The Challenges and Future of the CBD Industry
The Early Challenges
CBD, or cannabidiol, was made legal in the USA after the US Farm Bill was signed into law on December 20, 2018. (1) Since then, this industry has faced many challenges in banking, quality control, and FDA regulation.
From the beginning, the banking industry didn’t seem to get the memo that CBD was legal. Many merchant accounts refused to process CBD purchases and still do. As a CBD merchant myself, I was kicked off PayPal and Shopify just before Black Friday 2019 and was forced to rebuild my entire brand site in BigCommerce to be able to sell online again.
Another problem facing the industry is people with deep pockets and little knowledge of CBD or manufacturing who have poured money into the industry, launching brands quickly through major marketing campaigns. Some achieved their notoriety by selling CBD before the Farm Bill had been passed, and thus far, those who broke the law seem to be faring much better than those of us who followed it to the letter. Since there is no requirement for testing, only guidance for “Good Manufacturing Practices” per 21 CFR 1910, most products aren’t blended properly and vary wildly in their CBD content.
We as an industry are also up against the FDA. Within 2 months of legalization, the FDA issued statements banning CBD in food and beverages for humans or pets, with several other states following suit (California included). It was quite the sight to see dispensaries raided of their CBD edibles and beverages while the THC products remained legally on the shelves. Currently, they remain illegal until the FDA can issue guidance on the safety and efficacy of CBD in food and beverages, which can only be determined by continued clinical research, and thus, we still wait for an answer. (3)
The Future of CBD
Even with all of our early challenges, the CBD industry has a bright future. The truth is, we do need to be regulated by the FDA, somewhere between supplements and cannabis. We need to regulate the industry and require a minimum of good manufacturing practices, audits of raw materials COAs (including a US hemp grower certificate and 3rd party testing for pesticides, residual solvents, heavy metals, cannabinoids, micro, etc.) as well as finished product testing for cannabinoids. This allows a safer raw material and truth in labeling for cannabinoid concentration. Our customers deserve to know what they are getting, and growers and manufacturers should be held accountable to these standards. As with cannabis, there will likely be more stringent requirements on food and beverages with maximum limits of CBD per item and bag, as well as packaging and labeling requirements. These amounts should be determined by accurate research on CBD and not arbitrarily chosen. We hold out hope that we get there in 2021, and thus raise the bar for quality in CBD products. Science will tell us who has the best products, not marketing.
Products will likely start to diversify into more and more “effects”, as research becomes more available on CBD for PTSD, rheumatoid arthritis, or MS, among others. Creating targeted formulations, with the use of other cannabinoid isolates (CBG, CBN, CBC), cannabis-derived terpenes, and essential oils will allow more specific relief of certain conditions.
There will still be the challenge of how the FDA handles these claims. Right now, with few clinical trials, and none to date for full-spectrum distillate, the FDA won’t allow any claims on CBD formulations made on the manufacturing side. In fact, many CBD companies have received Warning Letters from the FDA in 2019 and 2020 for this reason. (4) Only pharmaceutical companies who take isolated CBD products through Stage III Clinical Trials can make claims currently. It will be interesting to see how both sides of the industry fare and how the FDA will proceed to allow the CBD industry to grow while regulating the safety and efficacy of the products created.
Sources:
1. https://www.congress.gov/bill/115th-congress/house-bill/2/text