2021 Phytocannabinoids Market Update: Troubleshooting & Trendspotting

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Slowed sales, regulatory uncertainty, out-of-control claims, Delta-8-THC…in our 7th annual deep-dive into the phytocannabinoid market, we take another look at some of the all-too familiar challenges that continue to hinder the hemp/phytocannabinoids category, and explore new concerns that are cropping up.

 

Major Issues Impacting the Category

“Regulatory uncertainty” was the most significant problem cited by many of our experts. “The FDA has not clarified their stance yet, different states have different label and COA requirements, and periodically particular regions and even retailers have allowed, than disallowed, sales of CBD products,” says Julie Dennis Fox, Founder, Natural Community Review, LL. “It’s been quite a ride and certainly not a get-rich quick scheme, especially considering the regulatory uncertainty and the higher-than-normal overhead costs. In time, legislation will be standardized and implemented and the years of roller-coasting will be in our past but for now…hang on!”

Loni Mowbray, Quality Control Manager, SōRSE Technology, ranks the regulatory status as a top-3 problem, along with supply chain challenges, and overall legitimacy of the industry. “Regarding regulatory uncertainty, since hemp was legalized by the 2018 Farm Bill, the FDA has been actively educating themselves on CBD to better manage and guide the food and beverage industry to ensure consumer safety. To date, the FDA has not granted GRAS status to CBD as a food additive.”

Overall, says Christopher Shade, Ph.D., Founder & CEO, Quicksilver Scientific, there is just a massive amount of confusion, and a need to “navigate the changing tides every day.” “We are constantly being apprised of the ever-evolving regulatory landscape through different touchpoints: from our compliance team, from our legal team, from our own research into the legality of selling CBD products into the market. And then there’s conflicting information being presented by the industry. We do have some customers who will no longer carry CBD because of their concerns regarding the grey legal landscape. We have other customers who will carry Hemp labeled products but not CBD labeled products…Our stance is that we strictly adhere to all of the rules and regulations for dietary supplements, as we do for all of our supplement products. We follow Prop 65 guidelines. Our labels are compliant. We have CoA’s for every CBD product, and we follow the rules established in each state for selling those products online. Retail is challenging because states approach the policing of CBD sporadically and with confusion.”

Like most responsible companies in the natural products industry, Quicksilver is cautious. “Right now, all of this confusion around whether CBD is a legal supplement and whether a company is compliant is all up to interpretation,” Dr. Shade says. “As a business, we’re following closely all of the regulations and, of course, the warning letters the FDA is issuing. We’re toeing the line as a dietary supplement company. We’re following those rules, and we’re making sure we’re compliant within those guidelines. Until we receive communication otherwise, that’s how we’ll proceed. But we do hope that there’ll be better guidance coming forward.”

Outlining the impact this is all having on the industry, Brandon Beatty, Founder and CEO, Bluebird Botanicals, notes, “Since September of 2019, the CBD industry has experienced a steady decline in sales and distribution in the retail channel. This is due in part to oversaturation of the space and an erosion in consumer trust in CBD. In the early days, many CBD companies and retailers sold CBD as the solution to everything, but it didn’t live up to the hype. Now, the initial excitement has faded and consumers are approaching CBD products with much more scrutiny. They’re looking for a brand they can trust—one that stands out from the thousands of other CBD brands in the U.S.”

The top issue impacting the hemp-derived phytocannabinoid industry, says Joseph Dowling, CEO, CV Sciences, Inc., “is the background noise being caused by the thousands of irresponsible brands taking advantage of the regulatory grey area, mostly online, and not working toward a sustainable and responsible phytocannabinoid industry that consumers can trust.”

A lot of CBD manufacturers, Fox laments, entered the market without any knowledge of label and marketing laws as they pertain to dietary supplements. “Those with no knowledge of DSHEA are often crossing the line and making a full-range of health claims including claims that it reduces anxiety and inflammation, can be used for depression, cancer and multiple sclerosis to name just a few examples.”

FDA has reached out to brands making structure function claims about benefits for specific applications and medical treatments that are considered anecdotal until more research is conducted, Mowbray says, adding that the agency is working with brands that claim a specific amount of CBD per serving on the label but are not delivering that amount, which she points out constitutes fraud. “Because of this, most companies producing products containing CBD are using state guidelines to the degree that they exist and developing systems and processes to produce safe products.”

Claims about all forms of hemp and cannabis products are an ongoing issue, agrees Laura Fuentes, Licensed Compounding Pharmacist, CEO, Co-founder, Green Roads. “Becoming educated about what the FDA allows CBD companies to say gives suppliers and customers a first litmus test that will help separate solid brands from less reputable and reliable options.”

