High Times for the Cannabis Industry
Emerging Trends with a COVID-19 Caveat
by Jim Motavalli
It’s fair to say that the cannabis industry has arrived. Recreational marijuana has now been approved in 17 states, and 37 have allowed marijuana for medical purposes. “We have CBD!” proclaim store signs selling the buzz-free cannabidiol. In 2020, more than 240,000 people worked in cannabis-related jobs. The Brightfield Group says the medical cannabis industry will reach $16 billion in annual U.S. sales by 2025. Cannabis market research firm Headset predicts this will be “a year of positive growth” for the industry.
Legalization and expansion are strongly in line with public sentiment: Two-thirds of Americans believe marijuana should be legal, says the Pew Research Center. Opposition has fallen from 52 percent in 2010 to just 32 percent by the end of 2019.
“Dispensaries and cannabis cafés are as commonplace as Starbucks, and ordering edibles is as easy as getting pizza,” reports marketing firm Grassfed Media. The National Retail Federation noted a 700 percent increase in the demand for CBD-based products in 2019.
One caveat, however, is COVID-19. Ron Newman, a sustainable development analyst with Lee Enterprises Consulting, says the hemp/CBD business was flat during 2020 because of the pandemic. “With the economic situation, people were buying only essentials,” he says. “But we’re seeing the business start to come back now.” With COVID-19 recovery, more growth is certain, and here are some upcoming trends.
Tetrahydrocannabinol (THC) is the active ingredient in marijuana that gets the user high. The natural compound CBD—said to have healing and pain/anxiety relief properties—is being heavily marketed in the form of oils, edibles (including gummy bears and lollipops), oral sprays, creams and pills. The third-most popular food-related Google search term in 2018 was “CBD gummies”. CBD dietary supplements are the biggest category, followed by topical applications and third, food and beverage additives.
THC is still illegal in many parts of the U.S., but CBD cultivation and sales were legalized by the 2018 Farm Bill. California offers a model for the states in regulating cannabis. Both medicinal cannabis and adult recreational use are legal, but the industry is strictly regulated by the Department of Cannabis Control to ensure that businesses operate safely and that products are free from contamination, properly labeled and kept away from children.
Research into cannabis is an emerging field, with 23,000 papers published since 2010, and Grassfed believes that some future products will be based on “other cannabinoids and terpenes such as CBN, CBG, THCA and THCV.” In addition, strains labeled indica, sativa or hybrid, or with names like Gorilla Glue and Wedding Crasher, may increasingly be replaced by a scientifically supported classification system.
Bar & Restaurant magazine wants its bartenders to know there might be THC-free CBD cocktails on their future bar menus. It reports that these drinks are “a legal grey area; federally they’re illegal, but some states have their own CBD-related laws.” The U.S. Food and Drug Administration (FDA) says flatly, “It is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement,” but the agency has said it is considering relaxing this prohibition.
There’s a Wild West quality to the CBD/hemp industry today. An FDA study found many CBD products to be mislabeled, with either more or less CBD than indicated. A significant number contained THC.
And then there are the laws, with federal prohibitions and state regulations, that can be quite different. For instance, New York bans CBD products with more than 0.3 percent THC, and bans CBD from any alcohol or tobacco product. So determining whether any specific product is “legal” or not in different locations is complex. But marketing benefits are plain. Wynk alcohol-free seltzer says it has “2.5 milligrams of THC and 2.5 milligrams of CBD in every can.” However, Wynk is not widely available. Casey Coughlin, Wynk brand manager, says, “We only sell Wynk through the dispensary channel, which is highly regulated on a state-by-state basis. So, although CBD and THC beverages are not federally legal, they are at the state level under regulation.”
Jody McGinness, executive director of the Hemp Industries Association, says the FDA doesn’t actually have strong enforcement powers, and that the worst thing CBD/THC legal violators can expect from the agency is a warning letter posted on the FDA website.
Gregg Sturz, co-founder of Florida-based CBD Hemp Experts, a leading wholesale provider of cannabis-derived products, says he expects the FDA to eventually approve CBD for use in dietary supplements. “I don’t think they’re trying to shut the industry down, just come up with some clear guidelines,” he says.
The legal status of THC is such a question mark that, according to Investopedia’s Marijuana Investing Guide, large banks “are currently afraid of money-laundering charges they may face if they work with these businesses … The American Bankers’ Association has been pushing for more legal clarity.”
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Newman, who studies the medicinal uses of CBD, notes that in some cases it’s being marketed as a topical analgesic for pain relief, when actually the other proven ingredients in analgesics—including methanol and camphor—are doing the heavy lifting. This situation has also produced FDA warning letters, because if CBD is claimed to relieve pain, then it is required to go through a new drug application process for efficacy.
In 2018, the FDA approved Epidiolex, an oral solution with CBD as an active ingredient, used for the treatment of rare and severe forms of epilepsy. While it’s the only approved product so far, studies suggest CBD might be useful for anxiety, insomnia, skin protection and addiction.
McGinness sees the major growth area for cannabis-related products not in CBD, but in industrial hemp fiber. As hemp growers gear up in the Midwest after decades of federal bans, they’re likely to expand beyond cottage clothing companies into such areas as auto and industrial parts and building materials, he says.
“Hemp products made in a green way create fewer emissions,” McGinness says. “And the bioplastics made from hemp are lighter-weight, which increases fuel efficiency. I expect we’ll see heartland industrial hemp grow so much it will make CBD look like a niche.”
Jim Motavalli is a Connecticut-based journalist who writes about the environment, cars and music. He can be contacted via JimMotavalli.com.