Delta-8 THC generated $2 billion in revenue in 2 years, report finds

0
6

Delta-8 THC products have exploded in popularity over the past two years, resulting in over $2 billion in sales as an alternative to traditional marijuana.

According to a recent report from the cannabis analytics company Brightfield Group, the increasing popularity of delta-8 THC products is causing other cannabis industries to take notice and take action.

Delta-8 THC is a psychoactive cannabinoid derived from hemp that has been reported to have similar but milder effects than traditional delta-9 THC in marijuana. Delta-8 THC is found naturally in small amounts, but the products currently on the market are made by chemically converting CBD into the Delta-8 molecule.

Delta-8 THC products surfaced after the 2018 Farm Bill, which legalized hemp cultivation with THC levels less than 0.3% at the federal level. However, legalization led companies to produce a wide variety of products containing minor non-psychoactive cannabinoids, such as CBD and CBG, as well as other cannabinoids that have milder psychoactive effects than THC, which are not classified as illegal because they are derived from hemp. .

However, concerns have been raised about the safety of Delta-8 THC and similar products, as the conversion of CBD molecules into THC molecules requires a skilled chemist to ensure safety, and improper or imprecise techniques can lead to high levels of impurities in the final product. . In addition, the health effects of consuming these impurities are currently unknown.

Nevertheless, the report finds significant overlap among users of CBD, cannabis, Delta-8, and other newly developed cannabinoid products.

The report indicates that 35% of CBD users have purchased psychoactive hemp-derived products in the past six months. In addition, nearly a quarter of marijuana users in states where marijuana is legal show interest in purchasing delta-8 products in the future. Because consumers are inclined to experiment with new products, a shift to delta-8 may occur in due course, especially if the cost difference remains favourable.

In states where marijuana is still illegal, delta-8 has emerged as a cost-effective and accessible way to experience psychoactive cannabis. It can be obtained legally or through mail order, giving consumers a less risky (legal) alternative to obtaining marijuana illegally.

That was also confirmed by a study published last year, which found that public interest in delta-8-THC increased rapidly in 2020 and 2021 and was exceptionally high in those US states that have not decriminalized or legalized recreational cannabis.

However, the report notes that the increasing popularity of delta-8 in places where marijuana is still illegal could negatively impact support for legalization.

“As Delta-8 continues to gain popularity and gain a foothold in areas where Delta-9 is restricted, legalization measures could lead to less popular support and grassroots fundraising, hindering progress towards full legalization in the US is being delayed,” the report said.

Plus, it seems like there’s already a significant amount of confusion between delta-8 and delta-9, marijuana’s main compound, even in places where that’s legal.

The report notes that retailers selling delta-8 products present themselves as pharmacies and fail to clarify that the compound is derived from hemp.

The report’s authors have observed some changes in consumer behavior in the CBD market, which may provide insight into how the Delta-8 market is impacting the industry.

According to Brightfield Group, there has been a decline in CBD online purchases since peaking in November 2020, with a sharp drop in online sales from November 2021 (reportedly down 53% from Q4 2021 to Q3 2022).

During this period of decline, there has been a 42% increase in purchases from vape and smoke shops, giving consumers more opportunities to be exposed to hemp-derived THC products. Since 64% of CBD users report using marijuana at least occasionally, these consumers may be tempted to switch to THC, especially in areas where adult-use THC is not legal.

The report suggests some options marijuana and CBD companies can take to cope with the rising popularity of delta-8 THC products.

To compete with the delta-8 THC gray market, companies in the marijuana and CBD industries should focus on promoting the importance of safety and testing of hemp-derived psychoactive products. They should highlight the lack of oversight and testing for delta-8 THC products, which could make them potentially more dangerous than naturally derived products, such as CBD.

An alternative approach, according to the report, is for marijuana and CBD companies to “diversify” in the delta-8 THC market by including Delta-8 and other similar products in their product offerings.

“Cannabis companies should consider investing in launching hemp-derived cannabinoids in non-legal THC markets to gain regional brand exposure before full legalization. While this may cause confusion later on, it is a way to seed the brand while resolving regulatory and legal issues,” the report reads.

Many companies operating in this field choose to overlook delta-8 THC products with the expectation that they will soon disappear or be banned by the 2023 Farm Bill or similar state laws.

The legal status of Delta-8 and similar compounds is uncertain, and the best course of action for a company, according to the report, could be to avoid interfering.

While the legal status of delta-8 THC is still uncertain, some states have taken action and attempted to ban them.

The Food and Drug Administration (FDA) reported 104 cases of side effects related to delta-8 THC products between December 2020 and February 2022. In May, they sent warning letters to five companies selling these products, citing illegal marketing and unapproved medical treatments. circumstances, as well as drug misbranding and the addition of delta-8 THC in food.

It is uncertain what the future holds for products such as delta-8 THC and other hemp-derived cannabinoids with psychoactive effects, as the forthcoming Farm Bill, which will be written this year and take effect in 2024, has the potential to bring major influence the current gray market. The Farm Bill could regulate this unregulated market, ban these products completely, or take no action at all. It remains to be seen which way the bill will go.