What are the biggest challenges consumer brands face when thinking about incorporating CBD into their products?
That's a big question as you look at the challenges that consumer brands face. The most pressing challenge is the fact that our Federal Drug Administration has yet to identify, approve or provide a clear pathway for the regulation of products containing cannabinoids. And notice I used the word cannabinoids not just CBD. We are really talking about cannabidiol; CBD is just the first of many cannabinoids we're going to see introduced into the marketplace as either stand-alone products or ingredients.
If you look at cannabis, it is comprised of over 100 individual cannabinoids. It also contains something called flavonoids and terpenes. As we sit here today, CBD or cannabidiol is only one of the 100-plus ingredients within cannabis that is considered “sexy” (for lack of a better term) because there is a worldwide insatiable appetite and consumer demand for this ingredient to be in consumer products. There are so many other cannabinoids that will be made in commercial quantities and introduced into products.
For example, if you were to create a beverage, let's use New Belgium Brewery in Colorado as an example. They make a beer called The Hemperor. If you've ever had the hemperor it tastes good, it smells good and it contains hemp seed oil and its flavor and it's smell - which is indicative of cannabis -comes from the terpenes. So project that across hundreds and hundreds of beverages or consumer products and you can see why terpenes could arguably be the most valuable.
What is the FDA evaluating regarding CBD – is there a timeline? What is their process? When will we learn more?
Let me start with an example. Nicotine vape pens have been in the marketplace for nearly 15 to 18 years. It took almost 20 years for the FDA regulate vape products. The FDA is a slow-moving government agency has rules and requirements and it's actively studying the stop. What we do know as lawyers involved with this, are that some of the executives are looking at the scientific basis behind adding CBD as an ingredient.
When nicotine vape pens became a billion dollar plus marketplace, it was up to the individual states to enact their own hemp derivatives and regulatory program. Colorado was the first and remains the only state in the country that has a clear regulatory framework for hemp derived food supplements. No other state in the country has that right now, and some of the other states are waiting for the FDA but that’s going to take some time.
As they wrap their mind around the science behind whether this is a benevolent, beneficial or deleterious substance, it's very likely that the pathway will be to create a “Line in the Sand” between FDA-approved medicine versus something sold over the counter. For example, there will probably be a difference between CBD sold in it’s natural state versus synthetic state which is more likely to be found in medicines moving forward. The bottom line is that we need to proceed with caution and a company should voluntarily avail itself of those standards, whether the FDA has permanent regulations or not.
The FDA is a slow-moving, large government agency. So for those folks that are sitting on the sidelines, waiting for the FDA to provide some clear guidance, that's not going to happen anytime soon. It's not likely that we will have permanent rules for the pathway for cannabinoid products until 2020 at the earliest.
Can you talk about how to maneuver state-by-state regulations?
The first two companies to sell CBD in the United States have been our law firm's clients are the entrepreneurs that took the risks, and steps forward to market and safely produce products that are consumer-friendly. We devised the legal strategy for these companies while maneuvering state by state regulatory systems. That’s where things become a bit difficult.
You really need to look at three different legal structures to determine whether or not it's worth selling it in that state. Does the state have a marijuana program? Is the sale of hemp derived products in the criminal code in that state, or does the state criminal code have a broad definition of cannabis or cannabis derivatives or oils that would make that product illegal? You must look at that states Controlled Substances Act definition.
In July of 2019, the European Union put out very clear pathways country-by-country for CBD. Some CBD products are sold on the shelves of major retailers such as Boots (similar to Walgreens) across Europe for example to be sold on the shelves of major retailers such as boots and DM Walgreens. Eurpoean markets, in certain cases look at consumer demand driven through the Asian market, so this is really a global cannabis supply chain that we’re seeing.
Industrial Hemp is a commodity - every single element can be benefitical. So as hemp becomes more popular, we will see all of the other sectors of the plant fibers fuel plastic cellulose living in sugar, but right now t the cash crop is the cannabinoid product because of the demand from consumer, retailer and manufacturer.
What do you think the cannabis industry hopes to achieve and what can we see happening over the next few years with regard to food and beverage products and or personal care products?
The Cannabis industry really has two sides and I just want to make that clear you've got the legal definition of hemp on one side, and the other side of the Cannabis industry is using the word marijuana, which has negative connotations, but it's the legal definition of the product. So marijuana certainly is not legal in the vast majority of jurisdictions around the world and around the country, and it's certainly not federally legal in the United States, but Industrial Hemp is. So as you see products come out of industrial hemp integrated into consumer products, you’ll see industrial hemp seeds protein in the demand for protein supplements in in countries that have protein deficiencies.
Utilizing our human and animal supply chain on a massive scale will see cannabinoids become identified as wellness products - not necessarily medicines - but promoted for daily use to address certain conditions in the human body. The Industrial Hemp plant provides great benefit to skin particularly as we age for repairing the structures and eliminating dead skin cells. You’ll see these products used in durable goods and consumer goods.
Today's the consumer demand appears to be off the charts and the retailers and manufacturers are responding to that. There are industry standards that we can borrow from other industries, and I think it’s a mistake to treat industrial hemp products different than other food and supplement products, but those guidelines already exist and I think that’s what the FDA is trying to do.
The best players will be the ones that understand the regulations, generally speaking as it relates to the supplements in food products and they’ll voluntarily take ownership of those standards and produce the most consumer friendly product out there. The ones that are out there trying to make a big splash and are being loose with those regulations and not recognizing the compliance issues, are not necessarily built to last.
What innovations would you like to see in the future?
I'd like to see cannabinoids recognized for what they, are and that's naturally occurring components that come from a plant. When synthesized, made synthetically or concentrated they may have a more direct impact on the human body, and that's where the FDA really needs to step in. But in it’s natural occurring state, in lower dose formulations - Americans are used to getting what they want in a consumer friendly manner and that was the evolution of the supplement industry. So to recognize that the standards that apply to supplements, whether or not they work – that’s not to be decided. But rather if consumers want to take the product, they should have safe, quality and consistent access to that product from regulated producers.