Putting the bigger picture in perspective: “CBD remains very big within the wellness industry,” Beatty says. “Considering its meteoric trajectory over the past years, a cooling-off period is not exactly surprising in light of this fading hype and lasting regulatory uncertainty. After the passage of the 2018 Farm Bill, industry leaders expected regulatory guidance from the FDA to promptly follow. Now, it’s been over two years and CBD still isn’t formally regulated as a dietary supplement, which has allowed unscrupulous companies to proliferate and further damage the industry. We’re hopeful that the Congressional bill H.R. 841 will alleviate this uncertainty, stabilize the market, and ensure that all CBD products are safe, properly labeled, and prepared utilizing Good Manufacturing Practices. Ultimately, this should also open more retail doors. With that, we do expect solid growth in the coming years, but not necessarily at the rate that had been initially forecasted by industry analysts, nor at the rate we’ve experienced in the past.”

Also commenting on the state of the market, Carl Germano, CNS, CDN, VP Verdant Oasis, says, “Sales for whole hemp CBD have not slowed due to a lack of interest. Companies have made a concerted effort to meet the demand of more immune-related products due to the pandemic. Over the past year, we have become the United States of Anxiety due to COVID. Unfortunately, companies have not completely understood that the enormous amount of stress, anxiety, and sleeplessness people experience contributes to significant immune suppression. Of all the ingredients our industry offers to address everything from stress to sleeplessness, whole hemp CBD is at the top of the list. So, you can take vitamin C and elderberry, but your immune system suffers when you are chronically stressed and don’t sleep well.”

It is “inevitable,” Dowling says, that phytocannabinoid products will be universally accepted as part of a responsible approach to wellness. “At CV Sciences, we call this Wellness 2.0, which includes phytocannabinoids and other plant compounds as a central part of managing everyday stress, life’s challenges, and finding balance.” He adds that CV Sciences is committed to taking the necessary steps to achieve Wellness 2.0. “We continue to work with other responsible stakeholders on cannabis legislation that will increase consumer access to regulated phytocannabinoid products. We continue building on our scientific work that adds to the growing body of phytocannabinoid research.”

Addressing delta-8 THC

Many in the industry are taking a strong, clear stance on this, including Carl Germano, who stresses, “As to delta-8 THC, it is a drug—ask the DEA!” The U.S. Hemp Authority also made its stance known, announcing in March that it will not certify products that are labeled as hemp yet marketed for intoxicating effect. This certification prohibition will apply to products such as delta-8 THC that feature a total tetrahydrocannabinol concentration of more than 0.3 percent on a dry-weight basis. “Recent press reports about the proliferation of potentially unsafe, intoxicating products calling themselves hemp have concerned consumers, retailers, law enforcement and policymakers,” stated Dr. Marielle Weintraub, President of the U.S. Hemp Authority, in a press release. “We felt it was necessary to take a strong stand against these products so that people will know that the U.S. Hemp Authority seal designates products that are truly hemp and that meet our rigorous standards.” Find more information at www.ushempauthority.org.

On the Horizon

Once the FDA stance and regulations on CBD are clarified, Fox notes, “I believe the floodgates will open and everyone who has sat on the sidelines will jump in, of course including the larger, risk-averse corporations. Until then, smaller brands continue to have the opportunity to enter the market and are doing so with vigor. Don’t get me wrong, there will always be room for the smaller companies to enter the CBD market, but once large, big-budget companies enter the field, of course it becomes more difficult for the smaller companies to gain momentum.”

There’s good and bad in that. “The days of generic CBD brands with no real story are definitely over, especially for the ones that refuse to innovate with ingredients or technologies but still have their products priced like it’s 2019,” says Josh Hendrix, Chief Growth Officer, Workman’s Relief. “Innovation with other non-intoxicating cannabinoids, new water-soluble technologies, combining cannabinoids with other ingredients that help target specific consumers, and positioning products for consumers as opposed to categories will all be trending this year.”

Beatty sees that as well, explaining, “Consumer interests are rapidly changing and their overall awareness of CBD and wellness has grown exponentially. With that, product innovation in the CBD space is adapting to include more targeted hemp products formulated with additional ingredients to support specific health concerns beyond general wellness. Likewise, emerging research has begun to focus on the potential benefits of minor cannabinoids beyond CBD, including CBN, CBG, CBC, and CBDA. These minor cannabinoids are now making their way into specialized products coupled with other nutraceuticals to address some of the modern consumers’ most pressing health concerns.”

