Month: February 2023

Minor cannabinoids like CBG and CBN can no longer be overlooked within the global hemp and cannabis market. Analysts everywhere are beginning to recognize that the hemp cannabinoid industry is about much more than just CBD, and efforts are being made worldwide to welcome a wider spectrum of cannabinoids into the fold.

The story of the cannabinoid industry is currently evolving across multiple continents and incorporates more than a dozen unique compounds. What began with pushback against prohibition has grown into something more: Cannabinoids are being looked at for medicine around the world, and nowhere more so than in the United States.

In this guide, we’ll examine four recent reports that shed light on the breakneck rate at which the global cannabinoid industry is growing and complexifying. Our core focus will be cannabinoid growth trends in the USA and how they’re spreading worldwide.

By the end, you’ll know how the cannabinoid industry is currently faring, how it’s expected to evolve, and what we need to do to help it along. As you’ll see, the days of opportunity offered by cannabinoids are far from over — in fact, the golden era of hemp has hardly yet begun.

Cannabis is growing globally

For our first piece of insight, we turn to prestigious analysis firm Markets and Markets, which recently released a new, compendious report in September 2022 covering the ins and outs of cannabis when viewed from a global scale. Titled “Cannabis Market by Product Type, Compound, Application, And Region – Global Forecast to 2027¹,” this report estimates that cannabis overall was worth $27.7 billion globally in 2022 and is expected to swell to $82.3 billion by 2027.

If you’d told a savvy investor in 2007 that legal cannabis would be worth nearly $100 billion in two decades, you would have been scoffed at. Yet today, the most trusted voices in the field are convinced cannabinoids have a shot at mainstream success sooner than anyone imagined.

US cannabis sales to reach $42 billion by 2026

While numbers like “$82.3 billion” are impressive, they don’t tell us a lot about how the US market fits into this picture. Some intrepid US-based cannabinoid businesses have already started expanding their footprints globally, but most domestic cannabinoid brands keep their business within national borders.

To narrow our focus to the United States, we turn to BDSA, which commonly provides critical analytic information regarding the growing cannabinoid industry. In a report entitled “BDSA Reports Global Cannabis Sales Will Grow 10% in 2022; Forecasts $57 Billion Market by 2026²,” BDSA predicts that the US cannabis industry will be worth $42 billion by 2026, composing more than 75% of total global cannabis sales.

Projected $60bn industry by 2030

For more detail on the projected growth of the US cannabinoid industry, we’ll next examine a report produced by Grandview Research in 2021. Titled “U.S. Cannabinoids Market Size, Share & Trends Analysis Report By Product, And Segment Forecasts, 2022 – 2030,³” the report begins by assessing that the overall US cannabinoid industry was worth $14.6 billion in 2021, a figure that roughly coincides BDSA’s estimated $25 billion in US cannabis sales during the same year.

The further we look out, the more BDSA and Grandview concur. Where BDSA forecasts the US cannabis industry at $42 billion in 2027, Grandview predicts that the industry will be worth $60.4 billion three years later in 2030.

Combining the data provided by the two analysis firms, US cannabis can be expected to grow by nearly $6 billion per year between 2027 and 2030. The time to prepare for this coming era of opportunity is now.

CBD is the most popular cannabinoid

It’s clear from this analysis that the US is the main driver of cannabis sales globally. What percentage of these cannabis sales, however, are driven by non-THC cannabinoids?

According to Grandview, CBD surpassed THC as the most popular cannabinoid in the United States in 2021, amassing an estimated 27.2% of market share. THC was estimated to make up less than a quarter of cannabis sales by comparison with additional cannabinoids representing 10% or less of the US cannabinoids market.

CBG, CBN, CBC, CBGA, & others making inroads

Even though their current market share may be small, the growth displayed by minor cannabinoids, especially CBN and CBG, should not be overlooked. These are no longer fringe chemicals hanging onto the coattails of THC and CBD. They’re legitimate contributors to the domestic cannabinoid economy, and they’ll only take up greater shares of the market as time goes by.

