The British have finally decided that cannabis reform is overdue. In London at least, 63% of the population believe that recreational reform is a good idea. According to a poll by The Evening Standard, the rest of England too, is getting close to a majority when the idea of recreational reform is in the room.
It is, as usual, recreational reform that is the icing on a medical cake that has yet to be baked. But that spice brownie is well on its way to the oven too. According to the British Medical Journal as of the beginning of July, the idea of broader access to regulated medical supplies for patients is mandatory.
And in the ranks of the conservative party, Crispin Blunt founded the Conservative Drug Policy Reform Group last September to lead Parliament in a long overdue discussion about the use of both medicinal and recreational cannabis use in the UK that formally “launched” during the last week of June.
But how the industry will develop here is also a big question in the room right now, especially with a country poised on the edge of one of the biggest constitutional questions in the country’s history – to Brexit or not, and how.
Justice Minister Crispin Blunt (right) Photo courtesy of The UK Ministry of Justice, Flickr
The North American Influence Is Controversial
While Blunt, for example, sees no issue with injecting North American capital into the debate, there are others who are not so sanguine. And while the idea of Canadian reform is popular here, including the freedom of patients (and others) to grow small amounts themselves, the idea of Canadian companies influencing national policy is not. From The Daily Mail to The Guardian, there have been front page headlines about the coming financial influence of “The North Americans.”
That this discussion is also going on at a time when the UK is considering a completely new trade agreement with the world, including on pharmaceuticals, is not insignificant. Where the country’s drugs come from, far from cannabis, is absolutely on the table. Not to mention how much they cost.
Questions of basic access are likely, in other words, to be in the room for a long time here. The barriers to obtaining and filling a prescription start at its expense – which is ₤1,100 (about $1,400) per prescription. There are few people, let alone those who are chronically ill, who can afford the same. This is far from a “normalized” drug- even of last resort- at the NHS.So far, the number of actual cannabis patients in the UK (ones who go to a doctor for a prescription and fill it) is still under 100 people.
That said, it is a start. And for the first time, as of this summer, those with the money can in fact, obtain cannabis by prescription.
But what happens to those (the vast majority) who cannot?
Patients Are Feeling Side-lined
Just as in national legalizing conversations in the United States and Canada so far, patients are being pushed aside for “the business” to take the conversation forward. But where does this business fall on matters of price and access?
So far, the number of actual cannabis patients in the UK (ones who go to a doctor for a prescription and fill it) is still under 100 people.
While patient groups are organizing, and the earliest ones to gain national attention, usually families whose children have been directly in the line of fire, are getting commercial ambitions themselves, the fact remains that patient voices are not the loudest ones in the room. Although as Blunt announced last week, he does not see recreational reform happening in the UK for the next five years.
That also means that every Canadian company entering the market (in particular) will have to continue to sing the same medical song they have been humming across Europe- at least in public.
The UK is NOT Germany – But It’s Not Canada Or The US Either…
No matter how much more “liberal” supposedly, the English people are on the whole CBD question (there is already far more CBD for sale in the UK than just about anywhere else), the UK market is still far behind Germany. Why? Since March 2017, insurance companies auf Deutschland have been required to cover the drug – from sprays and pills to floss when prescribed by a doctor.
There are, by latest calculations about 50,000 German patients.
That said, it is clear that the British do not seem to give a fig about the entire “novel food” discussion and are literally, in some cases, daring the police to raid stores and shut down establishments. The idea of rebellion against EU rules seems very obvious on the CBD front.
Beyond this, however, it is also clear that “Canadian” much less “American” cannabis reform is not necessarily the only model in town.
As the British, in other words, do finally embrace the cannabis question, it is very likely that the face of the same will be of a unique Limey strain all of its own.
With recent changes in federal and state law, and growing consumer awareness, the long-dormant hemp industry may finally be able to take heed of George Washington’s advice, “Make the most you can of [India Hemp] … The Hemp may be sown anywhere.”1
Hemp has a long and varied history in the United States. Throughout his lifetime, George Washington cultivated hemp at his Mount Vernon Estate, and, for a time, Washington even considered replacing tobacco with hemp as the Estate’s primary cash crop.2 Like Washington, Thomas Jefferson grew hemp at Monticello and his lesser-known Poplar Forest plantation.3 Both Founding Fathers primarily used the hemp cultivated on their property for making household items like clothing, rope, and fishing nets.
