What Kind of Threat is Hemp CBD?

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CBD products have found a huge market that could pose a threat to the marijuana economy. Cannabis contains CBD with all its proven and promised health benefits. As part of the marijuana experience, it comes in countless combinations with THC. The lower the CBD presence, the stronger the psychic reaction. The higher the CBD, the more sedating the effects. But in balanced strains, the CBD modulates the THC effect and delivers calming influences.

However, the CBD byproducts extracted from Hemp contain minimal traces of THC, small enough to make Hemp CBD legal anywhere. Since the U.S. Farm Act of 2018, Hemp with its cannabinoids were removed from the FDA’s Schedule 1 narcotics list. Everyone’s watching to see how it will affect marijuana sales.

MJ Biz Daily reported, “According to cannabis research firm Brightfield Group, the CBD market could be worth more than $2 billion a year by 2021. Two-thirds of that CBD would come from hemp, not marijuana, the company projects.” The question here is “Do Hemp CBD products pose a threat to CBD-dominant cannabis sales?”

It’s a curious marketing issue —

MJ Biz Daily also quotes Tim Keogh, CEO of AmeriCann: “I see the proliferation of CBD-only products as a complement to the full-spectrum, whole-plant cannabis market rather than a threat. The news around CBD and its availability is opening up new consumers that do not have any relationship with cannabis as a therapeutic solution to try new products. This changes the perception and decreases the stigma of cannabis.” And, Keogh is right in theory, but measuring inputs and outputs is difficult.

The story of hemp CBD —

Among the difficulties is labeling things and sorting the data. Hemp has been used for eons for food, fiber, and medical benefits. It is still farmed for industrial uses with its fibers used to make everything from paper to nautical sails. Hemp seeds are eaten how or processed into other foods. But new technologies have advanced the extraction processes to produce CBD oil. The oil is used widely for medical benefits, and producers include the extraction in edibles, capsules, beverages, and countless recipes. Finally, the seeds and oils become ingredients in soaps, lotions, cosmetics, and much more.

The story of cannabis CBD —

The narrative describing cannabis CBD is pretty much the same. After all, hemp and marijuana cannabis are botanical cousins. Hemp is cannabis sativa with such a low THC count it is classified as legal. However, research and anecdotes attribute more complex physical and psychological effects and benefits to the balance of CBD and THC in cannabis sativa and cannabis Indica. This sets up some of the marketing confusion and shenanigans.

Hemp products have been marketed for generations as herbal supplements through retail venues that attract the widening market for natural, earthy, green, and vegan options. There was little or no research into claims of efficacy, but then the organic economy has long been free of regulation.

Marijuana cannabis, however, has been prohibited in the United States since 1937. The prohibition has forced its sale, possession, and transport of cannabis. This effectively minimized quality research into the good, the bad, and the ugly. It also created a continuing bias against the product and its by-products.

Riding coattails!

So, marketing finds itself in a “chicken or egg” situation. Advocates for the expansion of legalization for medical and recreational marijuana have enlisted activists and media support from hemp advocates, many of them Baby Boomers and Millennials. Hemp already had a considerable market segment psychologically open to cannabis claims to health benefits, so supporting cannabis issues was an easy lateral move.

Conversely, the passionate and high energy campaigns that empowered legislation enabling legal sales and possession of medical marijuana have dominated the media. Hemp has been riding these coattails for some time, but marijuana advocates have not objected to the legal safety of the hemp world.

What’s the problem?

There are two issues: the market confusion and the FDA’s interest.

  1. The respective hemp and cannabis markets may benefit from the market overlap for some time. This risks confusing customers, especially where dispensaries sell both lines. Moreover, the valid scientific research studies on cannabis CBD do not apply to hemp products.
  2. The FDA has indicated concerns for manufacturer claims to psychological and physical benefits from CBD-infused products. The industry would do well to make voluntary concessions on claims and labeling rather than face additional regulation. But the hemp providers have the advantage here because it has been wide open.

These issues distract from issues in pricing. Producing and marketing hemp CBD has much lower overhead than promoting marijuana CBD. Hemp marketing has an edge if it can claim and certify organic sourcing and pure processing. It also allows manufacturers to produce under “private label” status effectively selling the same product under different brands available in stores and online everywhere.

Cannabis CBD does not enjoy the same profit margins. Where legal, it is subject to seed to sale tracking, complex state and local taxation, and the expense of “brick and mortar” locations, and the short- and long-term costs of employing staff.

All of this makes product-to-product comparisons impractical. If a hemp product serves a user’s purpose, that’s fine. But if medical marijuana is to make serious economic inroads in healthcare, it has a bigger challenge. It might benefit from endorsements by major media figures or from major healthcare venues like CVS, Walgreen’s, or hospital chains. But absent that, until more of the market has shaken out, pricing may drive the canna-economy.