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Marguerite Arnold

The Sale Of Cannabis Sativa Derived CBD Becomes A Crime In Italy

By Marguerite Arnold
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Marguerite Arnold

For all the excitement about the “CBD” or “Cannabis-Lite” possibilities in Europe thanks to Switzerland over the last few years, the reality as of 2019 is proving to be a little different.

As of the end of May, Italy’s top court, the Court of Cessation, ruled that selling derivatives of cannabis sativa (from the buds and leaves to oils and resins) is illegal. Hemp of course, is excluded from this decree. And in fact, this decision was intended to close a loophole that was created in 2016 for so-called “Cannabis-Lite.” In other words low THC, CBD products and extracts that are showing up in the market as is or as an ingredient in something else (from food to makeup).

While this development is certainly a blow to those who were not in the know already, it is hardly surprising– especially given current events next door. German authorities just declared that they could find no use for “CBD”. This of course confuses the issue even further (since CBD is obviously found in both hemp and cannabis sativa.) Austria did the same thing late last year- and further did so on a level unseen anywhere else in Europe (namely putting cosmetics on the list too).Novel food regulation, at its heart, is all about the source of the plant and how it is processed. 

In fact, and certainly in comparison, far from being nebulous, Italy appears to have taken, surprisingly, a rather scientific, if not clear-headed, approach to the issue in general. Not to mention a step that is absolutely in line with current EU policy on the same.

Novel food regulation, at its heart, is all about the source of the plant and how it is processed. This entire discussion about CBD falls squarely within that- although of course, hardly limited to just this one cannabinoid or in fact, plant genus.

What Should Investors Be Aware Of?

There is, as always, a hype around CBD. That is true in almost every legalizing market, but Europe, with a much stricter regional regulatory regime and at least a four-year path to recreational, has seen an odd twist in all of this for the last two years.

There is the potential for a CBD play in Europe, but it is niche, and country-by-countryIn the EU, the distinction between hemp and cannabis-derived cannabinoids (including but not limited to THC), is a well-known fact for those with any stripes in either the cannabis, or beyond that, mainstream food and drug industry. The largest confusion, in other words, is strictly at the lower rungs of the biz. Not to mention all foreigners.

Proof of the same? Purvey the contents of even the most wide-ranging Dutch Seed shop catalogue, and you will be hard-pressed to find non-hemp products. And even though such entities know how to get around loopholes themselves (starting with the online sale across Europe of cannabis seeds from all over the world), novel food is not a regulation even these cannabis entrepreneurs want to cross.

In other words, there is the potential for a CBD play in Europe, but it is niche, and country-by-country in an environment where both local and regional rules are shifting. And further are likely to do so for some time to come.

And in the meantime, those who make the grade, are certainly freed from one pressing if not looming question. The market in Italy is, in fact, not only far from “illegal,” but opening up both in terms of import and export to cannabis products from all over the world. Including of course, Canada and the United States.

german flag

Germany Enters The Fray On Novel Food

By Marguerite Arnold
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The novel foods discussion in Europe is a thorny one- and further one very misunderstood by natives, let alone those who would take Europe by canna storm. Within Europe, this discussion has festered and percolated for the better part of two years. Last year, despite a huge bump in sales in certain regions (see Switzerland), police were directly involved on the ground in Spain and rumblings of the same possibility took place in Austria at the end of the year. Early this year, further indecision at the EU level has continued to confuse the entire discussion.

This year, while there have been recent blow-ups in the UK, and fights at the EU level, the main action has been in the DACH region of the EU. The DACH trading alliance includes Germany, Switzerland and Austria.

In fact, the debate in this region of the world may drive not only European but UN policy. For that reason, the road currently is a thorny one, with lots of drama shaking out along the way in policy fights that still, at least in many European countries, involve the fuzz and what has been ostensibly packaged and labelled as “health food.”

It is for that reason that the most recent move by the German Federal Office of Consumer Protection and Food Safety (or BVL), which said that CBD should not be sold in food at all, has gotten all the attention lately. Especially and more worrying for the nascent CBD industry across the continent, the agency also opined that it does not see a case where CBD-containing cannabis would be marketable in foods or health supplements.

european union statesLast month, on April 11, the European Industrial Hemp Association (IEHA) issued a sharp rebuttal to the same. As they have just been asked to serve in an advisory role in setting EU regulations on novel foods and hemp extracts, this is likely to move the conversation forward regionally. Including in the DACH region where this issue is all over the place.

What Exactly Does Novel Foods Regulation Cover?

Novel Foods regulation in Europe covers two things, and this is true far from cannabis. It is consumer rights legislation and guidelines that cover all plant-based food and supplements across the continent. It also covers beauty products (since the skin is the body’s largest external organ) although so far, this tiny part of a niche industry has largely escaped attention. Do not expect that to last.

Where this crosses with cannabis is an interesting discussion. Hemp and cannabis of course have been consumed in Europe for thousands of years. As such, food and extracts of the plant, from species that occur naturally here, normally would not raise a fuss. However, this discussion has also become complicated for a few reasons. Starting with the fact that the seeds and strains now being developed in the U.S. and Canada are not “native” to the European region.

