The Cannabidiol (CBD) market has developed rapidly and surprisingly, enabled by a loophole in hemp legislation and boosted by the change in perceptions around cannabis of the last years. But, given the intensity at which the market developed, governments have been extremely slow to react.
According to the cannabis market research firm, Brightfield Group, the European market for CBD products had grown to €273 million in 2018. This number is estimated to grow more than five-fold to €1.5 billion by 2021. Incredibly, there is no regulation in place to oversee the CBD market and the consequences are starting to be felt.
The grey nature of the market is allowing companies to sell products without any controls, posing a grave risk to people’s health. Ironically, the risks are not associated to the CBD compound itself, but to other elements that may be found in or be added to products, such as mould or toxic heavy metals which cannabis plants may absorb from the soil.
Another issue affecting the CBD market is false advertising. Europe’s leading cannabis labs report that a large number of companies place products in the market with less CBD than they state on their packaging. In some cases, products contain no CBD at all. This is terrible for an industry that needs to prove it is reliable. Among the most worrisome findings are products confirmed to have been laced with synthetic cannabinoids, dangerous chemicals or illegal drugs.
It’s not an option to write off an entire new industry, one that brings with it jobs and where most producers are doing things correctly. But we can also not risk the safety of consumers. The EU did take action in order to clarify things, but the choice was far from perfect. By declaring CBD a novel food earlier this year, the EU has started a process where clarity could take years to achieve. That is too slow. CBD will need to be thoroughly assessed, added to the Novel Foods register and only then would regulations be created.
And these regulations wouldn’t apply to CBD products in areas other than food and cosmetics. The CBD market is already too large; there are already millions of users and thousands of companies that need guidance for the hundreds of product types already available. Proper standards and frameworks are needed for CBD now. If necessary, a transitional framework in the form of provisional regulations could be established until the full state of all cannabis products is clarified and more comprehensive laws put in place.
In a transitional regulatory system, we would not be starting from zero. Scientific experts in this area already exist. They have done research and completed studies with real people. There are countries that have legalised cannabis entirely, and they have lessons to share, both positive and negative. In the US, the Federal Drug Authority (FDA) has ramped up its efforts to collect information on CBD from scientists and other relevant professionals and interest groups. They have set up a working group in order to effectively plan for future CBD regulation. The EU should be taking its own steps in a similar direction.
Transitional regulation would not be complicated. Its focus would be clearly on the safety of consumers. The main gaps at the moment are mainly related to a lack of relevant quality standards and laboratories. There is simply no infrastructure available to support quality controls for the market. This is the main area where governments might need to be proactive. Regulation will create demand for laboratories. These might at first need to be set up through the initiative of the public sector. These laboratories would be third parties responsible for ensuring consumer safety and certifying the quality of products.
Governments’ biggest responsibility should be the protection of consumers by imposing mandatory testing of products for heavy metals, mould and other unexpected chemical products that may be found in cannabis products. Secondly, labs should ensure products state the right amount of CBD that they contain. Tetrahydrocannabinol (THC) – one of at least 113 cannabinoids identified so far - should also be properly measured to ensure it does not pass the legal maximum.
Another step that needs to be taken is the definition of the testing standards themselves. There are three different ways of testing for cannabinoids, and ideally the same standards should be used across Europe.
In terms of the packaging itself, the levels of CBD and THC should appear very clearly, even if it’s evident that THC may not yet exceed 0.2% in Europe. CBD products should state whether they are ‘full spectrum’ or made with isolates. A product with full spectrum will contain further substances found in cannabis (including THC to a certain extent), and other cannabinoids that enhance the effectiveness of the CBD contained, unlike products made with isolates (a concentrated form with no other cannabinoids present). This is an important difference.
Another thing the EU should tackle is the status of CBD as a legitimate industry. At the moment, players in the CBD industry are unable to carry out effective branding. They struggle to gain access to basic financial tools such as bank accounts, credit cards or loans. CBD companies are not even able to take payment online, as in most cases companies, as the likes of PayPal and Stripe refuse to work with CBD companies. Despite not doing anything illegal, CBD brands are being discriminated against when it comes to advertising in traditional media or digital media channels. This also limits CBD companies from growing their brands.
Brands serve an important function. Associated with different attributes such as quality or price, they help guide consumers in their choices. Brands are also relevant in terms of ensuring minimum quality standards. Over time, brands will be scrutinised by consumers and observers of the market, and so need to be accountable for the quality of their products. But this does not happen in Europe’s CBD industry today. As a result, consumers may fall victim to products that endanger their health. CBD companies need to be allowed the tools of branding. Conversely, this will allow us to hold brands accountable.
The CBD market needs to be regulated. It’s not about the CBD itself, but about the way the products are treated and manufactured. As the CBD market continues its exponential growth, European authorities should get serious about the potential threats of such a large, unregulated industry. Europe has a reputation for protecting its citizens, but when it comes to cannabis, it’s lagging behind. There needs to be a mechanism to allow for the minimum safety standards to become a requirement, and for brands to guide consumers in their choices.
Jonas Duclos is the CEO and Founder of JKB Research SA, a cannabis company based in Geneva, Switzerland
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