CBD From A Vending Machine? Manufacturers Face Opportunities And Challenges In Growing Industry
New York — In 2018, CBD-infused products sales totaled $1.9 billion, according to research by Colorado-based BDS Analytics in partnership with Arcview Market Research. That number is forecasted to grow to a whopping $20 billion by 2024, spurred by greater accessibility and an ongoing introduction of new products.
Setting the stage for that explosive growth was the 2018 Farm Bill, which legalized industrial hemp cultivation for products manufactured with cannabis sativa plants containing less than 0.3 percent THC, the main psychoactive compound in cannabis. As a result, the active compound in hemp, CBD (cannabidiol) has infiltrated the beauty, health, and food markets. While THC and CBD are both natural compounds found in plants of the cannabis genus, the latter does not produce a “high” or euphoric sensation for users only seeking to alleviate pain or anxiety.
Evidence of the expected rapid growth in the CBD product category was on display at the White Label World Expo New York, an online retail sourcing show held earlier this fall at the Javits Convention Center.
There, Andre Addison explained that his Canaboxx invention is a CBD products vending machine, known as a “dispensary in a box.”
“The technology automates the way consumers purchase CBD products much the same way banks integrated ATMs as a system for convenience,” said Addison, the company’s owner and president. “Additionally, the Covid pandemic has created a greater need for no-contact sales and social distancing.” He imagines a world where such vending machines will be on every street corner once all 50 states have deregulated marijuana usage.
Meanwhile, Milkweed Cannabis Confections’ Will Fleming is focusing on the top end of the spectrum, with edibles for luxury clients.
“The vast majority of cannabis edibles in the market today are commodity products: mediocre quality, mediocre ingredients, lackluster flavors,” said Fleming, the company’s director of sales and operations. “Milkweed Cannabis Confections is the brain-child of former New York City pastry chef Andrew LeStourgeon, whose mission is to bring luxury cannabis edibles to the market… utilizing local and high-quality ingredients, creating unique and compelling flavor profiles, and executing all of this at a top-tier level.” His team imagines a world where their products are widely enjoyed at upscale weddings.
Carolindica CEO and Founder Chris Karazin launched his company in 2019 as a craft CBD manufacturer, specializing in tinctures and vape cartridges. Over time, he branched out into a variety of other product types, including gummies, capsules, topicals and candy.
“Like tectonic plates, being involved at this time in the hemp industry means we get to fill in the huge cracks that develop as the industry shifts, flowing like lava to adapt to the emerging niches,” Karazin said. “Currently, the market for pure CBD products is extremely saturated, so the industry is trending towards working with the more unique hemp compounds in order to expand the benefit offerings and stay ahead of the curve.”
Carolindica segments itself by working with just about anything they can extract from the hemp plant, including CBD, but also CBG, CBC, CBN and Delta 8 THC. Each of these compounds has different properties. For instance, CBN is the most sedative and provides the best benefits for sleeping, while Delta 8 offers the most recreational value to consumers.
By blending these cannabinoids together with terpenes, the company creates formulations that target specific issues like sleeping difficulties, pain and anxiety, while blending the lines between recreational enjoyment and pure medicinal value. There are well over 100 cannabinoids in the hemp plant, and the industry can only work with a tiny percentage of them currently. Karazin fully believes that the future of this industry will revolve unique compounds focused on both the medicinal and recreational values offered by the hemp plant.
Deborah and her son Stephon Morton entered the industry in 2019, by launching four major products: Mor-Hemp CBD coconut oil, “Ladi Mary” smokable CBD Flower, and TUSK Hemp-infused Vodka and Rum. As a new liquor brand, they’ve found it difficult to partner with distributors in major states because the company cannot provide a proven track record of consistent profits.
Moreover, their family-owned business Mor-Hemp has faced challenges getting grants for minority farmers to purchase farming equipment, supplies and facilities needed to effectively expand. For example, they applied for a grant for disadvantaged farmers in Halifax County, Virginia.
“We submitted all the proper paperwork and patiently awaited the outcome. After months of no pertinent feedback or information, we did our due diligence of communicating with the office. Only when we reached out were we informed that the agency was changing directors and our paperwork suddenly went missing, and we were not awarded the grant,” Deborah Morton said.
As explosive as the growth of the CBD has been in recent years, there are still many unknowns and hurdles to overcome. Trojan Horse Cannabis Founder and CEO Christopher Fontes currently serves on the Government Affairs Committee for the National Industrial Hemp Council. He says the next big trend for the industry is the realization that Delta-9 THC is a legal product, so long as it is hemp-derived from a Farm Bill-approved program and remains below the federal threshold of 0.3 percent Delta-9 THC by dry weight. If that happens, attempts to create THC alternatives like D8, D10 and THCp will start to slow down or disappear.
More and more manufacturers are realizing that FD&C [Federal Food, Drug, and Cosmetic Act] regulations will treat their products like dietary supplements regarding safety and truth-in-labeling, Fontes said. “The industry fully expects hemp-derived ingestibles to be regulated as a dietary supplement at some point by the Food and Drug Administration. Doing so creates a regulatory framework of consumer safety, and is welcomed by the good actors in the industry. This could also have significant impacts on the hemp supply chain.”
Recent laws legalizing commercial hemp farming have led to an explosive growth in the CBD industry. However, the marketplace is still is its infancy as many obstacles and unknowns remain.
Minority farmers need grants, and a stigma still remains— some studies have shown that CBD “users were frequently labeled as irresponsible and unreliable ‘potheads’ by a variety of people including employers, colleagues, and even healthcare providers”. Consumers are increasingly interested in the benefits of CBD, but quality control and safety need to be addressed and regulated quickly.
Edited by Matthew B. Hall and Bryan Wilkes