Now That Hemp And CBD Are Legal, What Comes Next For Food And Beverage?
AUTHOR Cathy Siegner
Dec. 20, 2018
Dive Brief:
Now that the 2018 Farm Bill is signed into law, hemp and its derivatives are no longer classified as controlled substances by the Food and Drug Agency, and can legally be regulated by state and tribal governments and commercialized in foods and dietary supplements, New Hope Network reported.
U.S. hemp and CBD companies are expected to pursue listings on Nasdaq and other exchanges soon, according to Bloomberg. However, they still face regulatory obstacles from the Food and Drug Administration, the New Hope Network noted, because the agency's position has been that CBD can't be legally sold in conventional foods or dietary supplements.
While hemp and marijuana are both members of the cannabis family, hemp extracts contain CBD, a non-psychoactive compound that doesn't produce marijuana's trademark high from THC. Hemp does contain very low levels of THC, but hemp products legally sold in the U.S. must have no more than 0.3% of the chemical.
Dive Insight:
Besides removing hemp from the list of controlled substances, the new Farm Bill also expands research into commercial uses for the plant. Currently, hemp ingredients such as CBD oil, powders and seeds are being used to infuse beverages such as iced tea and are being added to a wide variety of other foods, including ice cream, salads, milk and even children's cereal.
The market for CBD and hemp products is already significant and likely to become more so. According to the Capital Press, a New Frontier Data report found that U.S. CBD sales jumped almost 40% in 2017, hitting $367 million. And, according to the Agricultural Marketing Resource Center, the total retail value of all U.S. hemp products last year was estimated at $820 million.
Major food and beverage makers are keeping an eye on the trend and considering how they might adapt forms of THC and CBD to their brands. Bloomberg recently reported that Coca-Cola has been talking with a Canadian cannabis company about marijuana-infused beverages following that country's recent nationwide legalization. A Coca-Cola spokesman told Bloomberg News the company has made no decision yet but is closely watching the growth of CBD as an ingredient in global functional wellness beverages.
THC, CBD and non-psychoactive terpenes from cannabis have appearing in beverages in states where such products are legal. Last year, Heineken-owned Lagunitas Brewing debuted a non-psychoactive, cannabis-flavored IPA brewed with terpenes — organic compounds that give plants their flavors — and the company introduced a THC-based sparkling water this year.
It's not a big stretch to combine cannabis and hops in beer brewing since they are genetically related. The key ingredient they share are terpenes. It's another question whether beer products containing both ingredients will spark a nationwide trend, although with hemp no longer a controlled substance, there could be many more drinks with some form of CBD or THC showing up on shelves and in coolers. Just this week, AB InBev and marijuana grower and distributor Tilray announced a joint $100 million investment to research cannabis-infused nonalcoholic beverages.
Other recent product introductions containing CBD are a nutrition bar from California-based SNAAK Bar that markets itself as optimizing sports performance — and is only available in California and online — and Spring's line of CBD-infused sodas sold in New York, Florida, Nevada, and Illinois.
One big unknown for this market is how the FDA will handle regulating hemp and CBD in products since the agency states that "it is a prohibited act to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which THC or CBD has been added." But because of the new Farm Bill's action regarding hemp, it's possible the agency will institute a rulemaking process to realign its regulation and enforcement of the crop and its products. Dave Donnan, a senior partner in A.T. Kearney's food and beverage practice, told Food Dive the regulatory machine will probably be figuring out how to make CBD a safe and legal ingredient.
“There's all these tactical things that 2019 will be the year to work through,” Donnan said.
Some concerns stem from the cannabis industry's poor food safety record and a tendency to market some edible and supplement products as miracle cures. The FDA took action last year against four firms selling supplements based on marijuana that were advertised as curing cancer. Such claims may not be as likely with CBD products, although the oil is said to help with pain, inflammation, anxiety, depression, insomnia and seizures, among other conditions. Critics say these benefits aren't based on science, but advocates counter there has been plenty of recent research to bolster health claims.
Whether hemp and CBD will be appearing across the board in foods and beverages is unclear at this stage since the ink is barely dry on the new Farm Bill. But as research grows into more commercial applications and companies innovate with new products testing public interest — and FDA's tolerance under its current policies — there could be a newly crowded segment attracting investors, retailers and consumers.