From the colonial era until 1970, hemp was routinely cultivated across the United States for industrial use. But, with the passage of the Controlled Substances Act (“CSA”) in 1970, U.S. hemp production ceased.4 The CSA banned cannabis of any kind, eliminating any distinction between hemp and other types of cannabis. As a result, hemp production became illegal in the United States.
A wide variety of hemp products can be found throughout the Untied States markets. Image courtesy of Direct Cannabis Network
More recently, the U.S. government finally began to ease restrictions on hemp cultivation and production. The 2014 Farm Bill introduced the USDA Hemp Production Program.5 Under the Program, universities and state departments of agriculture are allowed to cultivate hemp if:
The industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and
The growing or cultivating of industrial hemp is allowed under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs.
The 2014 Farm Bill did not remove hemp from the auspices of the CSA, nor did it address the continuing application of federal drug control statutes to the growth, cultivation, manufacture, and distribution of hemp products.
The 2018 Farm Bill built upon the deregulation that began in 2014.6 Although both the 2014 and 2018 bills define hemp as the plant Cannabis sativa L. and any part of that plant that has a delta-9 THC concentration of 0.3% or less by dry weight,7 the 2018 Farm Bill took the additional step of removing hemp from the federal list of controlled substances and categorized it as an agricultural product. As a result, the production of hemp is now subject to USDA licensure and regulation. However, until the USDA completes its rulemaking process for implementing hemp regulation, hemp production remains illegal unless done in compliance with the terms of the earlier 2014 bill.8 For the time being, legal cultivation of hemp still must occur in a state that has authorized hemp research9 and the researcher must be either an institute of higher education or a state department of agriculture (or its designee).
With the increasingly favorable changes to federal and state law allowing for the expanded cultivation and production of hemp in the United States, the market is expected to grow significantly in the coming years. In 2014, the U.S. industrial hemp market was estimated at approximately $504 million.10 In only one year after the passage of the 2014 Farm Bill, the industrial hemp market was estimated to have increased by over $95 million to almost $600 million. By 2017, the worldwide market for industrial hemp was estimated to be $3.9 billion and growing at a compound annual growth rate (CAGR) of 14%.
In addition to favorable changes in U.S. law, the hemp market is benefiting from growing consumer awareness and demand for hemp-based food products.11 High in omega-3 and omega-6, amino acids and protein, hemp is growing in popularity as a cooking oil, dairy substitute, flour source and bakery ingredient. Among other things, hemp is considered by some to provide positive health effects for those seeking help with insulin balance, cardiac function, mood stability, and skin and joint health.
Although hemp cultivation is now allowed in the U.S.—at least for research purposes—and the market is forecasted to rise steadily under growing demand for hemp-based products, broad access to viable, legal seeds continues to present a challenge for researchers and commercial growers. In order to legally implement authorized cultivation programs and take economic advantage of a swiftly growing market, farmers must have access to seeds that can be guaranteed to consistently produce plants that fall under the legal definition of hemp. In an attempt to alleviate the problem, several states, including California, Indiana, Maine and Oregon, have implemented programs to license or certify compliant seed distributors and producers.
The importance of hemp seed availability and development has also been recognized on the federal level. On April 24, 2019, the USDA Agricultural Marketing Service published a Notice to Trade announcing that the USDA’s Plant Variety Protection Office (“PVPO”) is now accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act (“PVPA”). Among other things, the PVPA provides intellectual property protection to breeders who have developed new varieties of seed-propagated plants. Under the new guidance, breeders of new hemp varieties can now secure protection pursuant to the PVPA. Those holding a certificate of protection from the PVPO can exclude others from marketing or selling a registered hemp variety and manage how other breeders and growers use their protected variety.
