The Hemp Industries Association (HIA) today announced that Jennifer Knaack, senior director of compliance and science for Koi CBD, and La Vonne Peck, co-Founder of Native Network Consulting, have been appointed to the HIA Board of Directors through 2022.
Credit: Mex Chriss
The vacancy appointments were made strategically to advance two of the HIA’s top hemp industry priorities: Elevating standards and sustainable development, according to a press release. “We are really lucky as an industry to have leaders willing to contribute their time and efforts to making it better,” said HIA’s president Mike Lewis. “La Vonne’s background helping indigenous groups to approach this plant as a socio-economic opportunity for their communities is going to be invaluable to our efforts to help farmers get the most value out of hemp. And Jan Knaack’s scientific expertise and focus on elevating standards are exactly what is most needed in the cannabinoids discussion we are having as an industry right now.”
Peck has more than 20 years of experience supporting the economic development of native communities, and has assisted 65 tribes with cannabis planning, according to the release. “I hope having an indigenous citizen on the Board will open avenues in the future for our Tribal communities,” said Peck, who is the former Chairwoman of the La Jolla Band of Luiseno Indians in Southern California, and a current member of the California Cannabis Advisory Committee. “We have a Board with years of experience, and I look forward to working with them,” said La Vonne, whose company Native Networks Consulting has been a member of the HIA since 2016.
Knaack earned a PhD in Pharmaceutical Sciences from the University of Southern California and will occupy the seat designated for a cannabinoids expert on the Board and act as Chairperson of the HIA’s Cannabinoids Council, an ad hoc members group focused on elevating industry standards and scientific regulations that prioritize consumer safety. She has more than 15 years of experience in analytical chemistry including serving as a laboratory director and consultant for multiple cannabis testing laboratories.
“The HIA has made such a great impact on this industry. I’m excited to join the other members of the Board and, through the Cannabinoids Council, to continue advocating for the development of hemp products from a scientific perspective —one that extends through extraction and testing of final products, and that includes safety and mechanisms of action.” Jen heads compliance and science for Koi CBD, a leading national producer and distributor of hemp extract products that is committed to the highest standards of scientific accuracy, consumer education, and safety.
The Hemp Industries Association Board of Directors, currently at 11 members, is the governing body for the association and has seen service by numerous prominent hemp industry and activist leaders over its nearly 30-year history. Nominations for HIA’s 2021 Board Elections are underway now, with a slate of candidates to fill four upcoming vacancies to be announced in September. Business and farming members with at least two consecutive years of membership are eligible to stand as candidates.
In a stern reminder to its citizens that vaping and cannabis products are illegal, Taiwan law enforcement and health officials arrested five people in the city of Taipei last week. Taipei police stated that they had broken up a criminal organization, whose members have been accused of selling vaping products containing cannabis extracts, according to the Taipei Times.
“After surveilling the premises for several days, police officers carried out a raid at a motel in Taipei’s Wanhua District last week, in which 94 vaping cartridges and 23 pouches of unknown powdered material were seized,” the story states. “Preliminary lab testing revealed that the cartridges contained cannabidiol (CBD) and tetrahydrocannabinol (THC), the main active ingredients in cannabis. The pouches contained ketamine, which is a controlled substance.”
A 25-year-old woman allegedly led the criminal ring. One modified handgun, 11 bullets and an undisclosed amount of cash were also seized. Investigators said that Liu’s group had been selling the vaping cartridge oil for the past year and has profited an estimated NT$10 million ($359,544) in illegal proceeds.
The suspects face charges of contravening the Narcotics Hazard Prevention Act and for possession of illegal firearms in contravention of the Controlling Guns, Ammunition and Knives Act. Ring members allegedly promoted their products to youth via social media and online platforms.
The CBD and THC oil were branded as “Cookies,” “Sherbet,” “Dream,” “Skywalker” and other names. Officials at the Ministry of Health and Welfare yesterday said that e-cigarette and related vaping devices have not been approved in Taiwan, and their use therefore is illegal, regardless of their contents.
CBD in pharmaceutical products has received approval for medicinal use in Taiwan, when prescribed by a physician and the request is approved by authorities. However, general sale of CBD is not permitted. Such products can contain THC at less than 10 parts per million, but would otherwise be scheduled as a Class 2 illegal drug, officials said.
International cannabis attorney Rod Kight discusses minor cannabinoids and the growing cannabis market.