Trends in US cannabinoid growth

However they may look at it, America’s best market analysis firms all agree that the US cannabinoid market is set for explosive growth over the next few years. One of the factors driving this growth that is not discussed nearly enough is the mounting importance of the role minor cannabinoids play in the global cannabinoid economy.

As a quick example, the carboxylic acid precursor to CBG, CBGA, has been identified as the “stem cell” or origin point of most popular cannabinoids. As a result, CBG-rich hemp has come into considerable demand as a source material for synthesized cannabinoids.

It’s hard to say which rare variant of hemp might become popular next as the market continues to produce new and unprecedented challenges and opportunities. The point is that Cannabis sativa is far more than just CBD and THC, a point that cannabis industry stakeholders are starting to notice.

Another recent BDSA report, for instance, details how CBN and especially CBG are currently exploding into the domestic cannabinoid market, driving growth numbers that make you look twice to ensure you read the figure right. Anyone skeptical about the long-term viability of the cannabinoid industry as CBD’s growth has cooled would do well to carefully analyze the following data:

CBD is stabilizing

In its report, titled “CBN and CBG Sales See Rapid Growth as CBD Sales Slow in Cannabis Markets⁴,” BDSA finds that CBD has, indeed, shown modest growth reductions in certain mature markets. Given the massive popularity CBD has already achieved along with its continued breakneck growth in newer domestic markets, these findings shouldn’t be any cause for concern.

Launching a new line of CBD products can be a viable option in today’s market, and it has the potential to be successful. However, including a range of CBG and CBN products in the offering can further enhance the potential success, by providing a wider range of options to appeal to different customers.

CBN is accelerating

CBN is showing impressive gains in many cannabis-aware markets, most notably in Colorado in which sales of the minor cannabinoid increased by 145% year-over-year in 2022. Oregon (22%), Nevada (30%), and California (29%) also posted decent gains.

Clearly, CBN is catching on in areas where other cannabinoids have been available for a while. Seeking to branch out and amplify specific benefits offered by cannabinoids, shoppers are increasingly searching for CBN by name.

CBG is skyrocketing

The gains showed by CBN are nothing compared to what the cannabinoid industry has witnessed in the CBG sector over the last year. Three states (Colorado: 1251%, Oregon: 1185%, Nevada: 1105%) showed more than 10-times increases in CBG sales in 2022. California’s CBG market grew more than six times over (655%), heralding another watershed moment in the history of minor cannabinoids.

Additional cannabinoids are also gaining

As we’ve seen from Grandview Research’s 2021 report, CBN and CBG are hardly the only cannabinoids emerging into the domestic hemp market. Also popular enough to pop up on Grandview’s radar are CBC and CBGA, which are trending for different reasons.

We discussed earlier how CBGA is playing a greater role in cannabinoid research and production. Cannabichromene (CBC), for its part, is likely to soon join CBN and CBG as yet another CBD-complimentary cannabinoid that offers distinct benefits.

Key drivers of cannabinoid growth

What’s causing these unprecedented levels of growth across multiple cannabinoids in both US and international markets? Grandview summarizes it simply by opining that “[k]ey factors driving the U.S. cannabinoids market growth include increasing awareness about the therapeutic benefits of cannabinoids, the growing legalization of cannabis and its derivatives in various countries.” Let’s unpack these points in more detail.

Increased awareness of cannabinoid benefits

It’s a fact that awareness of cannabinoids and their benefits has gone up a notch over the last year or two. A social media space once dominated by brands desperate to leave any impression at all has now been rightfully commandeered by shoppers and skeptics alike asking questions and receiving thoughtful, measured responses from peer experts.

In this online environment that fosters free exchange of ideas, awareness of the unique benefits of distinct cannabinoids has spread like wildfire. Those who were already familiar with cannabinoids no longer see CBD as the be-all, end-all, and cannabinoid newbies are entering a product environment already differentiated into CBD, CBG, and CBN offerings.

