Where is the UK CBD Industry heading?
WHERE IS THE UKCBD INDUSTRY
Recent years have seen a rush of excitement about the UK CBD Industry, with some commentators predicting it to be a multi-billion pound industry within the next decade. This is backed by the increasing involvement of North American cannabis companies into the UK, in a bid to gain entry to this potentially lucrative market.
The cannabis consultancy firm Prohibition Partners have projected a market forecast of £16.5bn in the next ten years,with managing director Daragh Anglim stating that he expects the UK market to open up to recreational use within three to five years.Their recent report estimates that black market cannabis comprises £8bn a year in the UK, but this could more than double if legalisation goes ahead.
More conservatively,albeit from looking at CBD alone, market research commissioned by the Centre for Medicinal Cannabis (CMC) estimates that the CBD market is currently one of the fastest growing wellbeing product categories in the UK. It’s currently valued at £300m ayearbut at the current rate,they claim it will be worth almost £1bn per year by the year 2025 -the equivalent of the entire UK herbal supplement market today.This is a 45% growth rate,which compares to soft drinks at just 3%, and tobacco at a mere 1.2%.
With these astronomical figures being floated, it’s little wonder that established cannabis businesses are lookingto make inroads to thepotentially fertile market in the UK. Since November 2018, five major Canadian companies have started importing cannabis into theUK,while Sundial Growers recently announced the acquisition of Lincolnshire-based plant, herb and flower producer,Bridtge Farm Group,with plans to produce and sell
high-quality CBD products.Not only this, Ontario’s Canopy Growth, the world’s largest publicly traded cannabis producer, has partnered with the British research institution the Beckley Foundation to develop medical cannabis. In May it paid £43m for a stake in the UK skincare brand This Works.
There’s also thearrival of ‘superpremium’ cannabis brand Ignite, headed by social media celebrity Dan Bilzerian. Mr Bilzerian said that he expected Ignite, currently valued at around £90m, to be abillion dollar business by the end of the year,with the UK (with an initial focusonCBD items only) a key destination for his business.
Of course,UK based companies haven’t been slow to act. Major high street names such as Boots and Holland &Barrett both stockCBD products,with Boots selling everything from CBD oral spray to lipbalm, while Holland &Barrett launched a CBD skincarerangeinFebruary2019, alongside
over 100 other CBD products.According to data from the Centre for Medical Cannabis, two surveys conductedinMay and June 2019 by Dynata and YouGov estimate that between 8-11% of UK adults respectively,or 4-6 million people, have tried CBD. It’s clear that CBD products appearing on the high street,and in doing so becoming ‘normalised’,has played a major rolein changing the perception of CBD in the UK intoa legitimate tool,rather than a substance linked to drug use and crime.
When it comes to the UK CBD industry, the CMC and YouGovdiscoveredthat the sizeofthe UK CBD market is between three to six times larger than previous estimates. This CMC research estimates that 1.3million consumers are spending over £300m per year on CBD products. This suggests the CBD market is larger than the total UK Vitamin D(£145m) and Vitamin C markets (£119m) combined.
There’s also the point that legalising cannabis could boost other areas of the economy. According to Nielsen data out in June 2019, marijuana use in the US has led to a boost in sales for the snacking industry. Sales in states where cannabis is legal had a 7.2 per cent compound annual growth rate, compared with 6 per cent in states where it is not yet legalised.
In their recent report, Prohibition Partners made the point that London was becoming a hub for market research and cannabis related finance groups such as the cannabis investment arm of Canaccord and European Cannabis Holdings. Alongside this, the UK is playing host to a number of major cannabis conferences, many of which, such as Cannabis Europa, are dominated by big business, often from North America and Canada.
With so many places around the world relaxing the law when it comes to this valuable substance it seems inevitable that the UK will soon follow. There are regular articles in the British national press about the benefits of cannabis, whereas just a few years previously this would have been unthinkable.
As Daragh Anglim of Prohibition Partners said recently, “Establishment of a functioning medical cannabis market would help destigmatise it with a view to having a rational debate around recreational cannabis in a couple of years time.”
And in the CMC’s recent report, it said the challenge for the legal cannabis industry is "not to be undermined down the road by the bad players that do exist in the fast-growing and disruptive CBD market". It wants firms to self regulate, urging them to be socially responsible.
There are concerns is that the dominance of non-UK parties could lead to big business taking a stranglehold over the blossoming UK cannabis industry. Activists such as Greg de Hoedt feel this could lead to a focus on profit above all else, out-muscling the smaller, artisan companies that are currently thriving in the UK. No matter which way the government decide to treat cannabis in the UK, whether heavily-regulated or with a light touch, it’s clear that CBD and medical cannabis will soon take an enormous role in the UK economy.
Written By Ian Jones