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CBD's Slowdown in the US: What Went Wrong in 2020

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Alexander Esposito Bio

A version of this article originally appeared in the digital edition of Natural Products Insider

By the end of 2019, CBD had completed an impressive entry into the American consumer market. In just a year, the non-psychoactive compound had gone from near total obscurity to just over USD4 billion in sales. Fast forward to late 2020, however, and momentum seems to have stalled for this nascent industry. Sales have inched forward at about 20% in year-over-year terms, well below expectations for a product that’s just getting started, and consumer sentiment has become decidedly more mixed. This slowdown comes as a result of an oversaturation of CBD products and regulatory uncertainty that has hampered product launches and quality. 

The 2018 Farm Bill’s passage set off a rapid pace of CBD product launches across consumer packaged goods categories. Less than a year later, Americans could purchase CBD in its least processed format (flower) as well as in a wide variety of other product types, including topical ointments, beverages, capsules and foods. These myriad options could be found not only in dispensaries but also in pharmacies, supermarkets and online. Americans warmed to these new products, and by the end of 2019, CBD’s user base numbered well over 13 million users.

By the end of 2020, however, CBD’s user base had only grown by 13% to 14.8 million users. Part of this slowdown in creating a dependable user base can be traced to an abundance of products using inaccurate or misleading messaging about the effects and intended usage of their products. Some less scrupulous manufacturers have also turned off consumers through low quality-control standards. Americans who purchased these kinds of products, especially those with too little CBD to produce an impact, may feel they wasted their money and might hesitate to try other CBD products in the future.

CBD’s slowdown can also be partially attributed to a lack of regulatory clarity. While the 2018 Farm Bill legalised hemp, it did not legalise CBD for use in all consumer products. Most notably, the FDA still considers CBD in food and drinks to be illegal. Enforcement action from the FDA has largely focused on CBD drink and food products which have been found to inaccurately label their ingredients or which contain more than the legally allowed amount of THC. In order to steer clear of these enforcement measures, manufacturers have been careful to craft messaging which avoids promising specific benefits for medical conditions. While some producers are able to hint at potential benefits of their products through creative use of language on their packaging, the overall result of this restriction is consumer confusion.

Federal authorities have also made clear their stance against interstate commerce of CBD products. The result of this ban on moving products across state borders has been the exclusion of big players from the CBD food and drink sector, resulting in both national manufacturers and retailers avoiding these categories. Improved regulatory guidance that provides more clarity and adapts to the evolving scientific understanding of the benefits and uses of CBD is crucial to improved future performance.

CBD growth is far from completely stalling, and there is undoubtedly unmet potential in this industry. Regulatory changes and a renewed push for quality and messaging clarity from manufacturers could be extremely helpful in improving CBD’s reputation and ensuring Americans who can benefit from it have access to safe and effective products.

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