Growing legalization and acceptance of cannabinoids

Alongside this hive-mind acceptance of cannabinoids now displayed in online social spaces comes a growing wave of cannabis legalization efforts around the globe. The US states that still outlaw cannabis are now in the distinct minority, and the factors holding back the continued growth of the domestic cannabinoid economy are primarily bureaucratic rather than existential.d

US policy sets the tone worldwide, leading the entire globe to adopt America’s ironically hypocritical stance toward cannabinoids. Everyone uses them and loves them, but some of them are still technically illegal. In this environment, cannabinoids inherently free of intoxicating stigma (CBD, CBG, CBN, CBC, etc.) can flourish even better than those still overshadowed by a history of prohibition.

Ingredient combinations and product differentiation

If the domestic hemp cannabinoid economy were still limited to CBD, the types of growth numbers we witnessed in 2022 would not have been possible. Unless they happened to get very lucky with a jackpot idea, it was only by adding CBG and CBN into their product lines that brands showed 1000%+ gains over the last year.

Anyone still unconvinced of the absolute necessity of effective product differentiation should stand corrected by the performance of the domestic cannabinoid market in 2022. Conventional products treaded water while highly differentiated products containing CBG or CBN shot leaps and bounds ahead.

The cannabinoid industry is complexifying but still growing rapidly

CBD isn’t going anywhere. It’s the backbone of the non-intoxicating camp of the international cannabis industry, and it provides a level of familiarity and comfort that shoppers still don’t have with CBG and CBN.

At the same time, it would be wise for brands that still haven’t adventured outside the CBD nest to test the air. The most impressive year-over-year gains, after all, are no longer happening in the context of CBD. They’re happening in the context of CBG and CBN, add-ons that are simply expanding CBD in a new dimension now that it has limited space to expand directly.

Over the remaining part of the decade, the United States will continue to make up the majority of the global cannabis market, and the US cannabis market will continue to be dominated by CBD. Alongside CBD, you’ll see CBN and CBG rise up, and soon after them, CBC, CBDA, and CBGA as well.

While it may be new territory for cannabinoid brands, this is hardly the last time the global cannabis industry will mature or complexify. Each time a door is closed, a window will open — the window for the next few years, at least, appears to take the shape of CBG and CBN.

Sources:

1. 1. Cannabis Market. (n.d.). MarketsandMarkets. https://www.marketsandmarkets.com/Market-Reports/cannabis-market-201768301.html
2. 2. Reports Global Cannabis Sales Will Grow 10% in 2022; Forecasts $57 Billion Market by 2026. (2022, November 9). BDSA. https://bdsa.com/press-release/bdsa-reports-global-cannabis-sales-will-grow-10-in-2022-forecasts-57-billion-market-by-2026/
3. 3. Rice, A. (2022, June 7). CBN Sales & CBG Sales See Rapid Growth as CBD Sales Slow. BDSA. https://bdsa.com/cbn-and-cbg-sales-see-rapid-growth/
4. 4. U.S. Cannabinoids Market Size & Share Report, 2022-2030. (n.d.). https://www.grandviewresearch.com/industry-analysis/us-cannabinoids-market

Depending on the situation, using cannabinoids topically can be the most effective and desirable solution. Even so, cannabinoid-infused topicals have traditionally been slower-growing compared to long-trending categories like CBD tinctures and gummies.

The latest data compiled by Statista, however, suggest that the topical tide is turning. A greater number of younger people are turning to cannabinoid topicals and skincare products, and insights from a mature market can now help us understand the main holdups currently hindering the growth of this category.

By solving the problems that people currently have with CBD topicals, your products will deliver the genuine value that shoppers are seeking. In this guide, find out who to market cannabinoid topicals toward and how to formulate your products to fit average hemp consumer needs.

Who uses hemp topicals and skincare products?

We’ll start by examining the available data regarding who currently uses or is interested in using cannabinoid skincare products: both their age and gender. Understanding your target demographic is a key step in developing a cannabinoid topical product that will succeed in 2023 and beyond. Let’s begin by taking a look at the likelihood a person uses CBD topicals based on their age:

Hemp topical use by generation

Between April 9th and 11th, 2021, Statista conducted a survey¹ of more than 30,000 Americans regarding their interest in CBD beauty and personal care products. The respondents were divided by age, and their chosen responses roughly fell in line with age-based demographic breakdowns of the CBD industry overall.