The process for requesting protection under the PVPA is fairly straightforward. Breeders, or their attorneys, must complete all application forms, pay the required fees,12 submit a distinct plant variety name, and provide a deposit of at least 3,000 viable and untreated seeds of the variety (or 3,000 seeds of each parent variety for a hybrid). One required form for a completed PVPA application is the Objective Description of Variety form.13 This form provides a series of questions that identify the distinct aspects of the variety in question, including, among other things, plant and leaf characteristics, seed properties and anticipated uses. Upon receipt of the completed application and fees, the PVPO examines the application to determine whether the listed plant variety is new, distinct, uniform, and stable. If the PVPO determines that the requirements are satisfied, it will issue a certificate of protection granting the owner exclusive rights to the registered variety for a period of 20 years.Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.
Although hemp has traditionally been used in the textile and fiber industries, the estimated 17.1% CAGR in the hemp seed segment is being driven by the increase in demand for hemp oil, seedcakes, and other food and nutraceutical products. These products are primarily derived from the hemp seed as opposed to its fibers. Presently, hemp seeds contain approximately 30-35% oil, of which approximately 80% is essential fatty acids, and 25% crude protein.14 Under the new PVPA guidelines, if a breeder is able to cultivate a sustainable plant that increases the plant’s production of the desirable compounds, he or she could achieve a significant position in the growing market.
The protection provided by the newly expanded PVPA builds upon other avenues of intellectual property protection now available to hemp breeders and growers. In addition to the PVPA, plants meeting certain criteria may also be protectable under a plant patent or a utility patent, both of which are administered by the U.S. Patent and Trademark office. Generally speaking, PVPA protection may be available for seeds and tubers, plant patent protection applies to asexually propagated plants, and utility patent protection may be available for genes, traits, methods, plant parts and varieties.15
With a market that is expected to grow substantially in the near future, and with the passing of increasingly friendly federal and state legislation, the hemp industry is on the cusp of significant expansion. Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.
George Washington to William Pearce, 24 February 1794.
To date, at least 41 states have passed legislation authorizing hemp cultivation and production programs consistent with federal law. As of the date of this article, those states that have not enacted legislation allowing the cultivation of hemp for commercial, research, or pilot purposes include: Connecticut, Georgia, Idaho, Iowa, Louisiana, Mississippi, Ohio, South Dakota, Texas, and the District of Columbia.
Currently, the Food and Drug Administration prohibits hemp-based CBD in food and beverages. However, the FDA has set a public hearing to discussing the legalization of CBD in food and beverages for May 31, 2019.
The PVPA application fee is currently $4,382 with an additional fee of $768 due upon issuance of a certificate of registration.
Hemp Seed (Cannabis sativa L.) Proteins: Composition, Structure, Enzymatic Modification, and Functional or Bioactive Properties,Sustainable Protein Sources (Ch. 7), R.E. Aluko (2017).
Regulations are currently under consideration that could expand or otherwise modify the scope of protection available under each of the enumerated intellectual property protection schemes. Consult a licensed attorney for questions regarding the specific program that may apply to a particular set of circumstances.
Fouser Environmental Services LTD, a laboratory based in Versailles, Kentucky, became the first cannabis testing laboratory accredited in the state last week, according to a press release. The American Association of Laboratory Accreditation (A2LA) announced the lab’s successful accreditation to ISO/IEC 17025:2017.
“We congratulate Fouser Environmental Services on becoming the first cannabis testing laboratory accredited in the state of Kentucky. Their completion of this milestone in such a timely manner through the A2LA accreditation process is a testament to their hard work and commitment to quality”, says Adam Gouker, A2LA General Manager. “A2LA realizes the vital role that accreditation plays in the cannabis industry to support compliance with regulatory requirements, and we are thrilled to see that our service has been adopted in a new state. We look forward to our continued relationship with Fouser Environmental Services in the provision of their accreditation needs.”
Fouser Environmental Services has been an environmental testing lab in Kentucky for more than 30 years. A statement by the lab in the press release says they want to support the hemp industry as it continues to grow in Kentucky. “It is our great honor to be the first A2LA ISO/IEC 17025:2017 accredited laboratory for cannabis testing in the Commonwealth as we continue to strive to perform accurate analysis and release reliable data to the growing hemp industry within Kentucky and throughout the country,” reads the press release.