By Timothy S. Donahue
The questions kept coming. When Vapor Voice published an article on Delta-8 THC and other minor THC products in its last issue (see “High Expectations,” Vapor Voice, issue 3, 2021), it seems readers had more questions concerning newly marketed cannabinoids than the story answered. To gain more insight into the state of the current overall global cannabis market, we went to one of the best resources in the business.
In the cannabis industry, there may be no attorney more renowned than Rod Kight. While his firm is based in Asheville, North Carolina, USA, Kight currently spends much of his time in Mexico. His experiences with marijuana started when he used it during chemotherapy treatments in 2011. It had such a positive impact on his recovery that he decided he was going to focus on cannabis law. He wanted others to have the access that offered him such a profound experience.
“It’s kind of funny because I was practicing in North Carolina, which is a prohibition state. I got licensed in Oregon and kind of dove head-in to the laws regarding cannabis. It was right around the time that the 2014 Farm Bill came out that legalized, at the federal level, cannabis for the first time in almost a century,” Kight said. “We started getting calls about CBD. And like any good lawyer, I thought I would do some research and see what the laws and regulations were concerning CBD.”
He did not find much. He said he found nothing on CBD derived from hemp. The only federal restrictions on cannabinoids were centered on the source of the product. If the cannabinoids are derived from marijuana, then they are illegal controlled substances because marijuana is defined as the plant and all its parts. The legal definition is so broad that technically speaking, chlorophyll from a marijuana plant is a controlled substance.
Anything derived from a hemp plant, however, is legal, provided it has less than 0.3 percent Delta-9 THC. “All of the hemp plant’s parts are legal. So, if you get CBD or another cannabinoid from hemp, then it is not a controlled substance. I carved that out and began writing about it,” Kight explained. “We started to get more and more calls, more and more clients … things just went from there. That’s now called the Source Rule, and that was the first thing that kind of put me and the law firm on the map.”
Credit: Rod Kight
When Congress wrote the 2014 Farm Bill, lawmakers specifically stated that hemp is a cannabis plant with no more than 0.3 percent Delta-9 THC. Kight says the law could have easily been written as 0.3 percent of “any” THC. There are 30 known THC isomers. “They singled out that one cannabinoid and had to have some reason for doing so. We don’t know what reason that is. It could be good, bad or otherwise. But it took a special effort to say ‘Delta-9’ and call that out versus just ‘THC,’” says Kight. “The result is that all forms of THC with the exception of Delta-9—no more than 0.3 percent—have been removed from the controlled substances list.”
Another concern is that the U.S. Drug Enforcement Agency (DEA) views Delta-8 as a synthetic form of THC, which is illegal. Kight says the agency is correct in saying synthetic THC is illegal; however, he explained that it is not entirely clear whether Delta-8 produced from CBD qualifies as a “synthetic” form of THC under U.S. law since no generally accepted legal definition of the term “synthetic” exists.
“To be clear, there’s not a special listing for ‘synthetic’ THC. It just says that THC is a controlled substance and that includes synthetic forms of THC … it’s totally accurate. However, the Farm Bill provides an exception. It specifically removed hemp from the controlled substances list, including all of its cannabinoids, extracts, derivatives and isomers. That more specific and recent law trumps the general older law, which is the Controlled Substance Act (CSA).” Legally speaking, this is referred to as the doctrine of “lex specialis,” which means that “the more specific controls over the general. In other words, the Farm Bill exempts hemp-derived Delta-8 THC from the CSA.”
Delta-8 THC and its cousins are not like the synthetic cannabinoids, such as K-12 and Spice, that pushed the DEA to ban synthetic THC, according to Kight. He says that those K-12/Spice synthetics are not anything like the THC molecule. In fact, technically speaking, they are not synthetic forms of THC. Rather, they are best understood as analogs of THC. These fall under the Analogue Act, a section of the CSA passed in 1986. It allowed any chemical “substantially similar” to a controlled substance listed in Schedule I or II to be treated as if it were listed in Schedule I, but only if it is intended for human consumption and has a stimulant, depressant or hallucinogenic effect on the central nervous system that is substantially similar to or greater than the controlled substance.
Delta-8 does not have the same effect on the body as Delta-9 THC. “Synthetics are typically very strong and potent, whereas Delta-8 is up to 10 times less potent than Delta-9 THC,” he said. “That’s a long way of saying that those are compounds that are created in a laboratory. They don’t resemble THC. Delta-8 is a natural compound that the cannabis plant produces and is much less potent than Delta-9 THC.”
