The CBD market: COVID-19 impact, regulatory hurdles, trending NPD and alternatives

20 May 2020 --- More than a year has passed since cannabidiol (CBD) was classified as a novel food in January 2019, yet the regulatory situation regarding its safety and applications is still far from clear. However, this has not slowed down NPD in foods and beverages, as well as personal care and pharma applications. Increased demand has also led to the rise of alternatives, such as palmitoylethanolamide (PEA). NutritionInsight examines what is trending in the CBD space, how regulations are progressing and to what extent the sector is affected by the COVID-19 pandemic.

According to Innova Market Insights data, the usage of hemp-derived CBD is soaring due to its touted health effects, reflected by an average annual growth of +165 percent in product launches tracked with CBD (Global, CAGR 2015-2019). The ongoing pandemic however may be negatively impacting the space, according to experts.

“Like most industries, we have also experienced business impacts and disruptions this year. We have since seen some hemp growers postpone seed purchases, and delay or decrease their spring planting as a result of economic and regulatory uncertainty. Similarly, like many of our grower partners, our harvest schedules and planned processing activities were impacted by shipping delays and quarantine restrictions,” Matthew Plavan, CEO of Arcadia Biosciences, tells NutritionInsight.

“That said, we believe the worst is behind us and are encouraged by the way hemp and cannabis have been embraced as essential businesses as the result of this public health crisis. We fully expect the industry will recover over the next 12-24 months,” Plavan adds.

Due to COVID-19, industry reports that hemp growers postpone seed purchases, and delay or decrease their spring planting as a result of economic and regulatory uncertainty. “Some companies in the US are showing a marked slowdown in first quarter revenues as compared to 2019 as a result of the COVID-19 pandemic. Although many individuals have chosen to use CBD to assist with immune support and add vitamin C and Echinacea to their usual dietary regimen, it seems that the brick-and-mortar storefront sales have been hit harder as a result of the pandemic,” Dr. Stuart Titus, CEO of Medical Marijuana, tells NutritionInsight.

Industry player Kemin recently launched branded medical cannabis products in Brazil. Miguel Martinho, Marketing Manager, Human Nutrition and Health Europe at Kemin tells NutritionInsight that he believes the new lifestyle steaming from the pandemic will support greater interest in overall health and wellness. 

“We are seeing the current quarantine and confinement moment driving awareness into specific health areas, for which Kemin has natural-sourced solutions, including CBD, to cover areas like eye health, immunity, weight management or cognitive and brain health,” he notes.

The regulatory climate globally
The hazy regulatory landscape surrounding CBD is causing major disruptions for big and small players alike. Governments around the world are taking steps to control unsubstantiated claims and unauthorized products, yet the industry is still dissatisfied with how things are handled, especially in the US. 

To speed up developments, US President Donald Trump previously requested US$5 million, from the FY2021 budget, to regulate the CBD industry and allow the US Food and Drug Administration (FDA) to continue enforcing protection laws safeguarding patients and consumers. In March, the FDA officially reopened the public comment window on cannabis and cannabidiol (CBD) products, “extending it indefinitely.” Although the extended comment period is to collect more scientific data, the Natural Products Association (NPA) pegged the move as a “huge step backward.” 

This uncertainty has caused some US states to go rogue in their regulation of hemp and CBD products. Earlier this month, Texas released proposed regulation, which would create rules around manufacturing, distribution, testing, labeling and registration. This comes at the heels of a new Virginia law, which regulates CBD as a food product.

“The industry as a whole is impatient for the FDA and US government to provide a concrete regulatory framework for CBD, which could be months or years away. In the meantime, we need the government to bridge the gap with practical and sensible legislation that upholds the intent of the Farm Bill and protects public health without impeding responsible production and sale of CBD products. We’d like to see a bill introducing language to categorize CBD as a dietary supplement or food and beverage ingredient so that it may be safely and legally sold and consumed in various product formats across all 50 states,” flags Plavan.

Regulatory approvals have also been slowed by COVID-19. “Regulatory approvals have been slowed by COVID-19. We had expected a vote on California AB228 bill to have occurred by now but unfortunately we are delayed until summer at best. This spring, farmers will plant the first fully US Department of Agriculture (USDA)-legal hemp crops in America since 1937, so that remains a positive aspect,” notes Titus.

Meanwhile in the UK, the Food Standards Agency (FSA) set a deadline for cannabidiol (CBD) companies to provide more information about their products and their contents by March 31, 2021 and to submit valid novel food authorization applications. Beyond that date, only products with a valid application will be allowed to remain on the market.

In Germany, hemp and hemp-derived products will continue to be labeled as EU-wide novel foods according to the German Federal Ministry for Food and Agriculture. The current status will not change until sufficient evidence of a “significant history of [cannabis and cannabis extracts] consumption in the EU before May 15, 1997” is provided.

Notably, Medical Marijuana recently announced that its subsidiary, Kannaway, has been granted Russia’s first-ever certificate to import CBD products into the country legally. 

CBD alternatives rise
To overcome these confusing and seemingly never-ending regulatory hurdles, certain companies are marketing alternatives to CBD that boast similar effects on mood and health. In this space, Gencor’s PEA ingredient, dubbed Levagen+ is showing potential as a viable alternative. The ingredient is touted as having anti-inflammatory and pain relief properties. 

“Despite an increase in sales for CBD over the last year, the awareness of the lack of scientific evidence and evidence of safety is also rising. Therefore, consumers are now looking for alternatives with similar mechanisms of actions and end-benefits to CBD, such as enhancing sleep, recovery and reducing pain,” Mariko Hill, Product Development Executive at Gencor, tells NutritionInsight.

“PEA is an ingredient coming into the limelight, with numerous clinical studies purporting its mechanisms in these areas, as well as its safety. Levagen+ has recently gained interest by brands for use as a ‘CBD alternative,’” Hill adds.

CBD applications are booming with gummies being particularly popular.Brazillian company Beraca introduced a “natural and safe alternative” to CBD, which is a complex of Amazonian oils marketed as reducing inflammatory activity while stimulating the production of beneficial β-endorphins.

NPD and major partnerships
The CBD industry is determined to continue with innovative NPD. Previously, NutritionInsight reported on the CBD-infused beverages market and the CBD cosmetics arena. In notable NPD, Socati launched single-serve CBD-infused products for coffee and other hot beverages. The company also launched a private label lineup of cannabinoid products providing hemp-focused brands with customizable CBD-rich finished products. Wellness startup Present Life launched Healist Advanced Naturals, a clinically supported CBD range, with a strong brand strategy that marries science and nature by Robot Food. 

Holista CollTech recently filed a patent for its platform technology touted for delivering fat-soluble nutraceuticals that can also be applied to the CBD industry. The technology can make oils roughly 40 percent more potent by boosting their absorption, says the company.

In CBD partnerships, Robertet and Klersun, strategic global partners in hemp oil extraction, formulating and sales, today agreed to a joint venture with Alponics, a Swiss based CBD and hemp production company, to expand cultivation and processing of hemp oil extracts for the Swiss market.

Meanwhile, US-based Applied Foods Sciences joined forces with Victory Hemp Foods to significantly expand the latter’s range of hemp products. Within the same arena, CBD wellness products company Charlotte’s Web Holdings is to acquire Abacus Health Products – a producer of over-the-counter products that combine pharmaceutical ingredients with hemp extract. The move seeks to create the world’s largest vertically integrated hemp-derived CBD company. Finally, Molson Coors Beverage Company and HEXO Corp recently formed a joint venture to explore opportunities for non-alcohol hemp-derived CBD beverages.

By Kristiana Lalou