This is not a discussion of climate change, it’s a discussion of the impact of weather on the agriculture industry. The question for the cannabis & hemp industry, and basically the entire specialty crop industry, is what will be the impact? According to the U.S. National Climate Assessment, “Climate disruptions to agriculture have been increasing and are projected to become more severe over this century.” I’m sure that’s not much of a shock to anyone who owns a farm, orchard or greenhouse.
Every national newspaper for the past two weeks has published at least one article a day about the flooding in the Midwest, while industry newsletters and blogs have contained more in-depth stories. The question is, what can agriculture professionals do to mitigate these problems?
Relying on state and national legislators, especially heading into a presidential election year is likely to be frustrating and unrewarding. Governments are excellent at reacting to disasters and not so good at preventing them. In short, if we depend on government to take the lead it’s going to be a long wait.Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors.
Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors. Gone are the days when people grew hemp and cannabis indoors in an effort to hide from the police. Pineapple Express was a funny movie but not realistic in today’s environment.
Today’s hemp and cannabis growers are every bit as tech savvy as any other consumer-oriented business and one could argue that given the age of their customers (Statista puts usage by 18-49-year-olds at 40%), distributors must be even more tech savvy to compete effectively. Some estimates put the current split of cultivation at about one-third indoors/two-thirds outdoors. To date, the indoor focus has been on efficiency, quality and basically waiting for regulators to allow shipping across state lines.
A major driver in the indoors/outdoors equation is that as the weather becomes more unfriendly and unpredictable, VC’s are factoring climate disruption into their financial projections. When corn prices drop because of export tariffs, politicians lift the ban on using Ethanol during the summer months. It’s going to be a while before we see vehicles running on a combination of gasoline and CBD.
Leaving aside the case that can be made for efficiency, quality control and tracking of crops, climate change alone is going to force many growers to reassess whether they want to move indoors. And, it’s certainly going to weigh heavily in the plans of growers who are about to launch a cannabis or hemp business. Recently, one investment banker put it to me this way: greenhouses are the ultimate hedge against the weather.
In a sign of how widely the German government is now casting its net for medical cannabis, even South America is not off the table. At the end of last month, two firms– one from Uruguay and another from Columbia- announced that they would begin importing medical cannabis of the THC and CBD kind.
Fotmer Life Sciences (from Uruguay) and Clever Leaves (Columbia) are entering a market where domestic cultivation has been on the drawing board for two years so far, but so far, brought down by lawsuits.
At present, Aphria, Aurora and Wayland are the big Canadians in front position on the German bid- but so far that is only importing. There are legal challenges against what appears to be the domestic cultivation licenses that appear so far to be unresolved. And against that backdrop, the big Canadians are also facing competition from indie German distributors now casting a wide net for product, globally.
Due to the timing of the announcement from South America and the firm involved in the import, CanSativa GmbH is clearly connected to the large gap in demand that is now developing in the German market and supply requirements. Further CanSativa is also a German firm engaged in what insiders on the ground admit is basically the only way to enter the market here right now, namely via an agreement with one of the new (and Frankfurt-based) distributors who are interested in this space.
Cannabis Central Is Not Berlin
To the great surprise of outsiders, who have long believed that Berlin is the center of all things cannabis in Germany, CanSativa is now one of quite a few firms who have not only called Frankfurt home, but have begun to put the city on the global cannabis map. That started of course with MedCann GmbH (later acquired by Canopy Growth), now with a huge new office in the center of the banking district.
However that also includes the now controversial Farmako, and several other new distributors who are setting up shop with a “Mainhatten” address.
Why Frankfurt? It has one of the best and busiest airports in the world just 20 minutes from the center of the city, and of course, it is home to the Deutsche Börse, the center of not only German, but European finance.
What Does This Announcement Mean?
For those interested now in setting sail for Europe, there is clearly a strategic path to get there, even if it means picking up stakes and setting down cultivation roots in places where there is an ex-im market. While the announcement about Latin American exports is not unexpected, it is also surprising that the very competitive young distributors now popping up in Germany, in particular, cannot find closer sources to bring cannabis into the country from.
