Marijuana Business Magazine September 2018

governing CBD are confusing, and the legal landscape is changing rapidly. Moreover, a boom in CBD products has fanned worries that the market may be overheating. Marijuana Business Magazine gath- ered the following tips and information to help companies capitalize on the current CBD boom. An Emerging Market Hemp-derived cannabinoids account for the lion’s share of the CBD market versus marijuana-derived CBD prod- ucts. According to cannabis research firm Brightfield Group, the hemp- derived CBD market in the United States will total nearly $600 million this year. Looking ahead, Brightfield projects the market will total more than $11 billion by 2020 and top $21 billion by 2022. Other market projections are nowhere near as bullish. Brightfield assumes passage of the 2018 Farm Bill will pave the way for the outright legali- zation of hemp extracts and an “explo- sion” in CBD product sales. CBD is now driving growth across the cannabis industry and giving companies opportunities that never existed for marijuana. CBD has moved cannabis beyond dispensaries and head shops and into coffee shops, pet stores and even hotel minibars. But how much growth can the CBD sector maintain? And how long will it be before regulation changes the market and potentially closes it to cannabis startups? For Priyanka and Pulak Sharma, there’s no end in sight for the CBD boom. Their company, Kazmira, located east of Denver, set up shop in 2017 to extract CBD from hemp – and quickly found more customers than it could handle. Kazmira started in a 55,000-square-foot facility. A year later, the Sharmas are planning to expand to 185,000 square feet. “It seemed like the perfect storm,” said Pulak Sharma, Kazmira’s co-CEO. Getting Started The booming CBD sector gener- ally attracts two types of investors: traditional entrepreneurs who may not oppose marijuana but aren’t keen to take on the plant’s legal risks, and longtime marijuana entrepreneurs who have discovered CBD’s medical promise and want to bring the compound’s health benefits to new audiences. The sector took off in 2014, when Congress allowed states to experiment with hemp production. That law didn’t say how states could experiment with hemp, freeing them to per- mit hemp cultivation for CBD-rich flower. ON THE CAP¬TAL¬Z¬NG CBD SURGE NEW KIND OF MEDICINE I n addition to less regulatory and tax baggage, some marijuana entrepreneurs are drawn to CBD’s medical potential and the oppor- tunity to diversify their businesses. “It’s truly the evolution of the cannabis industry,” said Tim Gordon, founder and president of Functional Remedies, a Boulder, Colorado, company that grows hemp for CBD extraction. Gordon owned a medical marijuana dispensary in Colorado but sold it in 2010. Two years later, Colorado voters approved hemp production, and Gordon planted hemp and started his CBD company the next year. Today, his Functional Remedies CBD products are sold online, through specialty retailers such as pet boutiques and chiropractic offices and even in traditional grocery stores. “In 2009 I started talking about the multiple swim lanes in the can- nabis market,” Gordon said. “And that’s what we’re seeing now. “What I’m seeing is folks who are longtime players in the medical marijuana market taking some of their other funds and allocating them to the hemp industry for CBD. “It’s truly an opportunity to lower costs and increase market share.” – Kristen Nichols CBD products from Functional Remedies are sold at a variety of stores. Photo courtesy of Functional Remedies September 2018 • Marijuana Business Magazine • 61