UK Adopts CBD Rules – How Will It Affect The United States?
The UK’s Food Standards Agency (FSA) has taken its official step toward regulating the use of CBD within ingestible products. The standards will specifically cover foods, beverages, tinctures and gel caps. Excluded are cosmetics, body creams and skin care products.
The standards have also suggested that maximum daily intake of 70mg of CBD is what is considered a safe amount of consumption. Furthermore, the FSA suggests that those who are pregnant, breastfeeding or taking any medication should avoid CBD altogether. The FSA used reports and findings from the Committee of Toxicity (an arm within the local government) to guide these suggestions.
By March 31, 2021, UK companies selling (or wishing to sell) ingestible CBD products must submit and have approved a valid novel food application. This authorization process is to meant to ensure companies are meeting safety standards and providing transparency on the details of their products.
Local authorities oversee novel food authorization and those companies failing to have their application approved by the mandated deadline will have products pulled from shelves.
Despite all the action that is taking place across the pond, US farmers should be keeping a close eye on these rulings and planning for how something similar could be adopted by the FDA. Below are a few implications and potential scenarios that could occur as a result of the FSA’s rulings.
The cost for market entry could increase
To date, companies selling CBD tinctures, droppers and oils have done so with regular market ease. Sure, there have been a few warnings, but most are selling to retail outlets and through online channels as if CBD were any other product found on the shelf.
However, the FSA’s application process will require CBD companies to prove that their product does no contain anything harmful for user consumption. This burden of approval will cost real money, resources and time. If a similar plan is adopted by the US, those farmers that plan to build a “seed to shelf” business will need to be prepared for the new cost of selling consumer packaged goods.
Tinctures & Gel Caps could become classified as a food or beverage
The UK ‘s rules cover anything that is ingested into the body. To date in the US market, companies have been freely selling CBD oil in the form of tinctures and gel caps as a way to sidestep any interaction with the FDA. Overall it’s been an effective means of getting to market; anytime the FDA is mentioned it revolves around foods and beverages. Steering clear of these products has worked so far for many companies.
But, if the FDA goes the route of the UK and classifies tinctures and gel caps as products considered as food or beverage, companies may need to start thinking of product pivots or embracing for tighter product margins (due to the potential application costs highlighted above).
Companies shifting focus to cosmetics, skin care products, and performance creams
Should the FDA rule in any way seen as unfavorable for companies selling in the ingestible market, they may find it more appealing to enter any market where CBD is not used as food or beverage. This involves the cosmetics and beauty product industry that is already drawing interest without any rules. One additional niche (that has also seen a recent spike) is the athletic recovery market. Using CBD as a cream to help with pain, inflammation and the additional ailments that come after physical activity could be a viable market (with the right type of branding, of course).
A possible return of the Isolate craze
For a brief period in early 2019, the demand for CBD Isolate was booming to the tune of $7,000/kg. One year later that same unit is selling for $1,500/kg and in some markets even lower. The decrease in value can be attributed partially to over supply and partially to consumers learning the benefits of full spectrum, whole plant extracts.
If the FDA adopts a standard that makes companies jump through hoops to show safe use of multiple cannabinoids, it’s fair to wonder if more products will begin going back to isolate? If it is less costly and labor intensive to prove an isolated cannabinoid as safe, it may be the only way a company can survive.