We have covered in detail the burgeoning market for cannabis-derived products, from brewer Constellation Brands Inc.'s C$5 billion investment in cannabis producer Canopy Growth Corp. to the rapidly increasing private equity and venture capital activity in the space.
The latest development in this trend came in March when major pharmacy chains CVS Health Corp. and Walgreens Boots Alliance Inc. both said they would start selling products that contain cannabidiol.
CBD has been touted as a treatment for a host of ailments, including anxiety, nausea and insomnia. It contains minimal THC, the psychoactive compound in cannabis, and has been marketed as a dietary supplement, a recovery aid for athletes and a painkiller. It can now be found in myriad products including creams, candy, oils and drinks. For now, CVS and Walgreens are limiting their offerings to topical applications.
Research into the health benefits of CBD is limited so far, as is federal regulation. "No one really understands edibles or beverages or skin creams that have cannabis in them because we're not allowed to research these products that are produced at the state level and furthermore, the federal supplier of cannabis doesn't manufacture these products," Jeffrey Chen, director of the UCLA Cannabis Research Initiative, told S&P Global Market Intelligence.
This roadblock has not put off some of the largest retailers in the U.S., which see the opportunity to broaden their product ranges and attract a new category of customer. Estimates for the potential value of the market vary wildly, from $5 billion in five years to $22 billion by 2022, but the rapid growth to date shown in the chart below is proof enough of concept. Barring any major regulatory backtracks, expect to see many more CBD products on the shelves of big-name retailers in the months and years to come.
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Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries that draws on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence.