Cowen: CBD Market Could Reach $16B By 2025

The U.S. cannabidiol market should expect to see continued gains in the years ahead, according to Cowen.

What Happened 

The CBD market could represent a $16-billion opportunity by 2025, according to a report issued Monday by a team of Cowen analysts.

The findings are based on a roughly 40-percent increase in consumer incidence with the average user spending $640 — or less than $2 per day — each year.

To generate its findings, Cowen convened 11 of its analysts in its consumer, health care, industrials and regulatory teams to analyze the market; 2,500 consumers were surveyed to determine the findings. The report noted a higher than expected amount of CBD consumption.

"We were surprised to see that nearly 7 percent of respondents in January 2019 reported using CBD as a supplement,” the report said. This was the first month of data and findings could fluctuate, Cowen said.

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Hemp — and its non-psychoactive derivative CBD — were federally legalized with the signing of the Farm Bill in January, but CBD-infused food remains illegal in the eyes of the federal government.

Why It's Important

The analysts compared CBD to another craze: JUUL vapes.

“Indeed, to put the 6.9-percent incidence rate in context, that compares to JUUL use of 4.2 percent, and 19.6 percent of consumers that consider themselves a current tobacco user, per our survey.”

Much of Cowen's estimations are conservative, according to the research firm.

This includes a belief that CBD use will grow 10 percent among adults, totaling around 25 million consumers by 2025.

The conservatism extends to the $16-billion forecast itself, the analysts said: "We can envision a scenario where a consumer that uses a CBD tincture or capsule may also be inclined to convert his or her beauty regimen to include CBD (e.g., CBD infused beauty products), and/or use a topical for targeted relief as well."

What's Next

Dissecting the industry a bit more, Cowen said it anticipates health and wellness to lead the market, with nutraceuticals earning $6.4 billion and topicals generating another $4 million. Smaller markets like food, beverages, beauty and vapor are all expected to have sales between $1 billion and $2.5 billion in the same time frame, in the sell-side firm's view.

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