Ten Predictions for the Hemp-Derived CBD Industry in 2020

Ten Predictions for the Hemp-Derived CBD Industry in 2020

2019 will forever be remembered as the year that launched America’s CBD craze. With the passage of the Farm Bill this time last year, hemp was de-scheduled and legalized federally as an agricultural crop. Since then, the consumers and commercial interest in hemp-derived CBD has only intensified, spurring a flood of new CPG businesses and product — from tinctures and edibles to beauty products and pet food.

The pressure is on for government approval of CBD and other hemp derivatives in CPGs, but for regulators, the jury is still out. In fact, the FDA recently updated its stance to remind the industry that it’s currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement. The agency said it can’t conclude that CBD is “generally recognized as safe” (GRAS) by qualified experts for use in human or animal food until more data on the compound’s short and long-term safety is supplied and studied.

So what’s in store for the the hemp-derived product market in 2020 and beyond? Here are ten predictions:

1. SEED TO SALE TAKES ON NEW MEANING

Today’s consumer cares about where the products they put in, and on, their bodies come from. From big breweries to boutique ice creams, mainstream brands showcase their farmers in their advertising and market organic, cruelty-free and hyper-local manufacturing practices on their packaging to assure consumers their products are natural, safe and worth a premium price. This trend will hit the hemp industry next, as consumers demand information on plant origin, farming practices, product composition and sustainability.

2. MILLIGRAMS MATTER

As consumer sophistication increases in 2020, they will demand easy and reliable ways to measure amounts when consuming or applying CBD and other cannabinoids. Brands should be prepared to provide clarity on consumable units of products like tinctures, edibles and topicals. This will be driven by consumers and regulators alike, requiring “metered” calibration of applicators like droppers or pumps, and standardization of serving sizes for consumables.

3. “HEY BOOMER!” IS MORE THAN A MEME

The AARP crowd is one of the largest demographics using hemp-derived CBD for chronic joint pain and sleep. Expect this trend to increase as Boomers seek to replace prescription and OTC pharmaceuticals with hemp-derived products — and to lobby for coverage and/or reimbursement through FSAs, HSAs and supplemental MediCare policies.

4. HEMP NATION

Today, one in five Americans report they use hemp-derived CBD for “mental health reasons” such as anxiety. In 2020, we’ll see even more people ditch Prozac prescriptions for non-impairing hemp-derived CBD to support their mental health goals. Expect brands targeting this audience to commission research on hemp-derived CBD’s functional benefits for mental health.

5. QR CODES WILL BE RETIRED
Today it is best practice for manufacturers to put QR codes on packaging, pointing consumers to lab results in order to demonstrate product safety. As USDA certification is finalized, this stop-gap will be abandoned in favor of a “seal of approval” from the USDA or other standards body. I suspect some brands or industry coalitions will seize the marketing opportunity to create their own “Michelin Star” system to grade products and build consumer trust.

6. DATA WILL BE KING

Broad categorical approval of CBD by the FDA won’t move forward until leaders band together to provide the safety data FDA is requesting. Leading brands are expected to collaborate on human studies to demonstrate safe daily consumption amounts, even if it means deemphasizing their business interests in the near term to do what’s right for the industry in the long term. Until this happens, expect more FDA and FTC letters and class actions to chip away at consumer confidence and add risk and cost to branded operations.

7. CBD WILL BE IN GOOD COMPANY

CBD was this decade’s craze, but as the market for cannabidiol becomes oversaturated, product companies will introduce other interesting minor cannabinoids like CBN and CBG, already touted as having functional benefits tied to sleep and appetite. Expect the FDA to voice concerns about these “cannabis derived compounds” and mirror its communication to industry and the public about the need for these products to be properly vetted for safety and use — and for product companies to market them nonetheless.

8. THE CANADIANS ARE COMING

Last year we witnessed a number of marijuana companies diversifying products and risks by introducing hemp-based wellness lines. In 2020, expect our Northern neighbors to take advantage of the depressed financial market and invest or buy U.S.-based hemp companies as a way to enter the U.S. market.

9. COMPETITOR CONSOLIDATION

RE Botanicals and Palmetto Harmony are early consolidators, but will not be alone in 2020. Now that the first big harvest season is behind us, product companies with outside investments will be pressured to improve top and bottom line results and scale. Some will try to be good at everything from production through marketing and sales, but many will look to consolidate with other brands who have complementary skill sets and realize synergies to the bottom line.

10. CERTIFICATION BECOMES SEXY (AND NECESSARY)

2020’s more sophisticated consumers will choose hemp-derived CBD products that are certified by industry or credible regulatory agencies, leaving behind pithy names, labels and packaging in favor of measurable standards and certified product quality. Certification becomes a risk to a CBD company’s business plan, as brands that don’t invest in certification risk loss of consumer trust.