Preventing precedent
Another question that arose following our previous article centered on the recent arrests of some Georgia vape shop owners for selling Delta-8 products. The Newnan Times-Herald reports that county authorities were tipped off that a store was illegally selling THC products. An undercover officer bought gummies from the store, and law enforcement tested the product for THC. They tested positive for THC. However, the tests the officers used in the field cannot differentiate between Delta-8, Delta-9 or any other THC, or if the products contained more than 0.3 percent of THC.
While several states have laws, regulations or official agency-level legal positions banning Delta-8 THC, Georgia does not. “Could this case set a precedent for other vape shop owners if they are found guilty?” a reader asked.
Kight says one only needs to look to the state statute for an answer. If the state’s hemp laws mirror the federal law, like (the laws of) many states do, then Delta-8 is a legal product. “If a judge were to be persuaded that it was illegal, however, that could create precedent,” said Kight. “Other states could look to Georgia’s ruling, and that could be very detrimental if the prosecution wins.”
The bigger problem with the Georgia case is the testing protocols, according to Kight. Most state crime labs don’t test to differentiate between different types of THC. To convict someone, you have to prove beyond reasonable doubt that they have committed a crime. The best a crime lab can usually do is identify THC. Depending on the particulars of the case, this may not be sufficient.
“There’s all sorts of forms of THC that are lawful. So, meeting its burden of proof to convict is much more difficult for a prosecutor now that hemp is lawful,” explains Kight. “A related issue is when crime labs test products using heat, which is known as gas chromatography. Since THCA [the acid form of the THC molecule] transforms into Delta-9 THC when heated in a process called decarboxylation, this is problematic. THCA in cannabis begins to decarboxylate at approximately 220 degrees Fahrenheit after around 30 [minutes] to 45 minutes of exposure. That amounts to evidence tampering, namely, converting one piece of evidence into another. … I hope that criminal lawyers will address this issue when it arises.”
Banning cannabinoids is not the way to regulate them, according to Kight. He says lawmakers need to understand that prohibition is a failed concept. Not only does it waste resources, it also drives products that are desired by the public into the underground black market, which results in additional problems, according to Kight. Banning a product means regulators lose the ability to regulate the safety of these products. “They are washing their hands on the ability to regulate them and collect taxes,” Kight says. “Prohibition also incentivizes people who would otherwise operate legitimate legal businesses to participate in an illegal black market.”
Businesses need to understand the laws surrounding cannabis products because they are consistently evolving. There are a lot of U.S. Food and Drug Administration regulations regarding labeling and the manufacturing processes. Importantly, no one should be making medical claims about their products. “You need to understand the laws,” Kight said. “Secondly, you need to be willing to dig in and understand the science so that when you look at a certificate of analysis and an ingredient list, you know what that means so that you’re not pumping out products to the public that may be dangerous.”
Kight said that he expects the FDA to start regulating CBD products in the next 12 months to 18 months. He isn’t sure if those regulations will encompass all cannabinoid products. Currently, several bills dealing with regulating CBD are floating through Congress. For example, the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021 has been in the Subcommittee for Health since early February.
This bill would allow the use of “hemp, cannabidiol (i.e., CBD) derived from hemp, or any other ingredient derived from hemp” in a dietary supplement, provided that the supplement meets other applicable requirements. Currently, the FDA’s position is that CBD products may not be marketed as dietary supplements.
Credit: Jose
Kight said that he also expects the market to consolidate as federal regulators enact rules for the industry. This will be good for some businesses and bad for others. “Companies that are attractive to the bigger companies will either enter into joint ventures or be acquired. Additionally, smaller companies that fill a niche that some of these larger conglomerates cannot fill will fare well,” said Kight. “But for companies that don’t fill a specific niche and also are not going to be appealing as a merger acquisition target, they’re going to struggle once a lot of consolidation occurs.”
Marijuana markets
Marijuana is growing globally. Numerous nations have or are considering legalizing cannabis products. Kight says that global markets are a “moving target” and changes typically do not happen overnight. In December 2020, the United Nations’ drug policymaking body recognized the medicinal and therapeutic potential of marijuana. Following a 2019 World Health Organization recommendation, the U.N. Commission on Narcotic Drugs removed cannabis from the strictest drug tier, Schedule IV, of the 1961 Convention—where it had resided alongside heroin for decades.
The U.S. currently has bills in both the House and the Senate aimed at national legalization for Delta-9 THC products. The Cannabis Administration and Opportunity Act (CAOA) aims to withdraw laws and federal penalties on marijuana. If passed, the legislation would also expunge nonviolent federal cannabis-related criminal records and let states make their own marijuana laws.
