The U.S. retail market for CBD is projected to swell from an estimated $2 billion last year to $16 billion by 2025, according to a report by equity analysts at Cowen.
A key factor in that forecast is the growing variety of CBD products that companies are bringing to market, such as drinks, capsules, gummies, topical lotions and tinctures, which are liquid extracts.
The number of hemp oil products offered by Amazon has roughly quadrupled in the past six years to more than 20,000, for example.
Nutraceuticals — foods that include additives with a purported health benefit — along with topical lotions and beverages will drive much of the CBD growth, Cowen says.
Tinctures are currently the most popular CBD product, making up around 43 percent of the market, according to a Cowen consumer survey in January. Beverages account for about 20 percent.
CBD products are sold online and in specialty shops across the U.S., though cannabis companies must navigate various state and federal limitations.
Products infused with CBD derived from marijuana can be legally purchased in the 10 states that allow cannabis for medicinal and recreational use. The sale of products with CBD derived from hemp is legal in most other states.
Proponents say CBD can relieve pain and anxiety, along with other health benefits. Other industry watchers say more research is needed.
Cowen analyst Vivien Azer estimates that CBD use could grow to 10 percent of U.S. adults, or about 25 million consumers, by 2025.
While many cannabis companies are involved in the CBD products market, Cowen has "Outperform" ratings on the stocks of three: Canopy Growth (WEED), Tilray (TLRY) and Turning Point Brands (TPB).
Tilray signed a $100 million deal with Budweiser maker Anheuser-Busch InBev last year to research cannabis-infused drinks for sale in Canada, which legalized recreational adult marijuana use in October.
Canopy Growth also made a splash last year after wine, liquor and beer company Constellation Brands announced a $4 billion investment in the Canadian cannabis producer.
Shares in Canopy Growth are up about 68 percent so far this year, while Tilray is down 1.1 percent. Turning Point shares are up 79 percent.