However, it is early days yet. The Israelis are coming as of this summer. German inspectors are also on the ground in Macedonia through June, certifying the early movers in the market there to begin importing presumably just before Israel enters the global ex-im business, finally.
There will also be an uptick in firms exporting at least medical grade (GMP-certified) CBD and hemp in the direction of Europe from the United States, although at present that traffic is a trickle as firms begin to find out about the possibility.
Regardless of the source, however, the news is yet another sign that the medical market is taking root, no matter how ambiguous the numbers still are, and no matter how hard it is on the ground to obtain.
Cannabis is now, indeed, entering Europe via Germany from all over the world, and it’s only going to get hotter this year.
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.
Last 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.
Folks from around the country and the world tuned into the U.S. Food & Drug Administration (FDA) website as they held a public hearing on Friday, May 31. Manufacturers and suppliers asked the FDA to regulate CBD like food or dietary supplements, while the FDA seemed to want more evidence on the safety of CBD products before giving the greenlight.
Background On The Hearing
For the uninitiated, after President Trump signed the Farm Bill into law back in December 2018, Scott Gottlieb, now former director of the FDA, issued a statement the same day the Farm Bill passed, clarifying the FDA’s regulatory authority. In the statement, Gottlieb explained that Congress preserved the FDA’s authority to regulate products containing cannabis and its constituents under the Federal Food, Drug, and Cosmetic Act (FD&C Act).
In April 2019, around the same time he resigned from the FDA, Gottlieb issued another statement, acknowledging the quickly growing industry throughout the country and total lack of federal regulatory guidance. This time around, Gottlieb laid out a handful of steps that the FDA plans on taking to address regulations around hemp and cannabidiol (CBD). Those included scheduling the public hearing for May 31, where written and oral public comments were submitted by stakeholders, sharing “their experiences and challenges with these products [hemp and CBD products], including information and views related to product safety.”
That statement also announced the formation of an internal agency working group to “explore potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed; including a consideration of what statutory or regulatory changes might be needed and what the impact of such marketing would be on the public health.”
Fast-forward to May 31, the day of the public hearing, and all eyes in the industry focused on what all these stakeholders had to say to the FDA about CBD. The day started off with about two hours of oral comments, each speaker had roughly two minutes to deliver their thoughts.
Karen Howard, CEO of the Organic and Natural Health Association, speaks about the quality of CBD products
Oral Comments
Industry stakeholders representing cannabis businesses sang much of the same tune, clamoring for wise regulations on safety, testing, banking and interstate commerce, among other standards. NCIA Policy Director Andrew Kline’s comments included running through five major positions of the industry trade organization representing CBD companies. Those included recommending the FDA act quickly in setting up regulations, stressing the massive economic impact of the industry, saying that CBD products are generally safe, clamoring for voluntary, consensus-based standards and informing consumers of any potential risks. “The bottom line is this – an overwhelming preponderance of evidence indicates that cannabis and cannabis-derived compounds present minimal health and safety concerns,” Kline told the folks at the FDA. “Time is of the essence. Hemp-derived CBD products are in very high consumer demand and the industry is eagerly awaiting FDA’s regulatory framework for these products. We strongly recommend that FDA act quickly to clarify the regulatory environment because there is significant confusion in the market.”
Anna Williams, representing the American Association for Laboratory Accreditation (A2LA), stressed the importance of testing for contaminants and adulterants as well as advocating for national standards on lab testing, instead of the state-by-state network of different standards.
Patients & Public Safety
After industry stakeholders had their chance to speak, the FDA allowed a group of advocacy organizations representing patients time to speak. That included representatives for the Alzheimer’s Association and the American Epilepsy Society, both of which were hesitant to throw their full support behind CBD as medicine. Kevin Chapman with the American Epilepsy Society said he wants to see clear warning labels, testing standards, more clinical trials and more studies before the group is ready to form a position on using CBD as medicine. Keith Fargo with the Alzheimer’s Association supports clinical trials to study it more, but thinks CBD is risky for patients without serious evidence of efficacy. A representative from the Tuberous Sclerosis Alliance also echoed similar concerns. They want to see labeling of drug interactions on labels of CBD products.