The CAOA proposal builds upon the recent Marijuana Opportunity Reinvestment and Expungement (MORE) Act passed by the U.S. House of Representatives. The CAOA expands beyond the MORE Act by proposing a “moon-shot effort to address drugged driving and multi-substance impairment, establishing strong cannabis health and safety standards” under the FDA, and leveraging the expertise of the Alcohol and Tobacco Tax and Trade Bureau within the Department of Treasury to regulate industry practices.
The U.S. cannabis industry grew 32 percent in 2020; and by 2025, it is estimated that the industry could have nearly $45.9 billion in annual sales, according to Grandview Research. Kight says legalization is probably closer at the federal level than many realize, most likely within the first term of the Biden administration.
“Whether that’s 12 [months] or 36 months from now … I think we’re going to see it during that time period,” he said. “We don’t know what form it’ll take, but it’s probably going to either be removing marijuana and THC from the controlled substances list altogether, which is really what should happen, or they’re going to be scheduled in a different way. Most likely, we will continue to have state-by-state regulation within the paradigm of federal legalization; some states will be really liberal, and some states will be really conservative.”
Internationally, Uruguay and Canada were the first countries to legalize marijuana. Several other countries are attempting to follow suit. However, many nations have signed onto treaties that make marijuana and THC illegal. Hemp is also defined differently from country to country, especially in the EU. In Switzerland, it is a 1 percent THC cap, whereas some other countries in the EU have a 0.2 percent cap, according to Kight. Countries have recently been more open to legalizing hemp, and that trend is expected to continue.
“We’re beginning to see producers in certain countries where hemp can be grown inexpensively being shipped to other countries where it can’t be produced inexpensively but where there’s a higher market price and demand. For instance, South America is known for being able to cultivate large tracts of hemp, especially in countries like Uruguay and Colombia, he says. “They want to deliver it to the EU where it’s a lot more expensive, there’s a large demand and people willing to pay more.”
In France, a court case made the decision for the country to legalize CBD products. France’s highest court ruled that CBD—including CBD flower—are legal in the country. The decision referenced last year’s KanaVape judgement in which a European court ruled that the French authorities had acted unlawfully in prosecuting two businessmen who imported CBD flowers from the Czech Republic in 2014, citing that CBD is “not a narcotic.”
The European court said France cannot ban any CBD that’s produced lawfully in the EU. If a product is produced lawfully in one EU country, it must be allowed in all EU countries. “France is changing its laws right now. Spain has got to change,” said Kight. “We are going to see this happen across Europe. These countries are working toward or just coming into compliance.”
One of the biggest stories currently in cannabis reform is Mexico. In late June, Mexico’s Supreme Court declared unconstitutional the prohibition of personal marijuana use in the country, clearing a path to legalization. Mexico’s lower house passed a legalization bill in March, but it is still awaiting legislative approval in a gridlocked Senate.
The Supreme Court of Mexico determined that the laws in Mexico prohibiting the personal use of cannabis is unconstitutional, according to Kight. Mexico has a “really important clause that the U.S. doesn’t have” called The Right to Free Development of Personality. The Mexican constitution protects the individual’s right to be unique and independent.
In several cases, marijuana advocates argued that the state cannot infringe upon that right when the consequences of marijuana consumption—be they positive or negative—only affect the individual who chooses to use the drug. “The Mexican Supreme Court agreed and determined that laws prohibiting cannabis use for personal use violated that constitutional provision,” Kight said.
Under Mexican law, its Supreme Court must rule on an issue five separate times (separate cases) for a decision to have precedence or value. The same process was how same-sex marriage was legalized in Mexico in 2014. The first cannabis case was brought by four members of the Mexican Society for Responsible and Tolerant Consumption in 2015. After the fifth separate marijuana decision was handed down in 2020, the court ordered the Mexican Congress to change the criminal laws prohibiting the use of cannabis.
Mexican lawmakers then failed to meet the Supreme Court’s April 2021 deadline to end marijuana prohibition after spending months going back and forth on a legalization bill that passed both chambers of Congress in differing forms. “There was an expectation that the Senate would again ask the court for an extension, but that did not take place. The Supreme Court of Mexico then entered a ruling that nullified the Mexican laws prohibiting cannabis use, and so we’re kind of in the Wild, Wild West now,” Kight explains. “That’s never happened for any subject under Mexican law, much less cannabis. Now the Congress is under the gun to enact laws and regulations.”
