There’s been a significant amount of overinflation and hype surrounding the CBD industry in the UK. Has the sector begun to stagnate? What should the CBD sector’s next move be?
Over the last few years we’ve seen a CBD boom in the UK. This sector has undoubtedly played a massive role in beginning to normalise the use of cannabis for wellness purposes.
There has been a significant amount of investment with a variety of products and companies coming into the space. This has brought CBD into the mainstream and onto high street stores like Boots and Holland & Barrett.
But is the CBD industry all that it has been made out to be? Or has it reached its peak?
So far, there’s been a mixed bag of success in the UK industry. At one end of the spectrum we’ve got Love Hemp, originally one of the biggest players, which has just filed for administration – on the other end we’ve got companies like TRIP and Goodrays which are killing it on a marketing front, drawing in a lot of consumers, and being stocked in well known chains.
Seeing the success of TRIP, it seems like there is still a lot of growth potential for the CBD beverage industry. However, a number of established CBD companies are either plateauing or declining.
There are various factors for why this has happened – Novel Foods regulations have definitely contributed to this change with companies needing to be compliant. This has caused a lot of companies to cut marketing budgets due to the costs associated with the application process. As a result, some of the buzz surrounding the CBD sector has waned.
There seems to be a growing consensus that the growth potential of the industry is limited. So, what is the CBD industry’s next move and where can we expect it to evolve to?
I spoke to Robert Jappie, a regulatory lawyer specialising in cannabis about his perspective on the CBD industry and where it is heading. We did a deep dive into why we are seeing this plateau, what the blockers are and what some possible solutions are for the industry.
Acknowledging that the CBD industry is struggling, Robert comments: “There appears to be a consensus that the real growth potential is now in the medical cannabis industry. Although it’s had difficulties of its own, there is still so much room for growth when it comes to patient numbers. In the last year I have definitely felt a pivot toward medical cannabis in the CBD space.”
The biggest struggle for companies in the current medical cannabis industry is the small number of patients, not allowing a lot of these companies to meet their costs. And whilst patient numbers have been increasing, it has been a slow process. The solution? Generate a substantial amount of new patients. This is of course easier said than done, as many people in the industry will appreciate.
However, Robert Jappie has some creative insights into how the CBD and medical industries could form a ‘symbiotic’ relationship to sustain one another:
“My view is that one less person buying from the illicit market can only be a good thing. I think what we’ll see in the next year or so is companies starting to utilise innovative and aggressive methods of bringing new patients into the legal framework. Of course, it is of vital importance that existing patients are well looked after and receive high-quality products, but if we don’t find a way to increase patient numbers then it’s entirely possible the legal medical cannabis sector in the UK could cease to exist.
For this reason, CBD companies may have an advantage having engaged with large numbers of wellness consumers for a period of years, allowing for the opportunity to convert them into patients.”
Robert presented an interesting argument for how the cohort of CBD consumers could be converted to medical cannabis patients. With CBD already operating on a much larger scale than the various medical cannabis clinics, this could help push up the number of patients accessing the medicine legally.
CBD companies also aren’t able to simply pivot into medical cannabis at the snap of their fingers – they wouldn’t be able to do this on their own and will need help. This is where collaboration with the existing industry comes in. One possibility is for CBD Companies to work with existing clinics that are prescribing cannabis medicines to patients.
“I think that a lot of medical cannabis companies wish they had a customer database like some of the CBD companies do. These customers have already shown an interest in ‘alternative’ treatments, and may be interested in medical cannabis, with a substantial percentage likely meeting the prescription criteria.
CBD products are not cheap – some consumers will be spending upwards of £150 a month on these products, meaning they can perhaps afford to pay for a medical cannabis prescription. It should be easier to attract someone into this space, who is already spending a similar amount per month on such products.”
From speaking to Robert, it seems like we’re on the cusp of seeing some exciting entries and collaborations within the medical cannabis market. Over four years on from legalisation, we’re beginning to see groups think a little more about what the future of medical cannabis looks like and how to creatively move patients from the illicit market into the legal one.
Seeing as both the medical and CBD markets are struggling to grow, partnerships which play to both sectors’ strengths is necessary. A stronger industry and can serve more patients, more efficiently and make sure that people in the UK have the best treatment options available. We must start looking to models that satisfy everyone, making businesses and patients happier.
Katya Kowalski is Head of Operations at Volteface. Follow her on Twitter @KowalskiKatya.