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Food, Beverages, and Clarity in the US CBD Market Leading into 2020

Food, Beverages, and Clarity in the US CBD Market Leading into 2020

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Published by Programme B

Those looking at the CBD industry with a certain degree of confusion as we head into 2020 are not alone. A rapidly-changing and sometimes conflicted legal landscape makes selling any cannabis product difficult at best—and yet surging consumer demand is still fueling a bullish market set to only grow stronger once legal clarity comes.

Next Green Wave’s – Forward Thinking Strategy

In fact, many companies such as Next Green Wave have already been cashing in on this windfall, providing a superior product with vertically integrated production from farm to store shelves. It is this type of control that will best position companies to weather future regulation and to ensure the safety and quality standards that will be expected of them.

Next Green Wave has is actively involved in the regulatory scene, keeping abreast of evolving challenges and fighting hard for “wins” to that will better position the company to serve the needs and demands of consumers across the USA and abroad. This tactic has already yielded fruits of their labor, with the company ranking among the industry’s leaders in the space and having earned critical acclaim for their many brands and efforts in the space.

A Quick Background on the Compound 

CBD, or cannabidiol, is a naturally-occurring component of the cannabis plant. While the substance has shown great promise for certain medical uses and as an overall health aid, continued research is necessary to better understand the underlying biological mechanisms by which it exerts its effects, as well as the ideal dosing and other protocols. Unlike its cousin, THC, CBD is not psychoactive, and is generally extracted from hemp, a group of cannabis varieties bred for food and fiber, not recreation.

                      

Regulation as a Schedule 1 Substance

Up until relatively recently, all cannabis products were regarded as Schedule 1 drugs, totally illegal under federal law. As individual states legalized cannabis, either for medical use alone or, in a few cases, for medical and recreational use, a brisk market in various cannabis products sprang up—and the federal government looked the other way, declining to enforce cannabis prohibition in those states.

Everything changed with the reassignment of hemp from drug to agricultural product.

Legal Definition of Hemp

For legal purposes, hemp is now defined as a cannabis variety that produces less than a certain threshold of THC, the primary psychoactive component of recreational cannabis. Hemp can now be freely grown to produce fiber for cloth and paper and to produce seed for human consumption. The seed contains virtually no cannabinoid of any type, either THC or CBD, and can be used to make oil and a number of other products.

Hemp-derived CBD no Longer Classified as a Schedule 1 Drug

CBD derived from hemp is no longer considered a Schedule 1 drug, either, and is no longer under the jurisdiction of the DEA. Instead, it is under the jurisdiction of the FDA—CBD is an active ingredient used for the treatment for certain forms of epilepsy, and is under investigation for other medical uses (as is THC). The FDA has not yet approved CBD for anything else, particularly not as an additive for foods and beverages, an obvious problem for the many companies currently selling CBD-infused food and drink.

The FDA currently maintains that it is illegal to ship CBD-containing foods and beverages across state lines and has sent cease-and-desist letters to some companies making medical claims for CBD products. However, the agency has been passively permitting much of the industry to grow unimpeded in the absence of definitive policy.  And in the absence of definitive policy, state and local governments have been jumping into the gap, creating a complex and shifting web of regulation.

New York’s Stance on the Matter

Some states have explicitly legalized CBD as a food and beverage additive (sometimes with certain limitations), while others have explicitly banned that use. Some states as yet have no applicable law. New York is among the states that have legalized CBD for some uses but has not addressed food and drink.

New York City, meanwhile, has passed a law banning CBD in food and beverages will now remove, or “embargo” all such products found for sale. Beginning on October 1st, 2019, any business still selling the products can be fined anywhere from $250 to $600. Other cities, including Los Angeles, Portland, Oregon, San Diego, and Seattle, have passed similar bans.

Selling any product at large scale is currently logistically difficult and legally risky—and yet the CBD industry as a whole continues to grow.

The good news is that the FDA is responding to public pressure by beginning the process to clarify the regulatory situation. The expectation is that while CBD in food and beverages may or may not be cleared, both over-the-counter medical preparations and less-intense dietary supplements will likely be approved. Not only will legal clarity allow companies to expand and invest with confidence, but explicit FDA involvement (as opposed to mere passive permissiveness) will allow the kind of industry regulation that ensures consistent product quality and safety—something lacking until now.

The Cannabis (and CBD) Industry is Booming 

Perhaps in anticipation of regulatory clarity, the cannabis industry is doing very well. Some analysts are predicting an annual growth rate of 49% by 2024 when the CBD market could earn anywhere from $15 billion to over $20 billion. CBD and THC products combined could reach $45 billion. The CBD market has been growing slightly faster than that for legal THC products, possibly because they are currently more widely available.

The situation comes down to a rapidly increasing acceptance of CBD and other cannabis products among the general public that is fueling (and in turn fueled by) a mainstreaming of these markets. Full legal acceptance and clarity cannot be far behind.

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