Cannabis-based industry waits for clarity to emerge
The food regulator has issued new guidance revising down its recommended daily intake of cannabidiol, or CBD, posing a fresh challenge to an emerging sector.
On October 13 last year, the day after the food regulator issued new guidance that drastically revised down its recommended daily intake of cannabidiol, Holland & Barrett pulled 31 products from its shelves.
Although the move proved to be temporary (Britain’s best-known health and wellness retailer insisted the move had been taken to revise staff training to ensure that people were equipped to answer questions from customers), the optics of the decision dealt another blow to an industry that was already fighting for its survival.
A slew of fast-growing companies making cannabis-based oils, drinks and other wellness products have sprung up in recent years. They claim to be able to help with ailments from insomnia to arthritis, but new guidelines published by the Food Standards Agency in October cut the recommended daily intake of cannabidiol, or CBD, the active ingredient, from 70mg a day to only 10mg, citing potential risks of damage to the liver and thyroid.
Although the FSA has said that products containing more than 10mg of CBD do not need to be withdrawn from sale, nor are any changes required for labelling, industry sources suggest that brands may asked to add a warning to their packaging, similar to the “traffic light” system in place to help people to identify products with high levels of salt, sugar and saturated fats. The agency has confirmed that it is reviewing labelling requirements.
Many of the products sold by some of Britain’s best-known CBD brands contain more than 10mg in a single serving. Soft drinks sold by Trip, the London-based brand, contain 15mg per can. According to Nielsen data, Trip is the fastest-growing soft drinks company in Britain.
Goodrays, a rival, sells cans containing 30mg of CBD, three times what is now the new recommended daily allowance. Eoin Keenan, 31, its founder, described the ruling as a “bump in the road”, but noted that neither consumers nor retailers seemed unduly concerned about the guidance. He said that the company, which has 12 employees and sells “millions” of cans a year, had enjoyed its best ever month in January and had new retailer listings going ahead as usual. Its drinks are sold in Waitrose, Tesco and WH Smith.
Even so, he admitted that the FSA’s guidelines had created “a level of complexity that we need to navigate, particularly on the PR side. I’m having to have this conversation quite a lot to put customers at ease, but I wouldn’t have got into CBD if I was afraid of complexity. It’s not an easy industry.”
Despite his products containing more than the new recommended daily limit, he insisted that they remained “100 per cent legal” and he was confident the guidelines would be tweaked. “The 10mg daily intake advice comes from research based on poor-performing CBD brands. The recommendations are temporary and we believe that as the market research comes out about the wide gamut of CBD available, they will regulate and legislate for the best-performing brands on the market, not the worst.”
Other business owners worry about the future of the industry. Jade Proudman, the founder of Savage Cabbage, which sells CBD oils and tinctures to customers in 40 countries, criticised the FSA for issuing “inaccurate and confusing new guidelines”.
A technicality means that her products are exempt from the ruling, but nonetheless she believes it has stoked fear among consumers because the regulator has not identified the difference between “full-spectrum” products, which contain other ingredients from the hemp plant, and those that contain CBD as the sole active ingredient.
“The FSA is needlessly damaging my business and causing my customers unnecessary anguish. It’s also harming an industry that provides customers with natural alternatives to products that can cause addiction and harm,” Proudman, 44, said. “Every flippant comment that comes out of a regulator’s mouth, the impact is significant and there is a ricochet effect.” She said sales of her products had slowed in response to watchdog’s action.
It remains to be seen if the ruling will have an impact on investors’ appetite for CBD start-ups. In the United States, celebrities including Jane Fonda, the actress and fitness guru, Gwyneth Paltrow, the actress and wellness entrepreneur, and Snoop Dogg, the rapper, have clamoured to invest in cannabis-related brands. In Britain, Trip raised £10 million in 2022 from investors including Maria Raga, the former chief executive of Depop, the fashion reselling site, and Christian Angermayer, the founder of Apeiron Group, the family office and merchant banking business. Goodrays has raised £4 million since its launch in 2020.
However, Nick Morland, who started his career at PwC, the accountancy firm, and who now owns and invests in several CBD brands under the Tenacious Labs umbrella, said that cannabidiol start-ups in the UK were likely to be attracting “less than 1 per cent” of the money they could if it wasn’t for overly stringent British rules and regulation. He is not investing in UK companies, but chooses to back rivals in America and European countries such as Germany, where cannabis use among adults will become legal on April 1.
The UK daily intake warning comes hot on the heels of several years of uncertainty for CBD brands after a ruling in 2018 that they would be classified as “novel foods” and would need to apply for authentication in order to sell their products to British consumers. The Food Standards Agency has confirmed that no CBD companies have yet been authorised. The process so far has been arduous and many small companies have gone out of business while waiting for the green light, according to Proudman.
“I welcome regulation because what it does bring is quality and consistency to consumers,” she said, “but when I think that we are where we are, we’ve been grandfathered into a system that’s been delayed with timelines that have been pushed and pushed and pushed and we’ve seen a lot of businesses hit the wall. You can’t innovate, you can’t bring out a new product, you can’t keep it juicy and sexy and all those things when you’re standing in a queue waiting very politely for somebody to give us permission.”
Proudman founded her business in 2016 after finding that CBD products had a transformative effect on a number of chronic health conditions that had left her suicidal. She was at her lowest ebb and had asked her husband to help her to end her life when she tried CBD oil for the first time.