'Cannabis beauty' is becoming a real category as Sephora, others promote CBD-infused products

  • Beauty products laced with CBD, a non-psychoactive compound found in hemp and marijuana, continue to find their way onto shelves in major retailers.
  • Analysts at Piper Jaffray are seeing further growth in this "beauty and the bong" industry, which will boost the overall CBD market that could potentially be worth $50 billion to $100 billion.
  • "We have seen a high level of interest in cannabis beauty from retailers over the past month based on our store checks and incremental launches. We expect further retailer developments in the coming months," says Erinn Murphy, Piper Jaffray's senior research analyst.
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Cannabis beauty has become so trendy that Wall Street analysts have started treating it as a standalone category.

As beauty products laced with CBD, a non-psychoactive compound found in hemp and marijuana, continue to find their way onto the shelves of retailers including Sephora, Barneys and Neiman Marcus, analysts at Piper Jaffray are seeing further growth in this "beauty and the bong" industry. The trend could help boost the overall CBD market, which Piper pegs at worth $50 billion to $100 billion on day.

"This week at Sephora, we noticed a curated section in-store for hemp-oriented products featuring brands that have dipped their toe into this space," Erinn Murphy, Piper Jaffray's senior research analyst, said in a note on Wednesday. "We have seen a high level of interest in cannabis beauty from retailers over the past month based on our store checks and incremental launches. We expect further retailer developments in the coming months."

Piper Jaffray lists Estee Lauder, e.l.f. Beauty and Ulta Beauty as related companies.

Only a month ago, Piper Jaffray had viewed CBD-infused beauty products as a subcategory under the natural beauty market, but the hype has convinced the firm to elevate it as a real category.

"Recall that we view the CBD beauty market as an extension of the broader natural & clean beauty movement that is taking hold within the industry. Google search trends suggest consumer interest in cannabis beauty has been picking up over the past year," Murphy said.

In addition to the curated section in Sephora, the analyst noted some department stores also jumped on the bandwagon.

Barneys announced last week that it will carry luxury cannabis accessories including a number of CBD beauty products in a Beverly Hills, California, location in March. Neiman Marcus also said it will begin carrying a selection of CBD beauty products online and in five stores.

"We continue to see established beauty brands experimenting with hemp seed oil-based products versus CBD products. We expect to see conglomerate brands become involved with CBD over time as regulation and efficacy become more clearly defined," Murphy said.