Retail chains led by CVS Health and Walgreens Boots Alliance are expected to dominate the emerging multi-billion-dollar U.S. market of CBD, the compound derived from cannabis, according to a new report.
CBD is gaining in popularity among consumers with the legal CBD market projected to surpass $23 billion in annual U.S. sales by 2023, an analysis by market research firm Brightfield Group shows. This year, such sales are projected to be $5 billion – a sevenfold increase over 2018, Brightfield Group said.
“The CBD market has been growing rapidly, but we will see unprecedented growth in 2019,” said Brightfield managing director Bethany Gomez in a statement accompanying the firm’s 75-page report. “The bulk of this growth is coming from large retailers like CVS, Walgreens, and Kroger entering the market and providing that availability to consumers.”
Retailers including CVS, Walgreens and Rite Aid have yet to disclose specific sales in their most recent earnings reports, but have said the pilot markets where they have begun sales of CBD products are doing well.
“During the first quarter, we began piloting the sale of CBD creams, lotions and lip balms at Rite Aid stores in Oregon and Washington to better meet the needs and preferences of our customers in those communities,” Rite Aid chief operating officer Bryan Everett told analysts last month on the company’s fiscal first quarter earnings call. “Response from customers has been positive so far.”
It’s unclear how soon the big retailers will expand such CBD sales, which are largely limited to markets where states have legalized sales of hemp-derived products and begun to establish regulations for such sales. Walgreens, for example, is offering “select CBD product” in nearly 1,500 Walgreens stores in Colorado, Illinois, Indiana, Kentucky, New Mexico, Oregon, South Carolina, Tennessee and Vermont. And CVS is selling hemp-derived CBD products in select stores in seven states: California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee.
“We’re entering slowly into this new category, and continue to actively monitor the regulatory landscape for CBD products and will expand product availability as appropriate and in compliance with applicable laws,” CVS spokesman Joseph Goode said. “The hemp-derived CBD products we are selling . . . include topical products such as creams, sprays, roll-ons, lotions and salves. We are not selling any CBD-containing supplements or food additives.”
Brightfield projects retail chains to control 54%, or $16.2 billion, of a $23.7 billion market legal U.S. CBD market in 2023, according to its five-year analysis of CBD distribution channels. “Though they entered the market only this year, mass retail chains will eclipse all other channels in 2019, hosting 57% of sales this year,” Brightfield said in a statement accompanying the report.