Before deciding to add CBD to a food or beverage product, experts advise makers to take the time to understand the regulatory repercussions and the trends of the category. During a Big Idea session, which took place during the Specialty Food Live! event, Monday, a panel of CBD experts highlighted the challenges and potential rewards of putting CBD into food and beverage.
The panel, moderated by David Donnan, included Jeni Lamb Rogers of PSL Law Group; Bethany Gomez, managing director of Brightfield Group; and Liza Cohen, founder of Nature’s Nosh.
Regulatory Grey Area
Because the legal stakes are so high, it’s essential that makers stay up-to-date on the latest state and federal regulations around CBD, said Rogers.
In October 2019, the USDA published the final interim rule, mandated by the 2018 Farm Bill, stating that the only hemp that is legal to add to food and beverage is hemp that contains a concentration of less than 0.3 percent Delta9THC. Any other kind is effectively illegal under federal law.
In addition, CBD and THC are prohibited from being added to food and beverage by the Federal Food, Drug, and Cosmetic Act, meaning it cannot go through the traditional process that the FDA uses to designate a product as “generally recognized as safe” or GRAS.
These federal regulations are why large food companies haven’t begun to produce products with CBD; they aren’t willing to take the risk.
However, some small companies are taking a progressive approach by acknowledging the risks but still putting products on the market. “Many of these companies are trying to solidify their formula and brand so that when the big companies do come to play, they are ready to compete,” said Rogers.
State laws present a risk for makers as well. Many states have some sort of law that permits the marketing of a food product with CBD or hemp extract, but the issue is that many of these laws do not line up with one another, making it difficult for makers to create a label that works across all of them.
“Consumer class action is another major risk that you have to consider as an emerging brand,” said Rogers. Some brands believe they are too small to worry about this, but Rogers warns that there are many lawyers out there who will bring an action against a small company in hopes that they cannot afford to go to court and will settle.
Rogers key piece of advice for makers is to proceed with caution. “Once you’ve developed a formula you’re comfortable with, make sure you’re complying with basic state compliance and protecting yourself form consumer class actions.”
What’s Happening in the Market Today
Despite the legal risks, the CBD market is continuing to grow, according to Gomez. At Brighfield Group, which provides data and insights for CBD companies, Gomez looks across markets, consumer behaviors, and product innovations to get an idea of the latest trends in the category.
“Following the Farm Bill, we saw a monumental growth in the CBD industry,” said Gomez. “Though growth has slowed in 2020, due to slow developments around guidance by the FDA and the COVID-19 pandemic, there are still some very strong consumer trends that indicate the market is here to stay.”
In terms of beverages, the category is experiencing a two-sided issue. On one side, there is a limited uptake in distribution overall. The largest retailers in the country are willing to experiment with external CBD products like tinctures or ointments, but aren’t willing to carry food or drink due to the regulatory risks.
However, on the other side, there is a strong customer demand for CBD in drinks, especially around functional beverages. Food or beverage products that aim to fill a need state (like boosted immunity or sleep enhancement) are becoming increasingly popular among consumers. In addition, brands that have become more savvy in connecting with customers and offering direct-to-customer sales options have also seen success.
A wide variety of CBD food products are coming onto the scene, according to Gomez. Indulgent products like brownies, cotton candy, marshmallows, and even macaroni and cheese, are finding success with customers. “They key is making them easy to dose,” said Gomez. “And they need to taste good!”
Similar to Rogers, Gomez recommends that makers who want to get into the space start getting prepared. “Understand the category and what consumers want from your product,” she said. Gomez also recommends building up brand awareness and customer loyalty, as that will help smaller brands compete in the market when the larger companies begin to take on CBD.
Blending Functionality and Accessibility
One of the brand’s currently experimenting in the CBD space is Nature’s Nosh, founded by Cohen. The brand aims to remove the negative stigma of CBD by making it healthy and convenient for consumers to eat.
The idea began to take shape in 2017, when Cohen went on a trip with a friend’s family. During the trip, her friend’s mother would sneak away to smoke CBD for relaxation and pain relief. Cohen didn’t understand why this was something to hide. “At the end of the day, I see CBD as a functional ingredient, and it should be treated as such,” she said.
Then, in 2018, while training for the New York City Marathon, Cohen began to research on the best things to eat to recover from a workout. This research pointed her to the same three ingredients over and over: nuts, dried fruit, and CBD. These then became the basis for Nature’s Nosh Fruit and Nut Bites.
The snacks, which are available in five flavors, aim to make CBD approachable to the everyday consumer and combat the unhealthy, sugary products that are currently on the market.
Cohen knows that there is some legal risk involved in making Nature’s Nosh products, but ultimately finds it worth it. “It’s not a super clear legal landscape,” she said, “but we’re doing everything we can to get our name out there and build consumer trust.”
Related: Canopy Growth, Martha Stewart Launch CBD Line; NGA Supports CBD Legislation.
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