Despite a smoky regulatory landscape for CBD and hemp-derived products, the power of this $4.7 billion-dollar market alone may mandate a clearer future.
Our expert CBD panel:
Zora De Grandpre, ND, Physician, Leafreport, Tel Aviv, Israel, www.leafreport.com
Alice Hirschel, PhD, Technical Service Director, ABITEC, Columbus, OH, www.abiteccorp.com
Collette Kakuk, Vice President of Global Marketing, HempRise, Jeffersonville, IN, https://hemprise.com
Justin Kats, CEO and Founder, Kats Botanicals, Hackensack, NJ, https://katsbotanicals.com
Will Kleidon, Founder and CEO, Ojai Energetics, Ojai, CA, https://ojaienergetics.com
Charlotte Mosher, Director of Sales and Marketing, Slumber CBN, Denver, CO, https://slumbercbn.com
Emily O’Brien, Founder, Mondo, Los Angeles, CA, www.mondomeds.com
Kelly Shea, Senior Vice President Government Affairs and Corporate Communications, Charlotte’s Web, Boulder, CO, www.charlottesweb.com
Chris Stubbs, Chief Science Officer, GenCanna, Winchester, KY, https://gencanna.com
Elan Sudberg, CEO, Alkemist Labs, Garden Grove, CA, www.alkemist.com
Jessica Wasserman, Attorney, Wasserman Rowe, Washington, D.C., https://wassermandc.squarespace.com
In a U.S. Food and Drug Administration (FDA) report to Congress in July, CBD product-sampling results showed some issues of inaccurate labeling, concentration underages and overages exceeding 20 percent, and the presence of THC above allowed limits. While some overage is unavoidable, the industry-at-large is working to improve quality benchmarks while trying to weed out some bad apples.
Since class-action lawyers abhor a vacuum, a lack of supplement regulations coupled with perceived industry vulnerability have naturally led to a spate of recent private-plaintiff lawsuits against CBD manufacturers.
The U.S. Trademark Trial and Appeals Board (TTAB) has joined the pile-on, too, having recently rejected a trademark application from a Colorado-based company for “hemp-oil extracts.”
While the company in question does have proprietary hemp extracts and a recently awarded utility patent for a new hemp variety, the U.S. Patent and Trademark Office denied this particular patent by asserting that CBD products are unlawful under the Controlled Substances Act—which is incorrect—and are prohibited because of the existing CBD drug applications/approvals.
Despite these challenges, and others, the CBD-and-hemp market has nonetheless been growing by leaps and bounds. In fact, recent data from the Brightfield Group projected that by year end, the “Total Hemp CBD” market will have hit $4.74 billion, and will rise by 29 percent, to $6.13 billion, in 2021.
To dig deeper into the issues surrounding the current CBD marketplace, Nutrition Industry Executive assembled a roundtable of industry experts who weighed in on a wide variety of timely questions and concerns.
NIE: In an FDA report to Congress in July, CBD product sampling study results showed some issues of inaccurate labeling, underages, overages and the presence of THC above allowed limits. What is your takeaway from this report?
Sudberg: Color me unsurprised to hear of discrepancies between label and actual contents. While the dietary supplement industry was once called the wild Wild West, the cannabis industry—with its astonishingly fast growth—has now earned that designation and plans to keep it for a while.
Due to its upbringing as “illegal,” the cannabis industry has struggled for legitimacy for nearly a decade and only recently have the big players found it legitimized enough to enter the market. Those are the organizations with enough at stake to challenge the “I guess that’s good enough” methodology and to require ISO 17025 accredited labs.
Until a single test method is required by the FDA—which may never happen—many “throw it against the wall and see if it sticks” sort of methods will be deployed, which will generate discrepancies between results. Unsuspecting and ignorant vendors will take whatever results they get and bring a product to market.
Kakuk: This report and others—ones that identify issues with inaccurate labeling of CBD products relative to actual contents—amplify the need for consumers to purchase from brands they can trust and magnify the need for brands to work with experienced ingredient providers who provide consistency, transparency and reliability to properly scale with brand growth.
