CBD market remains in limbo

CHICAGO — Many food manufacturers want it. Retailers want it, and, so do many farmers. “It” is federal regulation of cannabidiol (CBD), which may be derived from the hemp plant (Cannabis sativa), a growing business for US farmers who previously raised one of the United States’ original cash crops: tobacco.

Yet tobacco use is on the decline. The Centers for Disease Control and Prevention, Atlanta, reported that nearly 21% of US adults used tobacco in 2005. In 2021, that figure decreased to 11.5%. Since 2000, tobacco harvesting by acre has fallen and tobacco farmers have had to pivot.

For many, the pivot has been hemp. It’s a relatively easy swap, as the infrastructure is in place. Tobacco and hemp plants like the same climate, and they are processed in a similar manner.

The current challenge is while there is a home for select hemp plant components as food ingredients, it has been slow to catch on among food formulators. The big opportunity is in the CBD market, but without federal regulations, innovation and growth have been slow.

The Controlled Substances Act barred anyone in the United States from producing hemp since 1970, as it was considered a Schedule I substance. The crop was illegal to grow without a permit until the 2014 farm bill, which allowed for industrial hemp cultivation in state-controlled pilot programs. The 2018 farm bill took hemp to the next level and gave many former or soon-to-be former tobacco farmers a reason to feel positive. The 2018 farm bill legalized industrial hemp by removing it from the controlled substances list, but that has not been enough to get the crops moving.

That’s because the hemp plant is complicated. The seeds are the edible portion, and they have a hard, nut-like exterior and a soft inside referred to as the heart. Hemp seeds are about one-third protein, providing all nine essential amino acids, which makes it a complete protein, much like soy and animal. They are also a source of fiber and heart-healthy omega-3 fatty acids.

The seeds and hearts may be processed into ingredients that have application in everything from baked foods to snacks. They may even be “milked” into a beverage. Such hemp ingredients are Generally Recognized As Safe (GRAS) and exempt from food additive tolerance requirements. While the nutrient profile is attractive to food and beverage formulators, it’s the CBD and tetrahydrocannabinol (THC) components of the hemp plant that farmers are banking on.

CBD consumption is associated with relaxation, pain relief, improved sleep, positive mood, better memory and stress response. Some states have taken it upon themselves to make CBD, as well as THC, legal in foods and beverages. That’s something the 2018 farm bill did not do.

The US Food and Drug Administration recognizes hemp-derived cannabis ingredients with less than 0.3% on a dry weight basis of THC and CBD as GRAS for human products such as tinctures and extracts. To date, the agency has not approved hemp-derived CBD for use in foods and beverages. It also has not come close to addressing the inclusion of THC in foods and beverages.

THC is the psychoactive compound of cannabis plants, of which there are several species. The hemp plant is just one of them. In general, hemp plants contain more CBD, while other flowering plants in the family Cannabaceae contain more THC. In other words, CBD and THC may be sourced from any cannabis plant. If the promised legislation on CBD takes place in 2024, there should be lots of CBD innovation in the marketplace.

The market researcher the Brightfield Group, Chicago, estimates the US CBD market will be worth approximately $4.5 billion at the end of 2023. The research firm has two forecasts, one assuming the implementation of federal regulation by 2024 and the other assuming the status quo. Without guidance, the CBD market is expected to remain more niche. If the federal government issues a regulation, the Brightfield Group projects the market will more than double by 2027.

“Federal regulation will allow CBD products to be sold as dietary supplements and food additives, accelerating the growth of ingestible products like drinks and gummies,” said Brightfield Group analysts. “This will also increase acceptance and distribution in mainstream retailers. With federal regulation, the product categories poised to see the greatest success in up-and-coming mainstream distribution channels are overwhelmingly ingestible products. Drinks are expected to make a place in both grocery stores and mass merchandisers, fitting in neatly with the array of functional beverage products currently available in these channels.”

Innovation opportunities

Hemp-derived CBD ingredients may be formulated into a range of products. All types of baked foods are popular delivery vehicles, as are gummies and beverages.

Not all CBD is created equal, and not all hemp ingredients contain CBD. They vary in protein, fat, fiber and other nutrient contents.

Kemin, Des Moines, Iowa, for example, offers two hemp CBD distillates. The full-spectrum extracts contain a minimum of 60% CBD content with either a total THC content of less than 0.1% or 0.3%.

“They are USDA-certified organic and fully traceable to hemp farms in the Midwest United States,” said Tyler Holstein, global product manager. “Kemin ingredients conform to the law and requirements governing hemp to help customers get new products to market quickly. They provide the added benefit of certification by a credible source, something that CBD consumers look for when making their purchase decisions.”

Hilary Brown, director of technical and analytical services, SōRSE Technology, Seattle, said, “When creating CBD-infused baked goods and snacks, temperature is one of the greatest challenges. Knowing the internal temperature of the baked good is key to knowing if you can retain the CBD content in your final product.

“The other concern is the format (oil vs. water soluble) of the CBD. If you are making a cookie and are using butter, for example, then you could use a CBD oil. If you were to use a water-soluble emulsion, you would have to be mindful of the water content of the final product.”

One of the most significant opportunities is in the beverage space, which is being fueled by a rise in sobriety. Many CBD-infused beverages make promises of reducing stress and calming the mind and body. They often are formulated as mocktails but also are playing in the ready-to-drink coffee and tea space. Flavored sparkling waters also may contain CBD.

The beverage format is desirable as it is convenient; CBD delivery through a liquid format is absorbed faster and easier by the body. Water-soluble CBD further helps increase absorption, while the beverage flavors mask the ingredient’s bitterness.