Can the CBD industry avoid the ‘bust’ part of the boom cycle?

I have written in this space before about the CBD rush to market. It seems to me that the claims and quality control are all over the place, which is not a good sign. On the positive side, it may merely be indicative of the market’s immaturity.

Attorney Todd Harrison, of the law firm Venable, told NutraIngredients-USA earlier this year that he believes that the CBD wave may be about to reach its crest​​. Popular new ingredients often have a 3-to 5-year run in the sun, Harrison believes, and by his reckoning we’re in year four of the CBD boom.

CBD being sold everywhere

One thing that makes me wonder about the health of the market is the vast number of places where CBD is now being sold. Here in Colorado, at my neighborhood gas station, it is the prime retail focus (behind the gasoline itself, that is). There are now signs for CBD all over the place—at the pumps, on the side of the building, and inside the store itself.

Another example a friend posted on social media was a defunct video storefront being converted into a CBD emporium. Out with the old and in with the new.

One of my favorite examples of this trend was an outdoor Christmas market I wandered through during the holidays in downtown Denver. Roughly a quarter of the booths were either devoted solely to CBD products or prominently featured them alongside the jams, jellies, scarves and mittens.

Manufacturers are of course free to sell their wares anywhere they want. But what message does this send? I’m not against the convenience store channel per se, but it has never been the first avenue for the merchandising of high quality, carefully thought out products. It’s about packaging, placement and margins.

Do you go to a convenience store to get the highest quality pastries? The finest sausages? The ultimate in a gourmet cup of coffee? The obvious answer is no. You buy stuff there because it’s there.

Is this where the CBD industry wants to make its mark? In a retail venue whose main attribute is that it gets you back into your car the fastest?

Industry founded on real benefits

This is not how the dietary supplement industry itself grew up. According to Roy Upton, founder and executive director of the American Herbal Pharmacopoeia, the industry in this country can trace its roots to the activities of a naturopath named Benedict Lust, a German immigrant who settled in New York State. Lust started importing juicers and bulk herbs—things he couldn’t find on the US market.

Lust passed away in 1945. His legacy of commercial herbalism was later picked up by the counterculture movement, Upton said.

“You had the back to nature movement in the 1960s. The early co-ops always had bulk herb sections,”​ he told NutraIngredients-USA.

Then came the advent of the Dietary Supplement Health and Education Act (DSHEA), the law that created the regulatory framework with which we’re all familiar. Once the category had a solid regulatory underpinning, there was a flow of new investment money in the mid to late 1990s. But that activity was the tittering of little songbirds compared to the current roar of CBDs. Everyone, it seems, is trying to get into the game.

Upton cautioned that it’s not fair to assume that high quality products cannot be sold through the convenience store channel. Various vitamin and energy products have sold in those venues for years. But they didn’t get their start there.

Maturing industry? Or still a boom town?

I’ll be attending the NoCo Hemp Expo in Denver today (Friday, March 29). The organizers bill this as the sixth edition of this event, and it will be the first after the passage of the most recent Farm Bill which many in the industry have assumed—rightly or wrongly—to have opened the flood gates for CBD. 

It will be interesting to see what foot the industry is putting forward. Will there be a continued gold rush mentality, in which the primary goal is to stake your claim? Or will there be a maturing industry on display, one which is about providing products with real benefits for consumers? Look in this space in the coming days to find out.