Stubbs: My takeaway is that, as an industry, we have a lot of work to do. This is not a new problem when viewed from the broader lens of botanically derived ingredients included in supplements, foods and beverages; in fact, this issue has plagued supplements for decades. The inherent problems have been discussed ad nauseum: lack of stable genetics; lack of crop year to crop year predictability and unknown agronomic variables; and differences in processing techniques and analytical methods. In addition, the lack of cGMP (current good manufacturing practice) accredited facilities that have a holistic understanding of how to test, validate and substantiate finished goods are contributing factors to the findings discussed.
Shea: No surprise here. It’s why we have been fighting for regulations. It is critically essential for every CBD brand in the marketplace to conduct thorough third-party testing. With the swift growth in the hemp-derived CBD sector, consumers must be aware that not all companies follow the existing regulations for dietary supplements, including food-safety regulations, for the production of these products. In the absence of such regulations, there will continue to be a lack of standards and guaranteed third-party quality assurance testing.
Wasserman: The issue of inaccurate concentration levels on CBD labels is evident in the FDA report as well as a number of recent plaintiff actions against CBD companies alleging underages and overages of CBD concentration. Without an established safe concentration level or range established, it is not possible to know if these inaccuracies pose a safety risk. Neither this study nor others cite adverse event reports, even though the product has been on the market for more than five years.
The emerging global consensus is that 50 to 100 grams per day is safe. The approved dosage level for Epidiolex was around 1,200 mg/kg and the overages found by FDA were multiples below this level, so this is a “truth in advertising” issue more than a safety issue. The problem is yet another manifestation of an unregulated market. Without standards and enforcement, the problem will continue.
O’Brien: This is a cut-and-dried case of lack of regulations. Many people flocked to the CBD industry thinking it would be an easy way to make money—which it has been for some. Plus some companies do not go through rigorous R&D testing, since that is not a federal or even state requirement to sell. Nevertheless, companies that produce a legal 0.03 percent THC product, or lower, will show test results on their websites and clear chain of custody.
De Grandpre: Reputable companies will provide a complete analysis for every product and make that analysis available. The CBD market will need to be regulated and the problem is that these types of scams are likely to result in over-regulation. Uniform labeling standards and uniform standards of analysis should be a required minimum.
NIE: There has been a spate of recent private plaintiff lawsuits against CBD manufacturers. What main category weaknesses are these attorneys trying to exploit?
Stubbs: This seems to be an opportunistic grab in an environment with little regulatory definition that has resulted in producers, processors and brands potentially liable in many respects. There is undoubtedly a lack of definition in many regards, which leaves this kind of risk more likely than it should be.
However, when companies adhere to existing regulatory frameworks and subscribe to good stewardship through best practices, which already exist in the food, supplement and beverage industries, the risk is much lower. Accordingly, the possibility of dismissal of the suits is much higher when there is solid scientific and manufacturing footing beneath them.
Kats: It may not be the case that all of these lawsuits are frivolous or opportunistic. In other words, some CBD manufacturers very well may need to be held accountable for deceptive marketing practices, supplying mislabeled products or selling contaminated formulations.
That being said, the CBD market is still in its infancy relative to the health supplement market as a whole. Because of the longstanding association of CBD with THC-containing strains of cannabis, many attorneys are likely to attempt to exploit the deeply entrenched stigma surrounding this plant.
NIE: In a recent negative ruling, TTAB rejected a trademark application from a Colorado-based company for “hemp-oil extracts.” The U.S. Patent and Trademark Office denied the application by asserting that CBD products are unlawful under the Controlled Substances Act—which is incorrect—and are prohibited because of the existing CBD drug applications/approvals. What is going on here?
Sudberg: The patchwork of regulations, and designations for this category is a mess. So, what is it? Legal or not? This must be so frustrating for legitimate companies to pour tons of money into a product only to be sidelined by inconsistent government oversight. The only winners in this case will be legal counsel.
Wasserman: In all likelihood and with all due respect, the judge is likely justifiably confused. CBD is not a controlled substance but, according to FDA, is illegal in food and supplements. Unfortunately, the term “drug” adds to the confusion because, until taken off the controlled substance list, CBD was a “drug” in the sense of controlled substance. Now, FDA is saying CBD is a “drug” but FDA means something completely different: FDA means that CBD has been approved as an active pharmaceutical ingredient in the prescription drug Epidiolex and is, therefore, a “drug.” FDA cannot put CBD back on the controlled substance list.
