markets have consumed cannabinoid products. I will caveat, we have all of this information for total US, total Canada, down to stages of legalization in the US, down to individual state and province levels. I’m showing you fully regulated, legal cannabis markets because that’s the future. As we think about where the markets are going in the next five years, more and more states will become fully legal, and we have to consider what that means over time. That’s why I’m showing those numbers here.

So again, 37% of adults 21 plus in fully legal states. I also call those level one states, so that’s going to be Alaska, California, Colorado, Oregon, Washington, Nevada, and Massachusetts. They have to be fully legal with retail available. Again, 37% have consumed cannabinoid products.

hemp-derived and marijuana-derived consumer stats

 

Of adults in these fully legal markets, if we separate that, so 37% is the combined, 12% are hemp-derived consumers. 32% of the population is marijuana-derived cannabis consumers, as we talked about before. So again, 21% of adults 21 plus in fully legal markets have consumed hemp-derived products in the last six months.

Interestingly, if we overlay these and we force this to be 100%, so as we think about our total pie of cannabinoid consumers, you can see a substantial overlap between those purchasing hemp-derived products and those purchasing marijuana-derived products. What we find is that consumers that are familiar with cannabis or marijuana products tend to be more educated, understanding of cannabinoids and terpenes, thus driving them to be a bit more open about trying hemp-derived CBD products.

I know this is a bit complicated, but again, focusing right now on the biggest portion of the cannabinoid consumers are still buying regulated cannabis in dispensaries in fully legal states. What we predict happening over time is this portion of the pie becoming much larger. Let’s use Colorado for an example. Right now, 36% of the adult 21 plus population in Colorado consumes cannabis. Regulated, legal cannabis. Right now, again, the hemp-derived CBD marketplace is a bit less mature, not as available, and we’re talking close to 10% of the population consuming those products.

hemp-derived cbd marketplace in the us stats

 

Over time, we’re going to have penetration grow for total cannabinoids because now consumers who don’t walk into a dispensary have access to these products at CVS, Walgreens, convenience stores, grocery stores, mass merchandisers, and it really changes the landscape. And so there’s a huge growth opportunity for total cannabinoids as availability expands, but we also have to consider the interaction now between channels. As consumers have access to more and more of these products in the general market, that could deter some who would be walking into a dispensary to buy, let’s say a topical balm because they picked it up at CVS instead of going on another shopping trip.

That is a consideration set. So what we’re tracking and what we’re watching over time, is that interaction, that impact, that potential cannibalization. In fully legal markets do we start seeing growth rates in the dispensary channel in terms of consumer penetration decline as CBD products are offered in the general market. It’s important to call out that most of the consumers and most of the shoppers entering a dispensary are looking for THC products anyway, or looking for products that have both THC and CBD in them.

And that business will not be impacted by this growth of hemp-derived CBD. Another thing to consider is that, as the general population becomes more accepting, as we see penetration rates get above 30% hopefully into the 40% and 50%, now we have a more open environment, a more open marketplace, more curiosity, more interest to actually potentially see a path going from hemp-derived CBD products to marijuana-derived topical CBD products, to then as we see happen quite frequently, openness to high-CBD, 10:1, 30:1 ratio edible products, and then expanded from there as consumers become more and more comfortable with different product formats. So a lot of interaction to keep an eye on, a lot of interaction to be watching over time as this evolution continues and as products become more and more available to consumers.

CBD Share sales volume stats

 

All right, so again, back to the dispensary channel. As you look at the CBD share of volume over time in this green bar, just important to call out, as I discussed earlier, 10% to 11% of retail sales in dispensaries coming from CBD products in the dispensary channel. And you can see how that’s grown over the last five years and we continue to see that growth rate continue.

projected total US CBD market for 2018 bds analytics

 

What you’re looking at here is BDS Analytics projected, total US CBD market for 2018. This does include dispensary channel products that are high-CBD. And as you can see, not surprising, the majority of sales as of 2018 are coming from the dispensary channel. There’s a pretty sizable healthy volume eCommerce today. And then you see some other channels coming into play, natural grocers, vitamin supplement shops taking up a pretty big portion here, some play among independently owned convenience, grocery drug chains. But this is the marketplace in the market share by channel today.

US CBD Market Categories and stats

 

As we think about the categories today, there’s a lot happening. Again with the majority of volume coming from the dispensary channel. It’s not surprising to see a bit of category makeup look similar to what we see in the dispensary. But as we think about CBD or high-CBD products, both hemp-derived and marijuana-derived, you see a play across categories, inhalables, sublinguals being tinctures, confection or candy food, beverages, beauty/skin, wellness and so on. Really a lot of different categories making a play here today.

CBD general retail channel stats and growth

 

As we think about the growth drivers over the next five years, for this CBD total cannabinoid growth opportunity on general retail. So this is going to be the opening of the markets in terms of food, drug, mass, convenience, pet care and so on, being a big driving force of this growth of the CBD marketplace from 2 billion to 20 billion over the next five years. I will call out, I’m giving you summary data right now. What we have developed and again, this is modeled projections. What we have developed thus far is a full cannabinoid landscape that breaks down by channel, by category and overlaying channels and categories, to predict where we think all of this is going to go.

So a great example is in our open model, our clients can look at beverages and beverages over the next five years by food, drug, mass, convenience on premise and so on, to see where we predict the market going. Again, just showing you an overview today.

CBD category market growth and stats

 

Further as we think about the category drivers of growth over time. As we think about the CBD marketplace, we go again from the 2 billion in 2018 to the 20 billion in 2024, with huge drivers. To start with, the growth rates are going to look different as the products emerging and being launched start with more topical application.

So we’re going to see over the next six months to two years, a big growth in topicals, but once edibles catch up and edibles being beverages, confections, food and so on start making their way into the marketplace at a greater degree as well, we’re going to see that being the biggest growth driver. But topicals in the near term, especially with major retailers, CVS, Walgreens, Sephora, Ulta and so on, announcing product availability, that’s where we’re going to see a lot of the growth start. But then the category growth rates are going to change as we think about the next five years. So a lot of big opportunities here as you think cross category, and as I showed you previously across channels.

US CBD forecasts and stats for product categories and retail

 

So with that as I mentioned, there’s a lot of work that we’ve done, a lot of work still yet to be done. We have assessed the entire landscape and utilizing all of our data that we’ve collected as well as some partnership data projecting and predicting where all of this is going to go over the next five years. The next five years are important to consider, but there’s going to be a lot of changes.

A lot of evolution over the next six months. And we’re going to stay on top of this to ensure that our models and our projections and our data sets are keeping up to date with the moving landscape.

CBD Market Monitor bds analytics

 

So at that, what’s next? Available today just to call out, we do have a BDS Analytics’ CBD Market Monitor service. This isn’t a report, it’s ongoing dynamic and drillable access to complete CBD data insights covering retail sales consumer, as well as full open models. So we’re opening our models to our clients completely.

Then more to come. Really excited to announce, this is the first time I’ve said it out loud in a big forum, but we are moving forward with a strategic partnership with IRI, as well as many other partners to solidify our expertise in coverage of the total cannabinoids landscape globally. So as we think about being able to look at the dispensary channel and the cannabis consumer and expanding that to every channel of purchasing, again grocery, drug, mass, convenience, natural foods, natural grocers, supplements, as well as being able to track consumer behavior across all of these channels, essential to staying on top of this over time.

And so, again, very excited to verbally announce a relationship and strategic partnership with IRI, but many more announcements to come in terms of other key partners within the U.S. as well as globally.

 

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