One section of the oral comments included discussions about patients, public safety and retailers/distributors.
After those comments, some organizations had the chance to speak followed by comments from retailers and distributors. Patrick Bird, owner of PMB BioTek Consulting, spoke on behalf of AOAC International, where he primarily discussed public safety. He said they want cannabis products to be regulated with food safety in mind, asking for FSMA to apply to hemp products. They want to adequately ensure product safety with things like mandating HACCP plans, recall readiness, saying hemp products should be treated just like food products.
Retailers & Distributors
Peter Matz, representing the Food Marketing Institute, the trade association for the supermarket industry, said that regulatory ambiguity is a serious issue that needs addressing. “There is mass confusion in the marketplace for the public, suppliers, retailers and state regulators,” says Matz. “Demand for CBD products in human and animal use is growing rapidly. ¼ of American have already tried it. We are fielding questions from companies seeking clarity regarding the current federal regulatory framework.” He added, what many others also mentioned, that the FDA needs to move swiftly to provide a pathway to regulation.
State Regulators
Next on the docket came presentations from state government entities, including state departments of agriculture, followed by healthcare professionals. The state regulators that spoke mentioned a lot about food safety, standards, testing regulations, GMPs and things like that to protect consumer safety. “Currently states are struggling with the lack of sound scientific research available in CBD and long-term health impacts,” said Pam Miles, representing the Virginia Department of Agriculture.
The docket for state regulators delivering presentations
One interesting aspect on their talks however was telling the FDA just how large their markets have gotten already and how they need guidance on how to regulate markets in their own states. Joseph Reardon, with the North Carolina Department of Agriculture, said they already have about 600 farmers growing hemp and thousands of processors working with the product in their state. “We urge the FDA to resolve the statutory issues improperly establish a legal pathway for CBD products to enter the market place,” Reardon commented. He also asked that the FDA extend the written comment period from July to August. “We are simply looking for a regulatory framework on the extraction, production and reconstitution of CBD or cannabinoid related products.”
Healthcare & Research
Healthcare providers, and physician testimony also echoed a lot of the same concerns, including the lack of research done, concerns about effects on at-risk populations and concerns about use as ingredients in dietary supplements and food. Some of the presentations also highlighted the room for nefarious activity in an unregulated marketplace. Some went as far as to mention cases where they found CBD vape juices with DXM in it (the active ingredient in cough syrup), CBD products found to contain THC, as well as synthetic cannabinoids responsible for drug overdose deaths. Some advocates in the hemp and CBD community have equated these arguments similar to reefer madness.
The major takeaway from this hearing is that everyone wants to see more data. Researchers and healthcare providers want to study the efficacy of CBD used in medicine, regulators want public safety information, patient advocates want to see data about effects on at-risk populations, trade organizations want data to back up label claims and the FDA wants to see just how safe CBD really is.
Within two days of announcing the opening of license applications for growing hemp, the Illinois Department of Agriculture received roughly 350 applications. According to the Lincoln Courier, that number has since grown to 575 applications in the past couple weeks. The Illinois Department of Agriculture has already issued 341 licenses for growing and 79 for processing, as of last Friday.
According to Jeff Cox, Chief of the Bureau of Medicinal Plants at the Illinois Department of Agriculture, a lot of this excitement comes from farmers wanting to branch out from the state’s traditional crops, such as corn and soybeans. “Corn and soybean prices have not been the best over the past few years, and so I think they see this as an opportunity to have a different source of income on their farm,” Cox told the Lincoln Courier.
Morgan Booth, spokeswoman for the Illinois Department of Agriculture told the Chicago Tribune that they were expecting this kind of enthusiasm among farmers. “We knew there was a lot of interest in it,” says Booth. “We were very pleasantly surprised.”