Credit: Stock Photo Pro
Future focus
Overall, cannabis markets are expected to continue to grow globally. According to Market Watch, the global cannabis market size is expected to reach $118.9 billion by 2027 and is valued at approximately $20.6 billion in 2020. It is anticipated to grow with a healthy rate of more than 28.5 percent from 2020 to 2027. Regulation is coming, and many countries will likely regulate cannabis similar to the way tobacco products are regulated.
To help secure the future of the industry, businesses currently selling or manufacturing products using minor cannabinoids need to regulate themselves and produce and/or market only high-quality products using legitimately sourced and tested ingredients, says Kight, adding that one bad product can reverberate through the industry. Business owners should also be actively engaged with regulators.
“There are a lot of cannabis products out there that are not regulated. They might have contaminants in them that harm people, and we don’t want that,” he says. “I think it’s really important that industry players make sure they’re only dealing in high-quality, safe products. And they need to let their representatives in government know how important hemp is to them, including all of its cannabinoids.”
The U.S. Food and Drug Administration on Wednesday told Charlotte’s Web Holdings Inc. that its cannabidiol product cannot be sold as a dietary supplement, signaling that CBD reform may have to wait for congressional action.
Credit: Anankkml
“While we disagree with FDA’s reasoning, believing we provided extensive and credible scientific evidence that supported a different outcome, this decision affirms the path to regulatory clarity must come from Congress,” Charlotte’s Web CEO Deanie Elsner said in a statement.
The company’s bid to sell its full-spectrum hemp extract with CBD as a dietary supplement won’t be considered because of the FDA’s own prior decision to treat CBD as a drug, according to a letter posted on the agency’s website Wednesday, according to Fortune. The FDA’s latest decision rested in part on its prior approval of Epidiolex, a CBD drug to reduce seizures, which the agency said precludes it from authorizing CBD for dietary purposes.
Even if the drug hadn’t been approved, though, the FDA said in the letter to Charlotte’s Web dated July 23 that it “has concerns about the adequacy of safety evidence” that the company submitted. The agency would have wanted more data on potential liver and reproductive toxicity.
The decision isn’t expected to impact sales of Charlotte’s Web products or prevent other companies from continuing to sell CBD products. The market for CBD products has already grown to more than $6 billion as consumers seek help with everything from relaxation to focus to better sleep, according to reports. While generally an unregulated market, the FDA will periodically crackdown on companies that try to make unsubstantiated claims about the health benefits of CBD products.
In Nevada, Delta-8 THC is illegal. During the cannabis culture and accessories trade show, CHAMPS, the Federal Bureau of Investigation and the the Drug Enforcement Administration (DEA) allegedly raided the show because a vendor participating in the event unwittingly gave the Las Vegas district attorney an unauthorized Delta-8 THC product sample. Several social media posts by vendors at the show said they were detained and products were confiscated.
Credit: CHAMPS
Providing samples to the show’s attendees is against the rules. As a result, some vendors were asked to vacate the premises. CHAMPS vendors received notice last week that samples of Delta-8, Delta-10 THC and similar products were illegal in Nevada and vendors should refrain from offering samples.
Several social media posts began to report of the feds raiding the venue started cropping up late Wednesday evening. By Thursday, various vendors began posting that the officers ordered the attendees to wait outside while they inspected the scene, according to CannaTech Today. As a result of yesterday’s occurrence, plainclothes police officers are walking the show floor today while its vendor booths are currently being searched for any Delta-8 THC and similarly prohibited products.
Through the last year, several states, including states where Delta-9 THC is legal, such as Oregon, California and Arizona, passed laws specifically banning Delta-8 THC. Nevada went a step further in early July to specifically include Delta-8 in its definition of cannabis. The Nevada Cannabis Compliance Board recently stated, “products exceeding 0.3 percent THC, including Delta-8 and Delta-9 THC, would be considered cannabis. As such, a license from the Cannabis Compliance Board would be required to make it or sell it.”
The Champs trade show is one of the largest cannabis industry trade shows in the U.S. The 2021 sow is being held from Jul 27 to Sat, July 31 at the Las Vegas Convection Center. Smoke shops, vape shops, dispensaries, 420 counter-culture, adult novelty shops, C-Stores, online marketers and branders, entrepreneurs, glassblowers, and counter-culture industry professionals who are seeking to grow in their market sectors and gain current knowledge and product opportunities to better leverage their business in a thriving marketplace attend CHAMPS, according to the show’s website.