Interest in CBD topicals among Baby Boomers and older generations was comparatively low. It also appears that the youngest Americans, those comprising Generation Z, have not yet fully embraced the offerings available on the CBD topical market. At only 12%, Gen Z respondents showed dramatically reduced interest in CBD topicals compared to Millennial (21%) and Gen X (23%) respondents.

Many members of Generation Z are still too young to use CBD products. Among those who are already 18-21, it’s likely that CBD topicals have simply not been presented attractively to this age group. Usually branded as helping with ailments concomitant with age, CBD topicals do not immediately track with the needs of the nation’s youngest consumers, a situation that can easily be rectified with proper branding and marketing.

Messaging that supports CBD topicals is clearly getting through to individuals old enough to experience age-related woes, yet the oldest among us remain relatively naive of cannabinoid topicals and their reported benefits. It may, then, be wise to determine ways to position Millennial and Gen X CBD topical users as ambassadors who relate the benefits of this product category to both older and younger friends, family members, coworkers, and neighbors.

Hemp topical use by gender

Unsurprisingly, interest in “CBD beauty and personal care products” remains significantly skewed toward women, though perhaps using “beauty” in the name Statista chose for its 2021 survey on the subject² suppressed male response. This survey, which used the same pool of 30,000+ participants mentioned in the previous section, found that 24% of American women were interested in buying CBD topical body products compared to only 16% of men. At 10%, even fewer men were interested in CBD bath products.

As societal norms related to gender continue to evolve, it would be unwise to assume that the market for CBD topical products will be limited to individuals who identify as female. With an increasing number of men also seeking alternative options for health and personal care, there is potential for CBD topicals to be embraced by a diverse range of consumers, including those who identify as male.

In any case, all individuals could use a bit of coaching when it comes to the benefits of cannabinoid topicals. Only a quarter of women are even interested in CBD topicals, which goes to show they simply aren’t aware of the immense benefits and minimal risks this cannabinoid can offer when applied topically. The work of expressing the value of hemp topicals to both men and women is far from over, and it would also be prudent to recognize that the difference between the two genders is currently on the wane.

Why do people want to use cannabinoid topicals?

It’s one thing to know who uses a product you intend to sell, but it’s another to understand the motivations that drive users of your product. When you know not only who your market is but also what motivates them, you can discover ways your brand might be able to reach additional groups of consumers who might share similar motivations.

For insights into the reasons consumers use CBD topicals, we turn to a third Statista survey³, this time from 2022. Featuring a much smaller pool of only 622 respondents aged between 21 and 65 years, this survey zeroed in on the primary motivations driving individuals who have already chosen to use CBD topicals.

Thirty-five percent of respondents cited reduction of inflammation as their main reason for trying CBD topicals, meaning that this single motivation drives more than a third of the current cannabinoid topical market. Given the general reputation CBD has received as an anti-inflammatory, it’s unsurprising that so many people are turning to this cannabinoid for its potential help with inflammation. It’s also no secret at this point that applying CBD topically usually allows more cannabinoids to reach the affected area more quickly.

Coming in second place as the most-reported motivation for buying CBD topicals was the urging of friends or family members. Though hardly anyone knew what it was a decade ago, CBD has long since become a household name, making it nearly as common to recommend to people you know who are in pain as Aspirin or ibuprofen.

CBD has also taken hold in the natural health community due to its natural origin and apparently very limited side effect profile. Whether it’s someone from a different generation, social group, or lifestyle, recommendations to try CBD topicals are coming from trusted individuals in all different walks of life.

Why don’t people use cannabinoid topicals more?

If topical products containing CBD and other hemp-derived cannabinoids offer so many impressive benefits, why has this category historically experienced slower growth than quick winners like oils and capsules? Statista offers the answer to that question within the results of a 2022 survey⁴ featuring 1,157 respondents.

