Cannabidiol Oil – or CBD oil as it is commonly called – is hot right now.
People are buying it, selling it and investing in it.
CBD oil is made from hemp plants – whose cultivation was legalized under the 2018 federal farm bill, making the development of CBD-based products easier and less expensive.
The oil is touted as having many curative properties, from relieving anxiety, a claim most people familiar with CBD oil accept as likely true, to more far-reaching claims that it can be used to treat everything from the common cold to cancer. There are even CBD oil-based products for pets.
Overall, the U.S. CBD market could represent a $16 billion opportunity by 2025, according to a recent report by Cowen Inc., a New York-based investment firm.
However, skeptics of the oil’s benefits, and even some of its strongest supporters, sing a familiar refrain when it comes to investing in the CBD boom: “buyer beware.”
CBD oil-based products have been on the market since 2014 through what Geoff Whaling of the National Hemp Association described as a “narrow interpretation” of that year’s federal farm bill, which allowed for limited growing of hemp for experimental testing. The 2018 bill cleared the way for wider farming of hemp, and the use of CBD products made commercial sales more appealing to more traditional retailers.
The products – including vapes, salves, capsules, tinctures and gummies – can now be found on the shelves at a wide variety of retailers, from health food stores to truck stops. CBD shops are even opening in malls around the nation, while mainstream retailers like Abercrombie & Fitch and footwear chain DSW have started selling CBD products.
The Altoona-based Sheetz chain of convenience stores is among them. It has added CBD products to 140 of its 580 locations, including stores in Bethlehem, Harrisburg and York.
“We’re always listening to our customers,” said Brad Campbell, category manager for Sheetz. “As it becomes increasingly popular, we wanted to provide this.”
Campbell said that while the company had been eyeing the sale of CBD products for some time, the changes in the 2018 farm bill helped to legitimize the product.
“I’m not sure getting into this is something we would have considered otherwise,” he said.
Because the market is so relatively new and growing so quickly, sales have been likened to the Wild West, with little regulation or information on how CBD oil products are sold, claims about their benefits and the actual amount of CBD oil in products on the shelves.
Not all products on the market do or contain what they say.
Whaling noted that in 2015 the Food and Drug Administration tested a number of CBD oil products and found that 34 out of 38 contained less CBD oil than they claimed, with many containing little to no CBD oil at all.
Dr. Bruce Nicholson, a pain-management specialist with the Lehigh Valley Health Network, who was involved in helping to craft Pennsylvania’s medical marijuana bill, said similar tests conducted more recently by the University of Pennsylvania and John Hopkins University found that CBD levels in the products they tested were “all over the board.”
Needless to say, he has his reservations about the proliferations of CBD oil products and the claims made on their behalf.
“With something that you get at a trucks stop, you might as well put your money in the lottery,” Nicholson said. “Your odds of a good outcome are about the same.”
Many retailers tend to agree.
Sheetz’s Campbell said the company reviewed a number of CBD-oil products before choosing a handful of brands that the company felt were “strong” while still providing a variety of options.
Tom Crowe, who owns Shaffer’s Health Center in the Allentown Farmers Market, said he has tried a number of brands for his own chronic pain with mixed results.
“There’s so many companies out there that sell it, but 70 to 80 percent of them you’d want to throw in the trash,” he said.
Currently, Crowe said he uses and carries a line of CBD oil products that has greatly relieved his own back and knee pain and won positive feedback from his customers.
He said anyone looking to try CBD oil products should talk to someone with experience rather than just try something they find on a shelf. He notes CBD oil products are on the expensive side. His line ranges in price from $18 for a small bottle of oil to hundreds of dollars for a larger, stronger supply.
Generally, his customers tell him they’re using CBD products for joint pain, inflammation and anxiety. Many have been happy with the results, judging by the repeat sales.
“There’s been a tremendous increase in business,” he said.
Not enough testing
Nicholson’s biggest concern is the lack of testing that has been conducted on CBD-based products, noting that only one actual drug, used to treat epilepsy, has been approved by the FDA.
Everything else he said is mostly speculation.
“There’s a wide spectrum of claims, all of them unsubstantiated,” he said.
Nonetheless, he doesn’t believe the claims lack merit. He said a number of pre-clinical studies in animals have shown CBD oil to be helpful for treating inflammation, some types of pain and anxiety.
He said, anecdotally, he’s seen CBD oil products work on people as effectively as some prescription anti-anxiety medication. He is looking for approval to begin a study into the use of CBD oil.
“The problem is we really don’t understand it. We don’t know how it works,” he said.
He said the FDA has already gone after a number of companies for making false or unsubstantiated claims and is keeping a close eye on the industry.
For Whaling, who is an investor in the hemp industry as well as chairman of the National Hemp Association, he said he has a concern about the “money grab” underway in the CBD oil market.
“It is a money maker right now… but there are reputations at stake,” he said. “It’s a little unnerving to me that there’s so much unknown. People don’t know what they’re selling.”
His fear as an investor is that there is such a rush on CBD oil without proven benefit, the hemp industry will get a bad reputation even as it is just getting off the ground.
People looking to cash in on the CBD oil craze and invest in one of the growing number of CBD oil-producing companies should proceed with caution, said Nelson.
He said some companies will likely succeed, but he cautions that most of the publicly traded companies – the majority of which are being traded on the Canadian stock exchange – are still operating at a deficit.
He said investing in a CBD oil company now would be like investing in a tech startup during the late 1990s dot-com bubble.
“There are a lot of opportunities out there, but there a lot of disasters waiting to happen,” he said. “Right now you can’t pick which ones those will be.”