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Cowen's Pascarelli: CBD Market Shows 'Encouraging Signs'

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Cowen's Pascarelli: CBD Market Shows 'Encouraging Signs'
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CBD could represent a $16-billion opportunity in the U.S. by 2025, Cowen analyst Gerald Pascarelli said Thursday at the Cannabis World Congress & Business Expo in New York City. 

What Happened

Cowen is bullish on the market due to the exponential growth in consumer interest, the analyst said.

He cited pointed upticks in Google (NASDAQ: GOOGL) CBD trends since 2017, including the substance itself and more specific products like edibles, creams and oils.

Growth continued with Amazon (NASDAQ: AMZN) in 2018, when it began selling MCT oil, with SKUs now totaling over 20,000, the analyst said. 

Cowen was surprised when 7 percent of its polled consumers said they use CBD as a supplement, Pascarelli said.  

"Looking at the incidence by age cohort, consumers under the age of 35, that incidence rate is above 9 percent," the analyst said said. Comparatively, 3-4 percent of the same polled group reported using Juul e-cigarettes.

Cowen also found that tinctures were the most popular consumption method among those polled, with topicals and capsules trailing behind.

Consumers over 55 were highly inclined to use tinctures, Pascaraelli said, adding that there's a two-thirds chance of consumers 55 and up using tinctures as part of their delivery mechanism.

Beverages have a 20-percent form factor use, he said. 

"Beverages are much more nascent category relative to your traditional nutritional factors. So that was very interesting." 

What’s Next

Pascarelli ended his keynote address by focusing on the growth of the industry from pharmacies like CVS Health Corp (NYSE: CVS) and Walgreens into stores ranging from Bed, Bath and Beyond Inc (NASDAQ: BBBY) to Abercrombie & Fitch Co (NYSE: ANF).

"It seems every couple of days there's a new big box retailer adding CBD to their repertoire of products that they're going to offer, which is an encouraging sign," the analyst said. 

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