Sales in the hemp CBD sector are still shrinking, and many jobs have been cut. The industry is increasingly being overshadowed by other products, including intoxicating delta-8 THC. As U.S. CBD brands struggle to keep up with constantly changing regulations, they must make a decision about their identities and who they want to become.
Challenges for the Hemp CBD Market
The outlook for the U.S. hemp CBD business is not optimistic. The market contracted by more than 6% to $4.4 billion in 2022 and decreased 8% to $3.8 billion, excluding pharmaceutical sales, during a year of record inflation. Sales in the hemp CBD market plunged nearly 23% to $396 million last year, with projections for the CBD supplement category to shrink 13.6% in 2023 to $342 million. With over 1,500 brands in the market, companies are struggling with constant price compression and soft consumer demand due to the economy, leading to an existential crisis.
Identity Crisis in the Hemp CBD Sector
Amid these challenges, firms must decide who they want to become. Should they sell delta-8 THC and other intoxicating products or market themselves in the supplement health and wellness space? Or should they branch off into other markets, including pharmaceutical investments? Brands are also grappling with their identities and how they fit into the cannabis and supplement industries. The sector has reinvented itself every year, making it challenging for brands to know what strategic decisions to make.
Promise of the 2023 Farm Bill
The absence of a federal regulatory framework has limited distribution channels and impeded investments in the CBD market. However, the 2023 Farm Bill could provide much-needed federal guidance, creating a clear consensus for the direction of the industry. The FDA has denied citizen petitions to create a legal market for CBD in dietary supplements but has committed to working with Congress on a new regulatory pathway. If all goes well on Capitol Hill, the Farm Bill could pave the way for hemp CBD brands to thrive, potentially hitting the $10 billion mark by 2028.