It’s clear that the cannabis industry has exploded rapidly since 2018 when hemp was made federally legal. The US Farm Bill was passed by congress and opened up the possibility for a whole new industry to emerge.
CBD will grow to $7.8 billion in 2022, from production to manufacturing, sales to sales, and everything in between.
The ‘green rush’, much like the Wild West’s gold rush, has settled. Certain brands are gaining the loyalty of consumers. The demographics are changing. Sales are shifting from in-store retailers to the internet.
What does the industry look now and in the future four years after its creation? These are our predictions for 2022’s CBD industry.
1. Target Audiences will shift (and so will your strategy)
What image do you have of the average CBD user? Is it a mustachioed hipster in a man bun and a pair of capris? Are they a fitness enthusiast who is interested in CBD’s health benefits? Is it a dad of 50 who heard about CBD from the radio?
You might be surprised at the demographics of the average CBD user. 31% of CBD users are between 35 and 49 years old. 22 percent are between the ages 52 and 64, while 22% are between 35 and 44. You didn’t expect this? You might need to rethink your sales and marketing strategy. Although consumer preferences have changed quite a lot since the COVID-19 pandemics, different groups still expect different things from their shopping experience.
66% of Gen Z buyers will use social media for product research before buying it. Millennial buyers, however, are more independent than Generation X and baby boomer buyers in their journey to purchase. Before making any purchase, they do extensive research.
These are all important considerations to consider when creating a marketing plan for your CBD business. You must pay attention to your customers and tailor your marketing strategy to meet their needs.
2. Legalize it
THC isomers like Delta 8 THC and Delta 10 THC were popular in 2021. These products were widely adopted by consumers but faced severe legal challenges. Some states have recently changed their definitions of THC to include all THCs. Consumable hemp products must contain less than.3% THC.
The back and forth between cities, states and federal governments will continue into 2022 as they examine CBD, hemp and marijuana laws. Although the overall trend is positive, it’s impossible to predict what each state will do in the face opposition.
3. Payment Processing Challenges Continue
Many people in the CBD industry will tell you it can be difficult to find a reliable payment processor partner. CBD is a high-risk industry, and it is grouped with cryptocurrencies as well as online gambling. Many payment processors won’t work with CBD businesses for transactions online or in-store. These processors often charge high fees and are difficult to integrate with. They also use large contracts to limit liability.
Many payment processors will remain out of the cannabis industry as legal battles continue for CBD, hemp and marijuana status. Despite being high-risk, merchants have access to many payment processors. BigCommerce has partnered with many payment processors like Pinwheel and Inovio to assist our CBD customers in growing. You can learn more about CBD payment processing by visiting our deep dive .
4. Marketers will find new ways to adapt
Merchants don’t have to worry about payment processing alone. Since legalization, marketing and advertising have been a major challenge. Google’s Paid SEO Policies was updated in 2021 to include CBD (Cannabidiol) as an Unapproved Substance Search Terms. To penalize accounts who violate their policies, Google also published a Three Strikes rule. Accounts that violate the policy more than three times in a 90-day period will be removed from Google’s support site.
Some may be confused by this trend and wonder “How can I reach my audience?” Others are coming up with unique ways to get their messages in front of potential customers. These verticals are seeing more popularity for brand ambassadors, affiliate marketing, and influencers. Some merchants even turn to traditional advertising avenues such as radio.
Our friends from CBDistillery joined us last year to discuss their strategy and how they manage to circumvent some of the stricter rules in digital marketing and advertising. You can watch the talk.
5. Increased competition
Although 2020 was a difficult year for CBD, the businesses that made it through will see better pastures in the future. However, those pastures will not come without their fair share challenges. National brands will soon be able to create and sell their own CBD products as CBD becomes more accepted. Already, Sephora has started selling CBD products. Urban Outfitters will follow their lead in 2022.
What does this mean for CBD retailers of small and medium size? To be able to compete with the rest, you’ll need to be the best. BigCommerce is a great partner to help you succeed. The ecommerce platform allows sellers the ability to quickly adapt their stores to market changes. It includes SEO and marketing tools that will help you make sure your marketing dollars go where they are needed. We also partner with many payment processors to make sure your checkout process is smooth and simple.
Are you ready to grow your CBD business in 2022? Our comprehensive guide for growing your CBD business. Learn about marketing, payment processing, and other topics.