The most anticipated election of our lifetime just wrapped up, and the most decisive victor to emerge was green. No, we’re not talking money or the environment, but rather cannabis.
Five states in the US said yes to legalizing marijuana last week, for medical or recreational use, or both, adding to the 33 states (and Washington DC) that already had done so over the last few years. Two in three Americans supported legalizing cannabis, according to a Gallup poll in 2019, a pretty dramatic shift from just 15 years prior when 2 in 3 Americans disapproved of legal pot. This signals some pretty good times for the legal marijuana industry, which is now estimated to grow by US$9 billion.
With marijuana’s growing acceptance across the US, one would think that this would signal a bright future for the CBD industry as well. CBD oil, hemp oil, CBD-infused food and drink, and CBD beauty products are all now part of mainstream retail. The ingredient is linked with offering relaxation and calming benefits – and these are things we could all use after the year 2020 has been.
But things haven’t actually panned out this way.
The CBD downturn
Interest in CBD-based products fell by 66.5% in the last 12 months, after meteoric growth over a previous couple of years, based on Spoonshot’s proprietary data. Unlike legal medical and recreational cannabis, CBD’s use in food and dietary supplements is actually prohibited by the FDA. CBD does not have the Generally Recognized as Safe (GRAS) tag from the FDA, which has been cracking down on food and drink brands using the ingredient across the country.
The pandemic has not made things any easier with store closures, unemployment, and no regulation updates from the FDA on use in food and drink, curbing innovation to a large extent. In fact, projections for CBD sales in the US have now been revised downwards by 35-45%.
A Bright Spot
So, with such a dire outlook, you’re probably wondering why we’re even talking about CBD. Well, that’s because there may now actually be light at the end of the tunnel.
New York state, just a week before the elections, introduced a new set of rules for the manufacture, sale, and use of the extracts of hemp (including CBD), across categories, including in food and drink products. This is probably the most stringent set of rules for CBD, but one that has been long-awaited by the cannabis industry.
Once the regulations are formalized, we expect to see a rash of CBD food and drink launches in the state. These rules also will pave the way for other states to set their own regulations in the absence of any federal rules, much like in the case of medical and recreational cannabis consumption.
There should be stringent regulations on ingredients that tout health benefits but without rigorous studies to back up the claims. Especially since there is consumer demand for CBD products. Social media mentions of the ingredient have seen significant growth in the US over the last five years.
Growth in CBD-related conversations by consumers, US
With regulation, CBD can expand its presence across multiple “food and drinks” categories safely and with verified claims. Supplements and drinks are the main focus so far, but there is scope in edibles as well, such as snacks and baked goods.
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Share of launches featuring CBD as an ingredient, by category, US
This year, despite any clear regulations, a number of companies have thrown their weight behind CBD-based launches.
- In February, Socati, a manufacturer of broad-spectrum hemp-derived extracts, launched a line of CBD-infused additives for coffee.
- In June, CarryOn launched a range of sparkling CBD waters, backed by Ocean Spray’s Lighthouse Innovation Incubator.
- Also in June, Pure Harvest Cannabis Group introduced Elevated Harvest, a new line of CBD-infused energy drinks, edibles, and other products.
- In September, Martha Stewart launched her range of CBD gummies, soft gels, and oil drops in partnership with Canadian cannabis company Canopy Growth.
With rules in place, we can expect to see a lot more launches in the coming years. But just in case regulation isn’t forthcoming immediately, there are CBD alternatives, like copaiba, that are said to have the same benefits as CBD, without the psychotropic and legal baggage. Read all about copaiba in our white paper here.
Until next time,
Stay safe. Take it easy.