In this survey, consumers who had previously bought CBD topicals or skincare products were asked why they had not done so again. It may not come as much of a shock to those with awareness of the ins and outs of the hemp industry that the most-cited reason (32%) was the perceived high cost of topical CBD products.

There it is, plain and simple: Even if they’re convinced of the benefits, average people who use CBD topicals often can’t afford to continue doing so. The answer to this problem is just as simple: Thoroughly explain the value of CBD topicals while doing as much as you can to reduce pricing without impacting margins.

How much do CBD topicals cost?

To better understand the primary detractor keeping more people from using CBD topicals more frequently, we turn to a Statista market report⁵ published in 2021 consisting of data derived from 3,000+ products made by over 100 brands. In this report, Statista found that CBD topicals are the most expensive CBD products overall at nearly $0.20 per milligram.

With an increased understanding of the value of common ingredients, savvy shoppers are scrutinizing CBD topical labels and having trouble coming up with justifications for their high price tags.

In this case, the consumers aren’t exactly wrong. With many CBD topicals, prices are inflated dramatically due to the presence of additional expensive ingredients or delicate production processes. Though they’re becoming more educated on cannabinoid products, shoppers still have trouble telling genuinely high-quality cannabinoid topicals apart from low-value products capitalizing on a trend.

The answer is to reduce the pricing of CBD topicals when possible, and when not, simply explain the value of the product in ways shoppers can understand. Consumers will pay a lot for the benefits of CBD, but they have to feel confident in their decisions first.

How to make cannabinoid topicals appealing in 2023

Sitting on the shelf next to equally high-end products containing other ingredients, it can be hard for shoppers to understand why CBD topicals are worth the high prices they command. Thankfully, some of the best ways to optimize your cannabinoid product offerings overall also go a long way toward reducing costs without impacting your bottom line.

Below, we’ll take a look at five specific tips you can follow to boost the traction of CBD topicals in 2023 in any online or in-person retail environment:

1. Reduced price

First, it’s a bald fact that nobody wants to pay top dollar for CBD in 2023. The days in which hemp cannabinoids were niche substances capable of commanding higher prices are in their waning phase, and consumers are now led by the examples created by savvy CBD brands that have reduced prices without impacting quality.

When seeking ways to reduce your MSRP, it’s common to first turn to ingredient quality and margins. It’s often the case, though, that inefficient methods hold brands back from producing the same results at a lower price point. By streamlining your ingredients acquisition or other components of the formulation process, you might be able to pass savings onto customers without harming your bottom line.

2. Simpler ingredients

These days, shoppers want their products to contain the simplest, most natural ingredients possible. It’s often possible to turn this trend to your advantage: Fewer ingredients can sometimes mean reduced cost to formulate your product, and you might even be able to secure higher-quality ingredients with that wiggle room.

Coming up with a simple, efficient CBD topical formulation doesn’t have to involve reinventing the wheel. Brands often uncover massive opportunities for cost savings by offloading some or all of their formulation processes to a white labeler, for instance.

3. More cannabinoids

The sentiment certainly hasn’t soured toward CBD, but it’s not the only hemp cannabinoid around anymore, either. A growing contingent of CBD shoppers want their products also to contain CBG or CBN — or at least they want to have the option.

Substituting more-expensive ingredients for additional isolated cannabinoids is one way you can add value to your product while also simplifying its formulation and reducing its production cost. Even in their isolated forms, cannabinoids are still believed to provide the entourage effect when combined, leading to even more opportunities to make products appear valuable and beneficial to shoppers.

4. Universal appeal

While it may be true that 35% of cannabinoid topical users do so for help with inflammation, that also means that 65% use cannabinoid topicals for other reasons. While marketing CBD topicals toward specific conditions may still be appropriate under certain circumstances, it’s also important to make your products as universally appealing as possible.

Instead of describing a CBD topical as a specific ailment cream, you might want to label it an “muscle and joint cream” to also include athletic shoppers. Especially if your cannabinoid topicals will be occupying physical shelves in 2023, it’s important to catch the eye of casual customers who might be simply looking for something to help with their condition, not specifically for CBD.

