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According to a recent survey almost 66% of hemp-derived CBD sales in 2020 were online. You might want to chalk that up to the pandemic and believe the number will self-correct when it’s over, but there’s something to consider first – Amazon’s anticipated move into the lucrative CBD market.
For the moment, the only place the e-commerce giant is selling CBD is in the UK. Where it’s honing it’s online game by running a pilot program using hand-picked large cap firms who are mandated by Amazon to sell to UK customers only.
However, the betting has always been that when federal cannabis prohibition ends in the US that Amazon would enter their home market. And sure enough, a little-noticed Yahoo report last month suggests they’re laying the groundwork to do just that. CBD Life Sciences, a publicly traded pharmaceutical co. headquartered in Nevada, announced it was finalizing an agreement with Amazon to distribute its products:
The products we plan to distribute on Amazon focus more on the Health & Wellness side of things which would be our top selling Pain Relief Cream along with Anxiety and Sleep Tinctures.
Amazon is going to be greatly beneficial to CBD Life Sciences Inc … we expect to gain explosive revenue in the upcoming months, and we couldn’t be more excited to get the ball rolling!
Their expected “explosive revenue growth” will turn on two unlocking events: the much-anticipated legalization of cannabis in both the United States and Mexico. Both seem assured, likely this year, Mexico especially, and it will give rise to the largest free trade zone in legal cannabis in the world – involving the US, Mexico, and Canada (who went legal in 2018).
But Amazon’s involvement in the CBD space won’t stop with CBD Life Sciences. The market research firm Nielsen Global Connect, who accurately predicted Amazon’s move this past December, foresee even more developments:
With respect to Amazon, we’d expect that they will turn to a few major reputable manufacturers …
Depending on the success of this development, we could also see Amazon release their own Amazon private label brand, or potentially purchase the sole rights to one of the brands they partnered with previously.
There’s more. The UK website BusinessCann offered this sobering perspective on what Amazon’s up to:
The arrival of Amazon can not be understated and demonstrates what many in the industry have been saying for some time.
… Once the regulators are able to establish a clear way forward for the making and selling of CBD products the major brands will enter the market.
It is therefore not surprising that the companies selected by Amazon for the pilot include the UK arm of German pharmaceutical giant STADA and well-established UK health supplement business Healthspan.
The UK CBD market is said to be worth over £350m, and estimates of the size of the global CBD market over the coming years run into many, many billions.
So where does it go from here?
A few years ago a monopoly law expert wrote an eye-opening piece about Amazon with the headline: “Amazon Doesn’t Just Want to Dominate the Market—It Wants to Become the Market. The company is a radically new kind of monopoly with ambitions that dwarf those of earlier empires.”
Stay tuned.