A new line of marijuana growing kits for home use has been launched by Avail Vapor, one of the largest vaping companies in the world. Avail’s cannabis kits started to be sold in 18 of its Virginia-based stores under the Avail Grow brand on July 1, according to Maggie Gowen, Avail’s senior director of marketing and communications. Avail’s marijuana growing supplies will be available only in-store and not online.
Credit: Avail Grow
The growing kits feature soil, nutrients, lamps and other equipment needed to grow marijuana in Virginia, where marijuana became legal on July 1. The kits do not offer seeds, however. The sale of marijuana seeds and plants are illegal in Virginia. Residents over the age of 21 in Virginia are allowed to have up to four marijuana plants per household.
Priced at $130, the Starter Kit is intended to be used from germination through the seedling phase. Two additional kits are being offered by Avail Grow for $600 and $800 that will bring the plants to the harvesting stage. The larger kits also offer tenting and a filtration system.
Avail Grow is the vapor manufacturers second foray into the cannabis market. Avail launched its Leafana Wellness line of cannabidiol (CBD) products in 2019. Early last year, Avail Vapor split into three separate entities: Avail Vapor LLC (retail), Blackbriar Regulatory Services (contract manufacturing, laboratory services and FDA compliance consulting) and Blackship Technologies LLC (research and development).
Humble Specialty Products announced its latest hemp-derived product line during the Tobacco Plus Expo (TPE) trade show held in mid-May. According to a press release, the full lineup features five product formats that allow for consumers to easily identify their best method of consumption. The CBD line joins Humble’s recently launched line of hemp wraps.
Humble CBD is available in five product formats: a balm, a chewable, a dropper, a softgel and a twist.
“We are excited to introduce our products to surfers, skaters, snowboard enthusiasts and beyond as an option to incorporate into their wellness regimens,” said Daniel Clark, CEO of Humble. “Now more than ever, people are embracing energetic routines that drive them to push further each day. We know sustaining a dynamic life requires dynamic solutions, which is why Humble CBD products are designed to boost focus and help relaxation and recovery.”
Humble’s CBD products include:
Balm 1,000 mg of CBD in a 1.67 oz bottle roll-on featured in a refreshing eucalyptus mint scent;
Chewable 750 mg of CBD in a 30-count container or 100 mg of CBD in a 10-count container in assorted flavors;
Dropper (tincture) 60 ML droppers in three CBD strengths (1,000 mg, 1,500 mg and 2,000 mg) and eight flavor options;
Softgel 900 mg of CBD in a 30-count bottle or 100 mg of CBD in a 10-count pack;
Twist Six single-serve oil drops featuring 33 mg of CBD per serving; available in four flavor options.
Humble’s CBD products are lab tested, gluten free and made from industrial hemp grown in the U.S., according to the release. Humble CBD is available for purchase in select retailers and online at www.humblecbd.com. “Whether you prefer a topical, a chewable or a single serving dropper, Humble CBD is dedicated to helping you find the perfect product to fit your needs,” said Clark.
New York state has joined a growing number of U.S. states that have expressly prohibited delta-8 THC and other THC isomers derived from hemp. However, lawmakers in the Empire State did make several small concessions to hemp producers, including a modification to limits on smokable hemp and removing a requirement that all cannabinoids over 0.05 percent THC be listed on product labels.
The delta-8 THC ban is part of the state’s revised regulations for hemp products. The new rules state that hemp cannabinoid products may “not contain synthetic cannabinoids, or cannabinoids created through isomerization, including [delta] 8-tetrahydrocannabinol and [delta] 10-tetrahydrocannabinol.”
New York has also placed a ban on hemp prerolls, cigarettes and any “flower product labeled or advertised for the purpose of smoking.” But the state health department says it will allow the sale of hemp flower, so long as the flower is not branded as an item for smoking, according to Hemp Industry Daily.
Hemp vapes are legal for customers over 21 and must carry “a warning stating that smoking or vaporizing is hazardous to your health.”
At least six states have considered or are currently updating their laws to specifically govern delta-8 THC, joining at least 11 that already have laws on the books addressing the minor cannabinoid, which can produce psychoactive effects in some people, although they are considered to be less potent than the delta 9-THC common in marijuana.