The Trademark Office will likely continue to deny trademark applications as long as FDA deems CBD illegal under federal law. This is just another bad consequence of FDA’s refusal to establish a legal pathway for CBD.
NIE: The FDA submitted a “Cannabidiol Enforcement Policy – Draft Guidance for Industry” to the White House Office of Management and Budget (OMB) on July 22, 2020. Initial scheduled meetings with industry stakeholders were held in late July and early August. Could this mean that clarity might finally be coming to the CBD space, or not?
Stubbs: Only time will tell! While this seems like good forward momentum, the process has been unpredictable to some degree, and there are many perceived and actual risks that FDA is considering.
Doing it right takes time, money, effort, patience and good stewardship. When processed correctly—with adherence to standards, practices and proven product specifications—these are products that have incredible safety profiles and low risk.
Yet, there are far too many industry participants that are moving too fast and creating much more risk than there should be, and they will be dealt with formally or by attrition, because their practices are unsustainable. O’Brien: We can only hope some light will be shed on the FDA’s stance. Industry players have been trying to navigate these gray areas for several years, and some much-needed clarity will raise the entire CBD platform as a whole.
NIE: When it comes to labeling and advertising CBD products, what are the biggest challenges that manufacturers and brands face?
O’Brien: Advertising is the hardest hurdle to jump over. For many years, Google AdWords, Facebook and Instagram forbade any advertising on CBD products.
This has been the biggest hindrance since online marketing is a multi-billion-dollar industry. So companies had to skirt around the term CBD by instead labelling their products as “hemp oil,” an incorrect manner of promotion as hemp oil is a food-grade product for cooking.
Additionally companies, like my own, need to come up with creative means of describing how their products work. CBD cannot be labeled as a supplement, even if it has medicinal and dietary benefits.
So not only do you need to make a sound product you need a really creative marketing team to talk around the product in order for it to be sold on most e-commerce platforms.
Hirschel: Some of the biggest challenges facing labeling and advertising for CBD products are the regulatory uncertainties, along with the lack of integrity from some suppliers and manufacturers. Some suppliers and manufacturers are claiming products include CBD when, in reality, they contain very little. These “bad apples” just want to make some quick money, but it damages the whole industry. Suppliers, like GenCanna, are doing it the right way to ensure that the amount of CBD on the label is the amount of CBD in the product.
Shea: One of the greatest concerns in the marketplace today is that consumers could be confused by false, untested or unverified claims. Our No. 1 imperative as the hemp CBD industry must be to dial up trust with consumers so that household penetration of hemp dietary supplements will grow beyond its current 15 percent. In the absence of precise and sensible federal regulations, there will still some bad actors out there making illegal claims.
Kats: CBD manufacturers and suppliers definitely have their work cut out for them, that’s for sure. Chief among the challenges they face include developing accurate product descriptions, locking down quality vendor relationships, and managing ever-changing supply chain dynamics.
NIE: For manufacturers and CBD brand marketers, briefly, what new (or recent) research (it can be your own research) is the most exciting right now.
Kakuk: HempRise is conducting significant research to examine the potential of other hemp and cannabinoid ingredients, from broad-spectrum extracts, to water soluble, and to other cannabinoid isolates.
CBD was initially the most readily available cannabinoid and now, as more data unlock the power of the endocannabinoid system, we are discovering increased potential from minor cannabinoids—such as CBG, CBC, CBN, CBGa, as well as a series of terpenes—all of which are found in hemp extracts.
Kleidon: My company has partnered with the leading experts in flow-state neuroscience, the Flow Research Collective (or FRC), which is led by multiple New York Times bestselling author Steven Kotler. We have partnered with FRC to study how the endocannabinoid system and cannabinoids relate to flow state and peak performance. We are running the first-ever studies on how CBD and cannabinoids impact flow.
NIE: Briefly, what are the newest delivery technologies for CBD?