Also noting the trend of focusing on phytocannabinoids other than CBD that contribute meaningful benefits to the body, Germano says, “A move away from singling out one phytocannabinoid and acceptance of the benefits of the entire group of active compounds in hemp is essential—just as we do with any other herb in our trade. We are to appreciate studies that point to the use of whole plant hemp CBD products providing clinical benefits better than single magic bullet CBD. Acknowledgement of the beneficial effects of some of the minor phytocannabinoids in hemp, such as CBG, CBD, CBC, and CBN that display antibiotic, anti-inflammatory, antianxiety, antioxidant, etc. effects. The role of beta caryophyllene (a phytocannabinoid) that supports CB2 cannabinoid receptors and the existence of cannabis flavonoids (cannflavins) that possess potent anti-inflammatory effects. These early-stage discoveries about the other family members in hemp can only complement CBD’s activity or play independent roles in supporting the endocannabinoid system themselves. All reasons why we must rethink our focus on whole plant hemp extracts that are not only rich in CBD, but provide the rest of the family.”

Noting similar, Fox says, “CBD is just one of many cannabinoids found in the hemp plant and we have many years ahead of us to learn more and more about the full-range of constituents. And in fact, we can say this about many, if not all, plants. Look at turmeric. Also used by humans for thousands of years and then in its more recent history we delved deeper and started to learn of the virtues of curcumin and other curcuminoids. And, there are still many more chemical constituents in turmeric to be discovered. It’s endless, which is why at Canna Joint Relief we will always include full-spectrum CBD so we can benefit from the wide range of the yet to be discovered—or never to be discovered!—compounds.”

Another emerging trend Germano points to is the focus on providing complementary accessory nutraceuticals that support whole plant hemp phytocannabinoids. His examples:

  • Omega-3’s role in activating cannabinoid receptors in the body and serving as backbone structures to produce endocannabinoids in the body.
  • Actives in Boswellia that prevent the breakdown of 2-AG —one of the two endocannabinoids produced in the body.
  • Curcuminoids that play a role in depression by influencing cannabinoid receptors in the brain.
  • The existence of phytocannabinoids in foods such as carrots, hops, chocolate, echinacea, black pepper, clove, etc. that play subtle roles in supporting the endocannabinoid system.

“With this knowledge,” Germano says, “product developers have a wide-open field to produce more effective products that address pain/inflammation, stress/anxiety, insomnia, bone health, digestive health, neurological health, and immune health.”

Integration of functional ingredients, vitamins, and antioxidants into formulations is also on the trendspotting list for Mark Elfenbein, Chief Revenue Officer at Socati. “As consumers become more educated, they are looking to address specific use cases such as immunity, energy, rest and general well-being. Socati has deployed products in the forms of custom flavored stick packs, tinctures and gummies, which encompass such additional ingredients as valerian root, L-theanine, green tea caffeine, etc. Socati develops products in the Awake, Recover, and Relax categories.”

Fuentes agrees that more consumers will be looking to solve specific wellness challenges with hemp products. “For example, many people want to get a better night’s sleep. That’s why we rolled out a line of products focused on sleep. And naturally, we will continue to learn new, fascinating things about hemp the more research gets accomplished.”

Format is also key. Sonja Hintz BSN, RN, Abbychristopher Product Manager and Nurse Advisor, ConnOils LLC, explains, “Consumers look for ease of delivery. Adding CBD to functional food and drinks would be the next trend in CPG products if CBD is given a new dietary ingredient status. Brightfield Group estimates the total CBD market by 2024 to be $14.8 billion. This projected number is double where we are at today.”

At Quicksilver, says Dr. Shade, “Our complete CBD line leads with our liposomal delivery technology backed up with scientific evidence in a very benefit-oriented way…We’re going to continue to bring forth our technology into new product forms that allow consumers to have the benefits of CBD in whatever format that they prefer while being able to feel comfortable that they’re receiving a product that is effective and bioavailable.” He explains that the company’s proprietary technology enables it to expand its product offering, with partners from a variety of industries, into varied formats, with liquid delivery such as beverages, tinctures or drops, or other formats such as topicals, softgels or gummies. “CBD is everywhere, including major grocery and pharmacy chains, but only in a topical format. Once the FDA releases concrete guidance and consumables become more palatable to these national chains, we’ll see everything from beverages to gummies available in a more mainstream environment.”

In terms of product innovation, Mowbray notes similar, and says companies like SōRSE that emulsify extracts are able to take the CBD, terpenes, and other minor cannabinoids and put them into almost any food or beverage product. “The market has expanded well beyond gummies and capsules; beverage has become a huge category, and there are many product options on the market from still waters to carbonated to juice-based. Once federal legalization happens, larger food and beverage manufacturers may get on board with putting out products. Beer and alcohol companies have already begun to make this leap, whereas small startups have not been afraid to launch products as they see consumer interest in CBD continuing to rise.”

