For years, hemp and cannabidiol, better known as CBD, remained relegated to the fringes of the CPG market. But the global hemp market broke out in a big way in 2020, growing into a $1.7 billion business.
Industry analysts expect that to continue, with estimates as high as $13 billion by 2028, representing a 27.2% combined annual growth rate.
While the 2018 Farm Bill – and its removal of hemp and hemp products from the Controlled Substances Act – played a significant role in the expected expansion, there’s more to it than that. Baby Boomers have taken to CBD as if they’ve returned to the 1960s. But instead of using it to escape reality, they’ve turned to CBD to help treat it. According to the AARP, seniors now make up more than a third – 36% – of the patients on the medical marijuana registry.
This popularity isn’t limited to the United States, either. A pair of hemp producers in China has announced plans to invest $22 million in a hemp industrial park expected to produce 30 tons of CBD extract annually once it’s up and running.
“Right now, CBD is the chemical equivalent to Bitcoin in 2016,” Jason DeLand, a New York advertising executive, told the New York Times late last year. “It’s hot everywhere, and yet almost nobody understands it.”
That confusion hasn’t kept food, beverage, and even dietary supplement makers from trying to capitalize on CBD’s exploding popularity. While you can’t find any on the shelves in your local Target – at least not yet – fast-food giant Carl’s Jr. launched a CBD-infused burger in Colorado earlier this year.
Australian-based Ecofibre Limited saw the writing on the wall more than 20 years ago. They’re now the global leader in hemp technologies for health and resource sustainability. The company owns one of the largest and most diverse collections of genetics, with more than 300 land acres of cannabis across 25 countries.
Earlier this year, Ecofibre announced its working with TraceGains to collaborate on hemp standards and compliance.
“TraceGains has a long history of protecting consumers, manufacturers, and distributors by ensuring the highest level of transparency in safety and compliance,” Ecofibre Managing Director Eric Wang said. “We reviewed several options, but only TraceGains gives manufacturers and distributors the ability to validate that CBD providers are fully compliant with the 2018 Farm Bill.”
Eric spoke with TraceGains CEO Gary Nowacki about where the CBD business is headed on a recent Conception to Consumption episode. The new podcast highlights conversations between Gary and influential people in the CPG industry. It covers a variety of topics, ranging from career advice to new product innovation to regulatory compliance.
Playing catch up
During the podcast, Eric was quick to point out that for anyone wanting to get into the CBD business, whether as a supplier or a finished goods manufacturer, it’s still illegal at the federal level to include CBD on its own in any food, beverage, or nutritional supplement. However, suppliers and manufacturers can legally use hemp in their products, including CBD, as a natural component.
Eric urged caution as regulations are still evolving, and it could be years before the CBD market sees lasting stability.
“The laws aren’t clear yet,” Eric said. “Some states have decided that it’s perfectly legal and have programs in place, while other states remain unsure of what to do.
As many businesses and consumers charge ahead, regulators are still trying to catch up.
Beware of bad actors, labels
Because of the lingering uncertainty in the law, Eric suggests the CBD market remains vulnerable to bad actors.
“Whenever people think there’s money to be made in an industry, a lot of people flow into it and over time people flow out of it, but it’s that startup period where it gets a little bit crazy, as the gold rush in the wild west,” Eric said.
“When you have something that’s going into people’s bodies, you have to be very careful,” Eric added. “That’s why it’s wonderful for us to be working with TraceGains, which is about protection and safety.
Label claims are another area of concern for anyone who might want to dip their toe into the CBD pool.
The farm bill prohibits companies from making any therapeutic or structure/function claims because of CBD’s presence in their products.
“My advice – and this is urgent – it’s early in the game, and there’s no point putting your business or your customers at risk unnecessarily,” Eric said.
“Our partnership with Ecofibre represents our joint commitment to helping companies working with hemp avoid risk and easily adhere to current and future legislation,” Gary added.
Most recently, Ecofibre demonstrated commitment to quality by achieving the BCRGS certification with TraceGains software. Watch this on-demand webinar “Quality Assurance & Compliance for Food, Hemp, and Supplement Companies” and learn how Ecofibre has been able to accomplish so much and emerge as an industry leader. Watch the webinar now.