Back in late December of 2018, after the Farm Bill was signed into law, the Illinois Department of Agriculture was quick to jump on the hemp train. They announced their intentions to submit plans for a program to the federal Department of Agriculture, opened a 90-day public comment period, and finalized the rules in April. The state’s regulators hoped to expedite the process and have farmers growing hemp by June 1, which appears to be successful. Dozens of hemp farmers throughout the state are anticipating their first crops will be in the soil by the end of the month.
A steep spike in demand has created a race to the finish line in the hemp industry, but marketing a CBD product before FDA regulations are in place can be tricky. However, there is plenty you can do now to set your CBD company up for success.Let’s look at how CBD brands can get their marketing ball rolling in order to stay ahead of the curve.
Start With How You’re Different
Despite being a new market to many consumers, the hemp industry is well established and highly competitive. Leaders such as Charlotte’s Web and CV Sciences (AKA Plus CBD Oil) are publicly traded, but the market remains extremely fragmented with small mom-and-pop shops winning out in their respective locales. The number of competitors is intense and growing. In late 2018, Congress gave hemp its blessing by including it in the farm bill. As a result, “the market will continue to grow at a fast pace,” says Steve St. Clair, CEO of Enerhealth Botanicals. CBD is now officially mainstream. With thousands of competitors, it is of utmost importance that brands pull away from the pack.
Brand strategy is something that CBD companies should outline now. How is your product different? Why would a consumer pick your brand over another? These questions can be defined by talking to your current customers, observing holes in the marketplace and understanding the key advantages you have over other companies.
Just some of the many CBD products on the market today.
Consider how messaging varies for Colorado Hemp Honey compared to Epidiolex. The first leads with messaging centered around not just the quality of their honey, but why honey is a great source of fuel, especially for athletes (“Bee your best”). The latter speaks directly to families with children who suffer from seizures (“Seizures are shared. So is Relief”). While Colorado Hemp Honey might put an emphasis on attending extreme sporting events, Epidiolex would find greater benefits in focusing their efforts elsewhere.
That same brand strategy can be used when considering product extensions. According to Heath Thomson, director of business development at CFH, knowing how your company serves its customers can guide you toward product development. “There’s booming demand for CBD across consumer demographics, use cases and product types. While this presents immense opportunity, CBD is not a cure-all and not every product type that is in development or new to the market is appropriate for medicinal or dietary supplement use cases,” says Thomson. “For example, many CBD suppliers/manufacturers are chasing water soluble CBD, but do we really need CBD enhanced water?”
Nail Your Brand Online
Armed with a brand strategy, it’s time to build something consumer facing: your website. Mass market retailers are beginning to launch their CBD programs; however, they have dozens of brands to choose from when it comes to building stock. Brands with an established presence, clear purpose and consistent brand identity will have a leg up on fly-by-night companies.
In marketing, a brand’s website is considered its digital headquarters. Investing in a clean website with clear communication is a must. A strong website will establish trust among consumers (and retail partners) and further communicate how your brand is different from the rest.
Beyond branding, e-commerce functionality is an important revenue driver. A consumer may feel self-conscious purchasing CBD in store (there is still quite a bit of stigma surrounding the product), but clicking “check out” in the privacy of their own home is easy.“Earned media is where companies can separate from the pack and become category leaders.”
Own Your Email List
When it comes to driving revenue, there is no replacement for email. Some marketers personally feel their inbox is too full and so they cringe at the thought of adding to the constant stream of media we all face. The stats are undeniable though: the ROI of the typical email program is 73%.
When it comes to email, you (the marketer) set the guardrails. Unlike with paid advertising, your account won’t be shut down simply due to the nature of your product. Even with a modest 20% open rate, you’re reaching far more consumers than on social media (where brands only get 1% organic reach), and in a much more meaningful way.
Build Your PR Strategy
Two weeks of trying to run an advertising campaign for a hemp company will teach you one thing: when it comes to CBD, paid media is a minefield. To date, Facebook, Google, Pinterest, and Amazon still do not permit promotion of CBD products on their platforms. As a result, brands must lean more heavily on earned channels, such as PR.
“Earned media is where companies can separate from the pack and become category leaders. Press is more than just free advertising when it comes to hemp or cannabis. Consumers want to know that what they’re putting into their body is safe, and with so much legal grey area they’ll be even more wary than with other supplements,” says James Clark, co-founder of Room 214. “News coverage – especially in the right publication – is like a seal of approval for your product and reaches audiences currently blocked by advertising.”