Also on the horizon, according to Anna Addison, CEO & Founder, Advocates for Cannabis (A.F.C): “We are turning our attention to the ancient benefits of mushrooms, and we certainly aren’t the only ones with Myco on our minds. With psychedelics and mushrooms gaining attention as a medical arsenal of therapeutic results, I think several brands will start to jump on the bandwagon. It’s also about time for a packaging revolution, especially after a year of more frequent online shopping and getting food delivered to your door. Mushrooms have the potential to do so much more than most of us are aware of. We’re harnessing nature’s most beneficial plant-based nutrients on the inside and out. Our Hemp + Myco-Immunity Capsules come in a reusable container that’s protected by biodegradable mushroom packing material and hemp fiber. Not only is it better for your carbon footprint, the uniquely tactile unboxing experience brings consumers closer to nature, so they can not only benefit from consuming these superfoods in a familiar capsule format, they can also touch packaging grown from mushrooms, feel the hemp fiber, and then re-use the practical jar to minimize waste.”

Another factor impacting the category, Dowling maintains, is the fact that cannabis products now are widely available in different markets. “There is recreational and medical cannabis that focus on THC as well as hemp-derived CBD consumer products. Consumer demand for cannabis is strong, but consumers are confused about what type of cannabis product is right for their needs. CV Sciences is committed to serving the Wellness 2.0 consumer that seeks to be healthy and not high. The Wellness 2.0 consumer wants a balanced endocannabinoid system that helps with sleep, mood, and physical discomfort, but does not come with euphoria or increased appetite. We think the best Wellness 2.0 products will be realized when we have a mature and regulated hemp consumer products industry that is not littered with sub-standard products.”

And to guide all of this, Lauren Clardy, VP Brands, AIDP, hopes for increased research. “I am hopeful that once the regulatory landscape is sorted through that human clinical trials will progress in U.S. It has already started in Canada, and that is a good thing, whether it is for specific cannabinoids or combinations for the entourage effect of hemp with specific elevated phytocannabinoids—this is where the industry needs to go in terms of research.” AIDP offers hemp from Verdant Oasis, which doesn’t grow experimental strains, only registered hemp strains consumed by humans for decades, allowing the company to have “extensive” toxicology and safety studies.

Helpful Tool: AHPA’s Hemp Lexicon

The American Herbal Products Association (AHPA) announced the publication of a Hemp Lexicon to support the standardization of the terminology used in the cultivation, processing, manufacturing, and labeling of hemp and products derived from hemp as defined in U.S. federal law. This reference tool is for the hemp industry; federal, state, tribal, and other jurisdictions that oversee the hemp industry; and consumers. The goal: to provide guidance and encourage clear, consistent communication, as well as provide consumers with a common understanding of terms used in the description, marketing, and labeling of hemp products. “As the hemp industry continues to expand, all hemp stakeholders will benefit from the standard terminology established in the Lexicon,” said Asa Waldstein, Chair of AHPA’s Cannabis Committee, in the announcement. “Development of the AHPA Hemp Lexicon marks another important milestone in the accomplishments of the AHPA Cannabis Committee in its over 10-year history of work.” Access the Lexicon on www.AHPA.org.

Best Practices for Retailers

The advice Hendrix offers: “Look for brands that know who their customer is and target them directly through their marketing, packaging, formulations, technology, and price. The industry is oversaturated with bland brands that have no real intention with their products. Now is the time to find those brands that are garnering customers attention and most importantly, keeping it.”

And know what matters to your consumers. “Consumers care about sustainability and what the brand story says for that CBD company,” says Hintz. “Based on this knowledge, it is a must for retailers to vet the phytocannabinoid products they carry on the shelves. The infrastructure and regulatory framework for hemp-derived cannabinoid products will drive success in this space.”

Dowling notes that retailers are a critical stakeholder to help ensure that consumers have continued access to safe phytocannabinoid products. “Retailers should partner with companies that are committed to a responsible phytocannabinoid marketplace buoyed by science. At CV Sciences, we anticipate accelerated growth in a mature industry where claims are science-based, products are tested throughout the manufacturing process, and all facilities are FDA inspected.”

Trust brands that claim quality, Addison adds, but only after verifying a natural product is pure, safe, and true to its potency promises. “Be consistent with your product offerings and mindful of what’s on your shelves. A major part of this is education and holding yourself accountable. In the end, it’s all about taking care of consumers who are seeking alternative, more sustainable options, as opposed to big pharma.”

