Are you annoyed by the Cannabidiol(CBD) craze yet? I’m sure you’ve read the articles, heard the newscasts and seen the products on the shelves, CBD is everywhere.
It’s no surprise really, considering the worldwide market for CBD is expected to grow at a CAGR(compound annual growth rate) of over 32.0% over the next five years according to MarketWatch. That makes the CBD business one of the fastest-growing industries in the world.
BDS Analytics and Arcview Market Research even project that the collective market for CBD sales in the U.S. will surpass $20 billion by 2024.
CBD is now big business, and that means regulation.
If you’re looking to start a CBD business in 2020, one of the most important factors is legality. Keeping your business legal through ever-changing regulations can be a challenge.
Here’s some advice to help get you started:
What is CBD?
Cannabidiol or CBD is one of over 100 cannabinoids that comes from the Cannabis or Hemp plant. Unlike its intoxicating cousin, THC, CBD doesn’t produce any sort of ‘high’. Rather CBD is known for its healing properties.
CBD is reported to relieve symptoms of pain, swelling, nausea and even epileptic seizures. Still, the cannabinoid has yet to be proven to be effective in peer-reviewed lab testing(other than for seizures). This is because testing for CBD products has been delayed by its confusing legal status.
CBD can be found in both Cannabis and Hemp plants. Many confuse these two, but cannabis plants contain THC, while hemp plants are required by law to have no more than 0.3% THC. Hemp plants are used to produce the majority of CBD products because they require less processing during post-production and face less stringent government regulations.
CBD also comes in either full-spectrum CBD or isolate CBD forms. Full-spectrum CBD has all the THC removed, but still contains a number of other cannabinoids found in cannabis as well as terpenes which give the substance its flavor and taste profile. CBD isolate on the other hand is just what it sounds like. A form of CBD that is completely isolated chemically. This is the only type currently approved for medications.
The 2018 Farm Bill
The 2018 Farm Bill, formally known as the Agriculture Improvement Act of 2018, completely changed the game for hemp producers and birthed the CBD craze. The law legalized hemp and CBD oils, thereby removing CBD from the Controlled Substances Act. That means that the FDA, not the DEA, now has full regulatory control of CBD sales.
This move has caused some serious confusion for regulators and producers alike as the FDA scrambles to regulate a multi-billion dollar industry. Only recently have we seen the FDA begin to crack down on CBD producers and sellers.
Take it from an industry expert like Cory Slovik, the owner of Core Roots CBD, who admits the current CBD market is like the wild west and expects further regulation:
“I think the FDA does have to step in, and they will. I expect a lot of changes to labels; we’re seeing a lot of businesses out there now using the term ‘hemp extract’ instead of CBD, or they’re not thinking of health benefits so much. Many companies are doing different things, but no one really knows [what the regulations will be] until it happens.”
Know the Regulations
Ok, so knowing the regulations is impossible if they aren’t clearly written outright?
Of course, but that won’t stop the FDA from cracking down on ‘bad’ actors who are ‘breaking the spirit of the (unwritten) regulations’. Currently, the FDA has one page dedicated to CBD questions and regulations, but producers should expect a lot more to come.
Thus far, the FDA has not approved any CBD products other than one prescription human drug product which is intended to treat only a few very rare, severe forms of epilepsy. Clearer guidance will be needed by regulators going forward.
The FDA does post a list of warning letters which it sends to CBD companies. You can find that here. This is probably the best source to see if your business is still legal at this point. If you’re doing something one of the companies on the list was doing, you need to stop, it’s as simple as that.
Some key takeaways from the FDA’s warning letters are as follows:
- Suppliers can’t label CBD as a dietary supplement.
- Any type of CBD for kids will bring heavier regulatory pressures.
- CBD for food-producing animals still hasn’t been approved and will bring regulatory pressure due to unchanged interstate commerce laws that still see CBD as a drug.
Don’t Skirt Regulations, Prosecutions Are Coming
If you aren’t concerned about the FDA’s new crackdown on ‘non-compliant’ producers and sellers, think again.
Just recently the FDA sent new warning letters to 15 CBD producers and sellers in California, Florida, Colorado, Oregon, Arizona, and Kentucky halting their sales.
As FDA Principal Deputy Commissioner Amy Abernethy, M.D., Ph.D. openly admits, the FDA doesn’t have regulations yet, but that won’t stop them from shutting down businesses that ‘violate the law’ in ways that raise public health concerns:
“As we work quickly to further clarify our regulatory approach for products containing cannabis and cannabis-derived compounds like CBD, we’ll continue to monitor the marketplace and take action as needed against companies that violate the law in ways that raise a variety of public health concerns.”
Avoiding the indiscriminate wrath of the FDA can be difficult, but it’s a necessity if you want to keep your CBD business legal.
Get Cannabis Industry Specific Software
Cannabis industry-specific software is a great tool for keeping your CBD business legal in 2020. Seed to sale software can help make your business more efficient and help you maintain legality by organizing your business processes and documents. Furthermore, many of the best cannabis software systems have compliance management officers that can help your business deal with the FDA, or if things go really wrong, the DEA.
Software can help at every stage of the process from enabling faster retail service through POS systems to tracking your distribution and financials throughout the sales process. Cannabis software is one of the few tools CBD businesses’ have to fight back against regulators.
Maintaining your business’ legality—and your sanity—through this turbulent time in the CBD industry is a challenge, but one that can be accomplished through consistent education and the use of the right tools.