Leaders in the CBD industry already play a strong game when it comes to PR, but there’s plenty of room for more.
Prepare for Constant Change
This point cannot be stressed enough: over the next two to three years, everyone in the hemp industry needs to buckle up. The constant change in this ever-budding market means you must be ready to make quick turns and adjustments. This is even true in the exercise of writing this article, as every morning I wake up to news about new regulations in various states and motions from the FDA to hold hearings.
The impact constant change has on paid media is not to be underestimated. Over the course of just a few weeks, an advertising vendor may change their policies regarding hemp products. My team has seen this happen time and time again. They would spend a day getting a campaign rolling, see great success within a few days and then see the account had been suspended shortly after. While there are cannabis-specific advertising platforms such as Mantis, mainstream networks are still turning down hemp-based brands.
This sort of up-and-down movement requires patience, and a strong “try, try again” attitude. Applying the Dunkirk Marketing Model will help brands keep their eyes on the horizon while faced with these daily obstacles. With your focus on end goals, you must also be prepared for quick adjustments and split-second decisions.
Get Started Now
While CBD companies face far more obstacles than other CPG companies when it comes to promotion, your marketing should not take a back seat. How you build your brand today will position you to earn the trust of consumers tomorrow. Spend time building a solid foundation by getting to know your core customer. Outline a messaging plan and your brand’s positioning, and invest in owned and earned channels such as your website, email marketing and PR.
Last week, the United States Patent and Trademark Office (USPTO) published an Examination Guide to provide further clarity for how they assess the legitimacy of trademarks for cannabis products. For the uninitiated, the 2018 Farm Bill, which President Trump signed into law on December 20, 2018, removed hemp-derived cannabidiol (CBD) from the Controlled Substances Act. In order to register a trademark in the United States, the mark must be used in a lawful setting, meaning that the USPTO does not register trademarks for products that violate federal law- even if it is legal under state law.
In their guidance document, the USPTO identifies the distinction between hemp and other cannabis varieties as the basis for either issuing or refusing a trademark registration. This means that in the trademark application, companies need to specify that the cannabis product is derived from hemp, or cannabis with less than 0.3% THC in dry weight.
The USPTO clarifies that applications for trademarks that involve CBD filed before December 20, 2018 will be refused, but if they amend the filing date to after that date, the registration will be examined. Below is a direct quote from their examination guide clarifying this:
For applications filed before December 20, 2018 that identify goods encompassing CBD or other cannabis products, registration will be refused due to the unlawful use or lack of bona fide intent to use in lawful commerce under the CSA. Such applications did not have a valid basis to support registration at the time of filing because the goods violated federal law. However, because of the enactment of the 2018 Farm Bill, the goods are now potentially lawful if they are derived from “hemp” (i.e., contain less than 0.3% THC). Therefore, the examining attorney will provide such applicants the option of amending the filing date and filing basis of the application to overcome the CSA as a ground of refusal.
The USPTO’s Examination Guide explicitly mentions the authority of the FDA to regulate products derived from cannabis, much like the 2018 Farm Bill’s language. There is still some confusion in the cannabis industry surrounding the marketing and sale of hemp products under FDA regulation.
Under the Federal Food Drug and Cosmetic Act (FDCA), using a drug in a food or dietary supplement that is currently undergoing clinical trials is illegal (as is the case here- see Epidiolex for an example of CBD being used as an active ingredient in an FDA-approved clinical trial). According to the USPTO, this means that “registration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.”
Regarding trademarks for services involving “cannabis and cannabis production,” the USPTO also issued guidance. This section of the Examination Guide pertains to companies applying for a trademark that fall in the category of ancillary services, such as growing supply companies, lighting, nutrients, pest control and packaging, among other service providers. Basically, this section boils down to the same distinction the Farm Bill made between hemp and other varieties of cannabis. An applicant for a trademark needs to make clear their identification of services offered as involving cannabis containing less than 0.3% THC.
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