For nearly two weeks, most of the western world has been on lockdown. Companies are encouraging their employees to work from home, and brick-and-mortar businesses deemed “non-essential” have been forced to close their doors indefinitely. Almost no industry has been spared from this unprecedented economic fallout.
The CBD industry, however, is alive and well — at least for now.
CBD is Marketed as a Self-Care Product
During a global health crisis where people are prioritizing wellness, CBD’s market positioning as a self-care product is helpful.
According to a recent report by Brightfield Group, many people in quarantine are turning to self-care indulgences, like CBD, to keep themselves sane during this time. Some 53% of CBD consumers say they use the product to relieve symptoms of anxiety. With anxiety levels through the roof, expert and novice users alike are turning to CBD to get them through this tense period.
Most CBD Brands are Direct-to-Consumer
Over the past year, many CBD brands have worked hard to get on the shelves of mass retailers, pharmacies, and supermarkets; but the industry has traditionally flourished online. CBD consumers are used to ordering products directly from brands they know and trust.
Most CBD brands have a direct-to-consumer strategy, and e-commerce sales during the coronavirus crisis are spiking. Social distancing and quarantining has led many consumers to stock-up on essentials. For tens of millions of CBD users, this includes their go-to oils, tinctures, capsules, gummies, vapes, and topicals.
The question is whether customers are stockpiling, or if this is an indicator of future usage.
Smaller Brands May Be Pushed Out
The CBD industry was already suffering from overcrowding, with more than 4,000 brands in the market.
The top five CBD companies in 2019 were:
- CW Hemp (Charlotte’s Web)
- CV Sciences (Plus CBD Oil)
- Green Roads World
- Medical Marijuana Inc.
- Sentia Wellness
In an effort to appeal to their customers during this time, companies’ margins may be lowered as most are offering free shipping and adding discounts to their products.
Many brands are using this time to connect to their customers on a human level. The CEOs of Lord Jones, for example, published a personal letter on their website’s homepage:
This is an extremely stressful time for all of us. We’ve heard from so many of you. Thank you for your well-wishes and the many kind words and beautiful posts about the products we make. It means the world to us and fills us with purpose. We will continue to offer Lord Jones products at a 30% discount until we all pull out of this together. Please use code ESSENTIAL at check out.
Be well and stay safe,
Rob & Cindy
One impact that COVID-19 may have on the CBD industry is pushing out the smaller brands, and making the market less crowded moving forward.
Some CBD Brands are Making False Health Claims
Unfortunately, this is nothing new: the CBD industry was already something of a wild west, as it remains largely unregulated by the FDA. CBD’s popularity is far ahead of the evidence to support its efficacy; and marketing has always outpaced the science. While a range of research and evidence suggests that CBD has many potential health benefits, there are currently no FDA-approved CBD products, with the exception of Epidiolex, which is used to treat rare and severe forms of epilepsy. But that has not stopped brands from illegally advertising the unproven health benefits of CBD.
In July 2019, the FDA issued a warning letter to Curaleaf Inc. for claiming that their products can treat cancer, Alzheimer’s disease, opioid withdrawal, pain, pet anxiety, and other conditions. In November 2019, the FDA sent 15 warning letters to companies for illegally selling products containing CBD in ways that violate the Federal Food, Drug, and Cosmetic Act. These companies were named as: Koi CBD LLC, Pink Collections Inc., Noli Oil, Natural Native LLC, Whole Leaf Organics LLC, Infinite Product Company LLLP (Infinite CBD), Apex Hemp Oil LLC, Bella Rose Labs, Sunflora Inc., Healthy Hemp Strategies LLC (Curapure), Private I Salon LLC, Organix Industries Inc. (Plant Organix), Red Pill Medical Inc., Sabai Ventures Ltd., and Daddy Burnt LLC (Daddy Burnt Hemp Co.).
During the COVID-19 crisis, many brands have marketed products like CBD-infused hand sanitizers and face masks, falsely claiming its supposed anti-bacterial properties may prevent or cure the virus. Mona Lisa Healing, a Vancouver-based CBD company, sent out a marketing email with the claim that its products can “help your body defend against COVID-19 coronavirus.” A Portland CBD store was forced to take down a sign claiming that its products could boost immunity against COVID-19.
Continuing to Watch the Market
During this uniquely challenging time, the CBD industry has remained largely unscathed. CBD’s highly-touted wellness benefits and customers’ easy online access to products have kep most brands and suppliers afloat.
The FDA continues to crack down on companies making false health claims, including those that mislead customers into thinking CBD can cure or prevent COVID-19.
Of course, it will be interesting to watch new trends and consumer behaviors unfold in an industry that was reported to reach $2.1 billion in consumer sales this year alone. There is no way to know how long or how extensively the global economy will be impacted by the coronavirus pandemic. Only time will tell.