  1. SEED TO SALE TAKES ON NEW MEANING

Today’s consumer cares about where the products they put in, and on, their bodies come from. From big breweries to boutique ice creams, mainstream brands showcase their farmers in their advertising and market organic, cruelty-free and hyper-local manufacturing practices on their packaging to assure consumers their products are natural, safe and worth a premium price. This trend will hit the hemp industry next, as consumers demand information on plant origin, farming practices, product composition and sustainability. 

 

  1. MILLIGRAMS MATTER 

Greater accuracy of product application will be available through meteringAs consumer sophistication increases in 2020, they will demand easy and reliable ways to measure amounts when consuming or applying CBD and other cannabinoids. Brands should be prepared to provide clarity on consumable units of products like tinctures, edibles and topicals.  This will be driven by consumers and regulators alike, requiring “metered” calibration of applicators like droppers or pumps, and standardization of serving sizes for consumables.   

 

  1. “HEY BOOMER!” IS MORE THAN A MEME

The AARP crowd is one of the largest demographics using hemp-derived CBD for chronic joint pain and sleep. Expect this trend to increase as Boomers seek to replace prescription and OTC pharmaceuticals with hemp-derived products — and to lobby for coverage and/or reimbursement through FSAs, HSAs and supplemental MediCare policies. 

  1. HEMP NATION

Reasons People Report Using Products with CBDToday, one in five Americans report they use hemp-derived CBD for “mental health reasons” such as anxiety. In 2020, we’ll see even more people ditch Prozac prescriptions for non-impairing hemp-derived CBD to support their mental health goals. Expect brands targeting this audience to commission research on hemp-derived CBD’s functional benefits for mental health.  

 

5. QR CODES WILL BE RETIRED

Today it is best practice for manufacturers to put QR codes on packaging, pointing consumers to lab results in order to demonstrate product safety. As USDA certification is finalized, this stop-gap will be abandoned in favor of a “seal of approval” from the USDA or other standards body. I suspect some brands or industry coalitions will seize the marketing opportunity to create their own “Michelin Star” system to grade products and build consumer trust.

 

  1. DATA WILL BE KING

Broad categorical approval of CBD by the FDA won’t move forward until leaders band together to provide the safety data FDA is requesting. Leading brands are expected to collaborate on human studies to demonstrate safe daily consumption amounts, even if it means deemphasizing their business interests in the near term to do what’s right for the industry in the long term.  Until this happens, expect more FDA and FTC letters and class actions to chip away at consumer confidence and add risk and cost to branded operations.

 

  1. CBD WILL BE IN GOOD COMPANY

CBG the next Cannabidiol molecule to be exploredCBD was this decade’s craze, but as the market for cannabidiol becomes oversaturated, product companies will introduce other interesting minor cannabinoids like CBN and CBG, already touted as having functional benefits tied to sleep and appetite. Expect the FDA to voice concerns about these “cannabis derived compounds” and mirror its communication to industry and the public about the need for these products to be properly vetted for safety and use – and for product companies to market them nonetheless.

 

  1. THE CANADIANS ARE COMING

Last year we witnessed a number of marijuana companies diversifying products and risks by introducing hemp-based wellness lines. In 2020, expect our Northern neighbors to take advantage of the depressed financial market and invest or buy U.S.-based hemp companies as a way to enter the U.S. market.  

 

  1. COMPETITOR CONSOLIDATION

RE Botanicals and Palmetto Harmony are early consolidators, but will not be alone in 2020.  Now that the first big harvest season is behind us, product companies with outside investments will be pressured to improve top and bottom line results and scale. Some will try to be good at everything from production through marketing and sales, but many will look to consolidate with other brands who have complementary skill sets and realize synergies to the bottom line.  

 

  1. CERTIFICATION BECOMES SEXY (AND NECESSARY)

2020’s more sophisticated consumers will choose hemp-derived CBD products that are certified by industry or credible regulatory agencies, leaving behind pithy names, labels and packaging in favor of measurable standards and certified product quality. Certification becomes a risk to a CBD company’s business plan, as brands that don’t invest in certification risk loss of consumer trust. 

 

——————————————

Patrick McCarthy, ValidCare CEO - Insights-as-a-Service needed for CBD productsAbout Patrick McCarthy

Patrick McCarthy is CEO and co-founder of ValidCare, the market intelligence and research platform for the hemp-derived product industry, powered by real-time consumer experiences. He is an innovative executive with an extensive history of developing new businesses related to medicine, health and wellness, with a specific focus on technology solutions that bring businesses closer to their customers through research, data and insights.

About ValidCare

ValidCare, LLC is the market intelligence and research platform for the hemp-derived product industry, powered by real-time consumer experiences. Through the ValidCare community, participants including consumers, product suppliers, researchers, and providers, come together to study, educate, measure and document the consumer experience using hemp-based products. ValidCare’s app based platform supports ongoing two-way communication, combining self-reported consumer data with advanced machine learning to deliver aggregated insights that help improve product quality, consistency, effectiveness, and the adoption of industry standards. For more information, visit www.validcare.com or call 844-825-4322.

Press Contact:

Lisa Weser

Trailblaze – Elite Cannabis Communications

lisa@trailblaze.co