The labeling requirement remains in place for CBD and THC amounts in a product, just not for all cannabinoids in a product. The New York updates come six weeks after Gov. Andrew Cuomo signed a law making a first-in-the-nation attempt to regulate hemp operators working with flower and cannabinoid products the same way the state oversees marijuana operators, designating a new category for “cannabinoid hemp” that will be governed by a new Office of Cannabis Management.
New York’s health department told hemp and marijuana operators that it won’t require track-and-trace systems for hemp products, as some marijuana operators have requested. “Unlike medical marijuana and adult–use cannabis markets, cannabinoid hemp products can enter interstate commerce and it would be impractical to impose a state level seed–to–sale requirement on an industry not limited to intrastate,” regulators wrote. The state legalized recreational marijuana earlier this year.
Michelle Bodian, a cannabis attorney with the Vicente Sederberg firm in New York City, said that the state has the “potential to set a model for the rest of the country in regulating consumable hemp products.” But she added that the U.S. Food and Drug Administration needs to implement a single set of health-and-safety regulations. “Until there are national standards from FDA concerning cannabinoid hemp products, it continues to be very difficult and impractical for businesses to comply with these very specific state testing and labeling requirements, let alone all the other unique requirements.”
Priscilla Agoncillo, president of the Cannabinoid Industry Association, says the CBD market is poised for massive growth.
The cannabidiol (CBD) market is growing rapidly. The market is also preparing for industry regulations from the U.S. Food and Drug Administration as well as the possibility of changing rules under a new hemp bill winding its way through the U.S. Congress. Speaking during an online forum presented by TMG, a tobacco media group, Priscilla Agoncillo, president of the Cannabinoid Industry Association (CBDIA), outlined the current state of the CBD industry and what manufacturers, retailers and consumers can expect through 2021.
Estimates by New Frontier Data say the CBD market will increase from $390 million in 2018 to $1.3 billion in 2022. Additional research by BDS Analytics and ArcView Market Research suggests that CBD sales will reach more than $20 billion in 2024. CBD already comes in numerous forms, such as oils, tinctures, capsules, edibles, even topicals and cosmetics. CBD products also are expected to expand into infused beverages, suppositories, sprays, inhalers and a wide variety of hemp smokable products, according to Agoncillo. There will also be a significant increase in cosmetics and supplements that contain CBD as well as more novel drugs introduced as companies expand research and development efforts.
“In distribution channels, despite strict rules and regulations, the number of dispensaries and authorized retail storefronts that sell cannabis-based products to consumers will be opening due to new regions and states legalizing (marijuana) to meet the demand of consumers,” Agoncillo said. “Additionally, with the increase of product types, more big-box retailers will be stocking more CBD products and fostering relationships with CBD companies in research and development.”
Agoncillo expects the popularity of CBD products to continue to grow as the scientific evidence of CBD’s benefits comes to light. The research and findings will also boost efforts by companies looking to introduce new products and develop new uses for various types on cannabinoids, which will increase integration with new technology and delivery systems. There are currently an estimated 104 cannabinoids in the cannabis plant.
Looking at the top CBD trends in 2021, Agoncillo says that niche market efforts will become larger and more formalized as brands continue to seek out less crowded consumer segments. This will further diversify and differentiate each brand and allow for businesses to achieve higher returns on investments (ROIs) on exploratory segmented marketing efforts.
“Brands will move toward proven consumer packaged goods (CPG) models focused on brand family extensions, including the marriage of complementary products and product iterations. Companies will work towards developing diversified portfolios and specific consumer segmentation,” she said.” You will see brands that will follow the Procter & Gamble family of brands business model or create line extensions of existing brands.”
Priscilla Agoncillo
Moving forward, Agoncillo says that the success of the CBD market will be predicated on understanding consumer market entry and adoption trends. According to High Yield Insights, CBD gummies are the entry point for most new consumers (at a rate of 60 percent) before trying other types of CBD products. Another growing entry point is CBD-infused beverages. A recent CBD beverage study released by High Yield Insights and Innovate MR revealed just how much legroom there is in the CBD beverage segment, according to Agoncillo. Among 4,200 survey respondents, only 28 percent report finding “a CBD product brand or format that works for them,” according to the research.
“We project exponential growth in this segment [along with increased] diversity and inclusivity. Asian, Black and Hispanic consumer marketing efforts will support cultural competence, particularly among the nation’s largest brands,” said Agoncillo, citing her organization’s market expectations. “We expect to see more focus on niche marketing as consumer brand loyalty shifts toward the brands that consumers believe, respect and understand. More brands will concentrate on the growth opportunities within the Asian, Black and Hispanic consumer market, which have remained relatively untapped by CBD companies. One of the first signals of brand dominance in this segment market is the introduction of unique campaigns, specifically built to appeal to Black and Hispanic consumers, as well as Spanish-language advertising, packaging and support.”
