Understanding the CBD Market: Regulatory Status and Growth Potential

A derivative of the cannabis plant that’s known for its pain-relieving, anti-inflammatory properties, CBD oil has gained popularity over recent years and is now more widely available than ever. Unlike its more famous cousin, THC, CBD does not have psychoactive properties.

Though it won’t get you high, CBD does have an effect on a neurological level, in a manner which can be difficult for non-scientists to understand. A growing number of studies are adding to the general outlook that CBD in its pure form is mostly safe and effective. A lack of attention-grabbing safety concerns and an increasingly positive public perception of cannabis as a whole have created a CBD market which is full of growth potential. Many consumers and potential traders assume that CBD oil is perfectly legal to buy and sell.

In reality, different regulatory bodies still have widely varying opinions on its legality, from a controlled substance to a pure medication. However, having more reliable studies and lab test results available, the legal picture becomes clearer and more service providers get a better understanding of the CBD products.

Currently CBD merchants in the EU look set to access a much more accommodating framework for their rapidly-growing trade. So how do the rules change from country to country within Europe, and how does that affect the potential growth of the CBD market across the region?

CBD in the EU

Legislation regarding CBD sales in the European Union varies greatly between each member state. It is also often changing rapidly, as each country comes to a better understanding of what CBD is and how it works.

CBD oil is usually derived from industrial hemp, which, according to EU guidelines, must have a maximum THC level of 0.2.%. Many European countries have adopted this EU standard for hemp-derived products, which means that CBD oil containing a maximum of 0.2% THC can be considered legal in those countries.

Country by Country

Countries following the 0.2% THC limit include the UK, where the number of CBD users doubled between 2017 and 2018 from 125,000 to 250,000. In France, CBD oil with a 0.2% THC limit was confirmed as legal as recently as this year. Other countries on the 0.2% list include Hungary, Ireland, Greece, Bulgaria, Slovenia, Cyprus, Spain and Poland. In the Netherlands, industrial hemp may contain 0.2% THC, and CBD oil following this limit may be sold. However, it is illegal to create CBD oil from hemp, so many manufacturers send hemp abroad to be processed before it is returned to the country for legal sale. Is it thought by many this this legislation is likely to be relaxed in future, though it’s hard to say exactly when. 

In some countries, like Italy and Switzerland, permitted THC levels in CBD oil are even higher (0.6% and 1% respectively). Other countries, such as Sweden, have recently adopted a more hard-line position by classifying all CBD products as medicines which are only available on prescription. Slovakia, meanwhile, is the only EU member state which unequivocally defines CBD as illegal in any circumstances.

Worldwide Growth

A complicated legal landscape is not doing too much to hold back the CBD industry’s growth, however. According to the Hemp Business Journal, the global CBD market is likely to grow to an estimated $2.1 billion in consumer sales by 2020, which is a 700% increase from 2016. Other experts even predict the market could grow to $3 billion. Considering that the CBD market was worth around $202 million in 2017, this is a staggering leap.

Challenges Along the Road

Patchy, complex regulation is not the only issue faced by the rapidly-growing CBD market. Many new and potential CBD merchants are also running into unexpected difficulties processing payments. Banks are wary of offering their services because of a lack of knowledge about CBD and a tendency to associate it with cannabis. Many payment processing services have followed suit, and are quick to shut down the accounts of even EU-registered CBD merchants. The simple fact that their industry is poorly understood is causing many CBD merchants to be shut out, even without legal cause. 

Finding New Solutions

A deep understanding of the CBD market can eliminate the fear which a lack of knowledge has created. As the world comes to terms with it and learns more about it, CBD merchants are finding new and easier ways to do business, both domestically and across borders. Payment processing services may be lagging behind as a whole, but some service providers, as Paydoo have taken advantage of being able to board CBD merchants, mitigating most of the risks, associated with this industry. Paydoo’s well-balanced and flexible risk approach in combination with ongoing thorough legal compliance monitoring and the unique expertise allows to provide secure, reliable payment processing for EU-registered CBD merchants, enhancing their business growth.


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