In fact, the early exports across the Atlantic (and there have now been a few) are all on the hemp side of the equation. Currently hemp is the only plant containing CBD that is recognized as viable under novel foods. Cannabis sativa strains that are low in THC are where this whole discussion gets dodgy. The strain, Girl Scout Cookies, and its contents including CBD for example, would under this regime, never be allowed. Nor would cannabis strains bred for their low THC in the United States.

The second issue is how such plants are processed and the cannabinoids extracted. That is another issue that directly relates to how concentrates, tinctures and extracts are made in the first place. This is also in the room.

But that is also where the entire debate also spins off into other semantic hair-splitting that the industry so far has found not only tedious but largely impenetrable.

Why Is The German Announcement So Cynical?

Germany is following its DACH neighbour Austria to directly put the brakes on the CBD and THC discussion across the border with Switzerland. In contrast to its Teutonic trading partners, the Swiss have been experimenting with all kinds of CBD products, from all sorts of sources, and are now talking THC recreational trials (even if sold out of pharmacies).

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

In contrast, over the last six months, both Germany and Austria have come out with statements and official pronouncements not about hemp, per se, but rather CBD- a cannabinoid found in all instances of both hemp and cannabis sativa. While politically this might send a statement that both countries are not ready to engage the cannabis debate on the next level (beyond medical in other words), scientifically of course, this is a silly argument to make. A cannabinoid is a chemical compound that acts the same whether it comes from cannabis, hemp or synthetic sources (see the synthetic dronabinol).

In the meantime, CBD itself has not been declared a “novel food.” In other words, for all the legal regulatory “brakes” and excuses, the dust is starting to clear on the debate as both regional and international bodies finally take on the entire cannabis discussion, albeit in a plodding, multi-year way. That, however, is undeniably under way at this juncture.

In the meantime, look for political grandstanding about every cannabinoid under the sun and further such drama will not abate even with “recreational” reform. Even when Europe accepts full boat regulated, recreational, novel food regulation will still be in the room. Even if politicians no longer play games with individual cannabinoids.

That said, at this point, that is also unlikely. In other words, expect the battle on the novel food front to continue for the entire industry, and shift, when recreational comes, to merely another cannabinoid, unless policy makers address the bottom-line issues now.

Marguerite Arnold

Italian Canapar Moves On European Hemp Extraction

By Marguerite Arnold
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Marguerite Arnold

Canapar SL, an Italian organic hemp producer has just announced it is breaking ground on what it is being billed as “Europe’s largest hemp processing facility.”

Located on Sicily, Canapar is already established as a manufacturer and processor of CBD oil and concentrates. On its roadmap already is to become a leader in the CBD-infused cosmetics, skincare and beauty industry with the additional benefit of bearing the “Made in Italy” imprimatur. In addition to the upscale export market of course, Italy is Europe’s fourth largest consumer of such products.

Canopy Rivers now owns 49% of the company.

Why Is This Significant?

There has been much noise made about the CBD market in Europe, which even surprised experts by the end of year when it reached a magical 1-billion-euro sales cap.

However, things are not all smooth sailing on this front, no matter how much the market exploded. With the success of CBD, in Switzerland, Spain and beyond, regulators in Europe began looking at how the entire enchilada was regulated.

CBD isolates are falling into a very strange gray territory at the present across the continent. Why? As a plant extract, extracted CBD from cannabis absolutely falls into territory ruled “novel food” in the EU. In effect, what this means is that anything with CBD distillates that do not come from hemp, now requires an expensive licensing process to prove they are not harmful. In places like the UK, Spain and Austria, this became so contentious that police raided Spanish stores over health food products. The UK is now requiring tighter licensing and labelling for these products. Last December, the Austrians banned the entire industry. Take that, Switzerland!

CBD distillate made from hemp, however, seems, for now, to have survived this battle, which is why the strategic investment of Canopy last December was also so intriguingly timed. Why? It appears to be the loophole in the EU in which CBD producers will have to hang their hats until the broader CBD question is answered satisfactorily at both the UN and EU level.

Producing hemp distillate on the Italian island of Sicily also represents an interesting step for the entire cannabis industry as it develops in the country. There have been many efforts to legalize cannabis because this will then end the direct involvement of the Mafia. Perhaps the multi million investment from Canopy will be enough foreign capital to start to do the trick if not turn the tide.

But Won’t CBD Just Be “Rescheduled” By the UN?

There are many reasons why this is a strategic move for Canopy (if not producers moving in similar waters). Yes, CBD is likely to be descheduled by the UN at some point in the near future, but this still will not solve the larger question of “novel food” issues until the EU formally issues regulations on the same. Until then, EU will be a state by state hop for CBD, much as the United States has been so far. And will be, until that debate is settled across the EU at least, sourced from hemp.

With Italian food products export just behind things like cosmetics, Canapar is clearly moving into strategic and potentially highly lucrative territory.