Exploding anxiety rates and associated mental health issues, especially surrounding the Covid-19 pandemic, will also provide hemp and CBD brands with new opportunities to promote the efficacy of CBD. Agoncillo says her organization is seeing increased focus on this niche market, which can be tricky to navigate due to advertising restrictions.
“Brands are finding value in workarounds that allow them to leap over ad restrictions via targeted keyword searches; 25 percent of new market entrants purchased CBD to cope with pandemic-related stress and anxiety,” she said. According to High Yield Insights, more than 83 percent of U.S. employees reported mental health issues during 2021, and over 67 percent of U.S. employers project another mental health crisis within the next two years.
“We project heightened partnership and growth opportunities in CBD products focused on stress, anxiety and sleep. Staying ahead in CBD as a highly regulated, newly developing industry, it is important that you obtain legal counsel to assist in the understanding of changes in regulations as well as to help you keep up with the constantly changing atmosphere,” explained Agoncillo. “Keep your company in compliance with regulations, always. As many of the regulations have not been finalized to cover the entirety of the CBD industry, it is safer to always err on the side of caution by operating your company according to GMP and other top-tiered standards.”
New regulations for the CBD industry are also on the horizon. Draft rules from the FDA are currently with the White House’s Office of Management and Budget; however, review of those rules is currently being postponed by the Biden administration. Agoncillo says that no one in the industry knows exactly what those rules entail.
“It’s very interesting because I remember when that report came out; it was back in October 2020, and the media would contact us and ask for our opinions on what that report was and what the regulations are. The truth is that they didn’t release it to anyone,” she says. “Through the CBDIA, we have a lobbyist in Washington that’s dialed in and has his finger on the pulse of everything that’s happening. And they haven’t shown what those regulations are to anyone. However, we do know that it is suggested that things are moving towards GMP standards. In the U.K., they’ve adopted the novel foods application for their CBD products. They’ve moved full steam ahead there. So there’s a suggestion that it might follow that closely. But obviously, we don’t know until they actually come out. This is why it’s really important to be involved with different industry associations and different organizations because they are going to be the first to get the word of how it’s going to actually roll out.”
Another legislative change is brewing in the U.S. Congress. On Feb. 4, 2021, Congress introduced another CBD deregulation bill, H.R. 841—the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021. If passed, the bill would legalize the marketing of hemp, CBD or any other ingredient derived from hemp in a dietary supplement, provided the supplement satisfies other applicable requirements. The bill is in committee as of this writing.
Agoncillo says another important part of the success of a CBD business is participating and supporting the community. She says that owners can help their company succeed by joining and being active in relevant cannabinoid-related industry associations, attending and being present at key conferences and crafting business outreach accordingly. Owners also need to hire the right staff to help them grow.
“Keep your CBD company ahead by staying on top of the latest medical research and/or participating in the R&D to further advance the science of CBD and the industry as a whole. Hire talent with five-plus years in the cannabis or hemp industry to help navigate through the development of the CBD segment of your business model,” she says. “You will need a seasoned insider that understands the culture and can effectively translate that to your company.”
Experienced staff can help guide business owners through the smoke and mirrors to avoid pitfalls, harmful partnerships and assist in forming a proper strategy for a business model. Additionally, experienced talent will have key relationships and resources in place to assist in executing business endeavors, according to Agoncillo.
“We need high-operating brands and companies out there to apply their talents and their products and their technologies into the CBD space. The consumers need it,” she says. “We want it. And there’s no better time to really sink your teeth into this industry. And it’s very exciting because we can form this industry into what we need it to be.”
The U.S. House of Representatives on April 19 passed legislation that would allow banks to serve cannabis companies in states where it is legal, reports Reuters.
The bill clarifies that proceeds from legitimate cannabis businesses would not be considered illegal and directs federal regulators to craft rules for how they would supervise such banking activity.
Banks have generally been unwilling to do business with companies that sell marijuana or related products, fearing they could run afoul of federal laws.
That has left companies in the marijuana industry with few options, including relying on just a handful of small financial institutions or doing business in cash.
Thirty-six states have legalized medical cannabis while 17 states now allow adult use, according to the National Conference of State Legislatures.
Lawmakers voted 321-101 to approve the bill and send it to the Senate.