Clardy adds: “All retailers should diligently do the research. Make sure you are buying hemp extract, not isolates or distillates, and make sure the brands you stock have all the SIDI and testing documentation in place.”

Germano offers a detailed guide to aid the verification process. “Retailers need to get involved with getting the appropriate documentation from companies to mitigate any risk associated with the CBD materials in the product,” he stresses. He offers a list of information that he feels retailers must get from manufacturers to assure quality, legality, and safety, including toxicology studies, lab assays, organic status, and more. Find his full list in the expanded version of this article on www.WholeFoodsMagazine.com.

Once you’ve done the homework, ensure your staff is in-the-know, advises Dr. Shade: “Make sure your retail sales associates are educated on the benefits of specific products so when consumers come in, you’re able to provide them with concrete information about the product they may be purchasing. It’s not like you’re picking up a bottle of water that costs a dollar. The price point is higher. You have to be able to explain the value proposition and real solid educational information so first-time buyers become repeat customers. We don’t want customers to get turned off to CBD because they’ve been promised something that can’t be fulfilled by the product they’re purchasing.”

Retailers need to be flexible to succeed, adds Mowbray. “What many businesses have learned from COVID is that they need to be able to pivot quickly when the retail climate changes. If something isn’t working with a business, they have to track consumer behavior and figure out what can be done differently. Retailers also need to hire people who have experience in the food and beverage industry or personal care industry. They also need to continue educating themselves and doing their homework by keeping up to date on cannabinoid research. Ultimately, retailers have to know what they are peddling and ensure that the products they are selling are backed by science and testing.”

Help your customers learn, too. “Provide educational tools that can help your customers find the right CBD product for them, whether they’re shopping in stores or online,” suggests Beatty. “This can include straightforward answers to frequently asked questions, easy access to quality control information and third-party lab tests, and a well-informed and responsive customer service team. The customer base for CBD products is continuing to diversify and expand to new segments of the population, so it’s important to make CBD approachable and welcoming for newbies. This includes offering products that are affordable, simple to use, and address specific wellness concerns.”

6 Qs Retailers Should Ask

By Carl Germano

Retailers need to get involved with getting the appropriate documentation from companies to mitigate any risk associated with the CBD materials in the product. Here is a small list of necessary information retailers must get from manufacturers to assure quality, legality, and safety:

  1. Toxicology Studies/Self-Affirmed GRAS – Since FDA is asking the trade to prove their materials are safe, self-affirmed GRAS (Generally Recognized As Safe) or a dossier of the required toxicology studies that were performed on their material to demonstrate safety is a good start. A good platform to follow: The FDA Redbook Guidelines on proper toxicology studies to prove safety. You want to make certain that you are dealing with a reputable manufacturer of true whole plant hemp/CBD materials that understands the importance of proving that the materials are safe.
  2. Registered True Hemp Strains – Make certain that you are dealing with a legitimate grower and processor of Type III Non-Narcotic Hemp as defined by USP and not questionable marijuana hybrids that are genetically manipulated to contain abnormally high levels of CBD and THC as compared to true industrial hemp.
  3. No Isolates or Distillates – Request an affidavit describing that the raw materials used to produce their whole plant hemp/CBD materials do not contain CBD isolates or overly distilled hemp to produce higher CBD levels. You want to make certain you are working with a trustworthy company that understands the true meaning of full spectrum hemp CBD by minimizing the extraction process to preserve the integrity of the whole family of phytocannabinoids. While continued distillation may raise CBD levels higher, you lose many of the 100+ important phytocannabinoids that provide better clinical effect.
  4. Lab Assays – Reputable companies should be performing tests for pesticides (including Monsanto’s glyphosphate), tests for heavy metals for Prop65 compliance, and microbial laboratory assays on every lot as depicted on the bottle/batch being sold.
  5. Organic Status – Ask for a copy of the USDA and NOP documents to assure organic status of the biomass used to make the finished material. Processing in an organic facility does not assure you the finished material is organic – the biomass itself must have the document.
  6. Certifications – Does the company operate under cGMPs?  Ask for a list of certifications of their growing and manufacturing facilities.

Final Takeaways

“Hemp has been used for thousands of years for food, fuel, fiber and medicine. And now, as we learn more about its virtues, we discover new applications for this ancient plant,” says Fox. “Although used for thousands of years by humans, then outlawed for a short sliver of time, it’s back. We’re just working out the regulatory ‘kinks’ and learning more about its value as we delve deeper into its chemical profile and applications. As the CBD market matures, innovation will include novel applications for isolated chemical constituents, as well as a continued rollout of different delivery systems in the dietary supplement aisles.” WF