Wasserman: The industry is witnessing a significant improvement in the evolution of water-soluble CBD products, meaning that CBD in beverages can go mainstream once FDA provides the path. Advances in flavorants and nano-emulsions, which can benefit solubility, are also exciting. Inhalable products—with no nicotine or THC—have been available for some time, but the regulatory path for these products is very unclear.
Kleidon: Back in 2014 we discovered how to encapsulate cannabinoids for aqueous formulations without using nano-synthetics or synthetically modified compounds. Our issued patents cover this, and more, and we have the only certified organic aqueous solutions of cannabinoids available.
Hirschel: One of the technologies that may support CBD absorption and bioavailability are lipid delivery systems. ABITEC specializes in functional lipids and self-emulsifying nutraceutical delivery systems (SENDS). SENDS include an active, like CBD, plus a solubilizer, emulsifier and surfactant.
CBD is not soluble in water, but it is soluble in many types of oils, including MCT oils. ABITEC’s CAPTEX MCT oils help solubilize CBD and Abitec’s CAPMUL mono- and di-glycerides help emulsify CBD to help our body recognize it for absorption.
Unique delivery technologies, like SENDS, are needed to help facilitate absorption as well as inclusion in different delivery forms such as functional beverages, edibles and capsules.
Kakuk: Potential hemp and CBD consumers want convenient delivery forms they are familiar with, with edibles, food and beverages ranking highest.
According to a survey from High Yield Insights, 57 percent of consumers want to get CBD in baked goods, 45 percent in chocolate, 30 percent in beverages and 29 percent in snack foods. Some other areas gaining significant interest are water-soluble products, nano-emulsions to improve bio-availability, and transdermal patch delivery.
NIE: Briefly, what are some of the most intriguing and emerging wellness applications for CBD and why are they intriguing?
Hirschel: As we are all adjusting to a different home and work life balance during COVID-19, more consumers are feeling stressed, anxious and exhausted. If some of the potential benefits of CBD could improve sleep or reduce feelings of stress and anxiety, this may be when it’s needed most.
De Grandpre: Pain management, anti-inflammatory and anti-proliferative applications are among the most interesting. Chronic pain management is a significant clinical concern, especially in view of the adverse effects of chronic opioid use. CBD alone may not be as useful as CBD in combination with THC or other cannabinoids and terpenes, however.
Inflammation is a core process in most, if not all, chronic diseases and cancer is obviously a major concern. There is often a large gap between the bench and the bedside and narrowing that gap with reliable, safe and effective use of CBD could be a huge step forward.
NIE: What are your predictions for the long-term future of the CBD category in the U.S., and why?
Kleidon: I believe that, in the long run, the market will become more sophisticated and the companies that are following the science—with strong triple bottom-line ethics and patented technology—will win.
There will be a consolidation of companies in roll-ups. It will continue to move toward a commodity, however high-quality farming and products, along with tech-driven offerings, will continue to rise in consumer demand.
Ultimately, hemp extract complexes containing CBD and other cannabinoids are here to stay.
Shea: I’m excited to tell you that we believe in continued growth in the hemp-derived CBD sector. In fact, we’re so confident in this category of wellness products that we expect to be a billion-dollar company. Our predictions are for more cutting-edge research, more cannabinoids becoming widely known, and increasing regulatory clarity.
Charlotte’s Web continues to invest in and support precision science and trials through our CW Labs division, and through external third-party research, like the current ValidCare liver toxicology human trial study we are co-funding.
The future looks bright for hemp derived cannabinoids through investment in science, and improved access for all consumers through aligned state and federal regulations.
De Grandpre: It depends, to a large extent, on how the FDA comes down on CBD. It also depends on whether researchers will be allowed more flexibility in obtaining CBD for research purposes and designing valid clinical trials. One might hope that we are over the “reefer madness” concept of CBD (and THC), but it is currently a bit uncertain.
Sudberg: I think there is no putting this genie back in the bottle, so the regulatory inconsistencies have to be resolved.
This herb is likely to stay in our industry beyond the flash in the pan we are experiencing now. Similar to turmeric, the industry initially traded it whole, then as a simple extract and now as complicated and branded versions of its original self. I predict cannabis will follow suit.
In order for the potential to be realized, we need to push to have hemp formally recognized as just another herb in commerce. Industry members must champion best practices to build stability and market sustainability into the category. NIE