5. Specialized effects

At the same time that it’s important to make CBD topicals universally appealing, it’s just as essential to make them potently effective for certain uses. CBD is only one compound, for instance — you might want to accompany it with a substance like capsaicin in a topical product designed to help with muscle pain.

It may not be necessary to overtly advertise every specialization you add to your cannabinoid topical formula. What’s important is that when a shopper uses your product, it works. They won’t necessarily want to know why it works — they might not even care if it contains CBD.

How to make 2023’s winning CBD topical

There are two ways of looking at the CBD topical market going into 2023: On the one hand, it’s one of the slowest-growing CBD subsections even though it commands the highest prices. On the other hand, though, that makes it one of the CBD product categories with the most opportunity — the pain points in the CBD topical market are easy to identify and rectify with a product that fits shopper motivations for using CBD while eliminating disincentives. Below, we’ll take a look at three tips that can help you achieve this goal:

— Top-tier ingredients

It’s a fact that formulating CBD topicals is more complicated than putting together other types of CBD products. As a result, many brands resort to inferior ingredients just to make sure other parts of their formulations work well with each other.

In other cases, brands might use high-end, boutique ingredients in their cannabinoid topicals because they think doing so imparts value. It also raises prices, though, which is the predominant pain point in the CBD topical industry at present.

— Professional methods

Trying to put together a winning CBD topical formulation without any help might not be a winning or profitable strategy in the long term. Formulating topicals is unavoidably complicated, and inefficient topical formulations won’t perform as well due to their ratio of higher prices to reduced effects.

That’s one of the reasons it can be so useful to seek the assistance of an expert in the field. The right large-scale cannabinoid private labeler will have long since discovered the most efficient and effective ways to formulate CBD topicals, saving you the trouble of struggling to put together a winning formula with no support.

— Timely formulation

The times are changing quickly, and your CBD topical formula must be able to change with it. The best-performing CBD topicals on the market cost less, feature more cannabinoids, and offer higher ingredient quality than the competition. They’re fine-tuned to the needs of today’s cannabinoid shoppers, and their formulations can be adapted as necessary to incorporate new innovations and cost-saving techniques.

Summary: Cannabinoid skincare & topicals in 2023

With due diligence from a select group of brands, 2023 could be the year that cannabinoid topicals and skincare products stop being viewed as the most expensive CBD products with benefits that are the hardest to understand. It could be the year that making the decision to buy a CBD topical becomes as easy as making the decision to buy sunscreen, moisturizer, or a pain cream containing any other ingredient.

CBD topicals don’t need to become just as affordable as other types of topicals. All that needs to happen is a confluence of slightly reduced pricing and better ambassadorship. There’s massive potential in the CBD topical sub-market just waiting to be explored by intrepid brands that aren’t afraid to take educated risks.

Sources

1. 1. Statista. (2022, June 14). Consumer interest in CBD beauty and care products in the U.S. 2021, by generation. https://www.statista.com/statistics/1290066/consumer-interest-in-cbd-beauty-and-care-products-in-the-us-by-generation/
2. 2. Statista. (2022a, June 14). Consumer interest in CBD beauty and care products in the U.S. 2021, by gender. https://www.statista.com/statistics/1290056/consumer-interest-in-cbd-beauty-and-care-products-in-the-us-by-gender/
3. 3. Statista. (2022c, December 12). Reasons to buy CBD skincare among U.S. shoppers 2022. https://www.statista.com/statistics/1350854/reasons-to-buy-cbd-skincare-among-usa-shoppers/
4. 4. Statista. (2022c, December 12). Deterrents to CBD skincare purchases in the U.S. 2022. https://www.statista.com/statistics/1350859/deterrents-to-cbd-skincare-shopping-usa/
5. 5. Statista. (2022c, August 19). Average price per milligram CBD U.S. 2021, by segment. https://www.statista.com/statistics/1327628/typical-cannabidiol-dose-us/