CBD From A Merchandising Machine? Producers Face Alternatives And Challenges In Rising Business

Olin Schumacher, co-owner of Vermont Pure CBD in Shoreham, VT, shows off the hemp they were grown on … [+] their farm and extract CBD oil at the National Cannabis Industry Association’s Seed-to-Sale Convention at the Hynes Convention Center in Boston on February 13, 2019. (Photo by John Tlumacki / The Boston Globe via Getty Images)

Boston Globe via Getty Images

by Lisa Chau

In 2018, sales of CBD-infused products were $ 1.9 billion, according to a study by Colorado-based company BDS Analytics in collaboration with Arcview Market Research. That number is projected to grow to a whopping $ 20 billion by 2024, fueled by better accessibility and the continued introduction of new products.

The basis for this explosive growth was the 2018 Farm Bill, which legalized industrial hemp cultivation for products made with cannabis sativa plants that contained less than 0.3 percent THC, the main psychoactive compound in cannabis. As a result, the active ingredient 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 create a “high” or euphoric feeling in users who are just looking to relieve pain or anxiety.

Casco Bay Hemp Product Lines (Lisa Chau)

Lisa Chau

Evidence of the expected rapid growth in the CBD product category was shown at White Label World Expo New York, an online shopping fair held at the Javits Convention Center earlier this fall.

There Andre Addison stated that his Canaboxx invention is a vending machine for CBD products known as a “pharmacy in a box”.

“The technology automates the way consumers buy CBD products, much like banks have integrated ATMs as a convenient system,” said Addison, owner and president of the company. “Also, the Covid pandemic has created a greater need for contactless sales and social distancing.” He envisions a world where such vending machines will be on every street corner once all 50 states deregulate marijuana use.

Milkweed Cannabis Confections’ Will Fleming, meanwhile, is focusing on the higher end of the luxury edible spectrum.

Canaboxx President Andre Addison explains how his vending machine works.

Lisa Chau

“The vast majority of cannabis edibles on the market today are mass-produced: mediocre quality, mediocre ingredients, lackluster flavors,” said Fleming, director of sales and operations for the company. “Milkweed Cannabis Confections is the brainchild of former New York pastry chef Andrew LeStourgeon, whose mission is to bring luxury cannabis edibles to the market … all of the highest quality.” His team envisions a world in which theirs are Products are widely used at upscale weddings.

Chris Karazin, CEO and Founder of Carolindica, started his business in 2019 as a CBD craft maker specializing in tinctures and vape cartridges. Over time, it branched out into a variety of other product types, including gums, capsules, topicals, and candy.

“Like tectonic plates, engaging in the hemp industry means we can close the giant cracks that develop as the industry changes and flow like lava to adapt to the niches that emerge,” Karazin said. “Right now, the market for pure CBD products is extremely saturated, so the industry tends to work with the more unique hemp compounds to expand the range of services and stay ahead of the curve.”

Milkweed cannabis candy.

Lisa Chau

Carolindica segments itself by working with almost 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 example, CBN is the most potent sedative and offers the best sleep benefits, while Delta 8 offers consumers the highest recreational value.

By blending these cannabinoids with terpenes, the company creates formulations that target specific problems such as insomnia, 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 operate on a tiny percentage of them right now. Karazin firmly believes that the future of this industry will have unique connections that focus on both the medicinal and recreational value of the hemp plant.

Deborah and her son Stephon Morton entered the industry in 2019 by launching four main products: Mor-Hemp CBD coconut oil, “Ladi Mary” smokable CBD flower, and TUSK hemp-infused vodka and rum. Falling as a new spirit brand they find it difficult to work with distributors in the major states because the company does not have a proven track record of consistent profits.

In addition, her family business, Mor-Hemp, faced challenges in obtaining grants for minority farmers to purchase agricultural equipment, supplies, and facilities necessary for effective expansion. For example, they applied for a grant for disadvantaged farmers in Halifax County, Virginia.

“We submitted all the necessary documents and waited patiently for the result. After months of lack of relevant feedback or information, we carried out our communication due diligence with the office. It wasn’t until we contacted each other that we were informed that the agency was changing directors and suddenly our papers had disappeared and we hadn’t received the grant, ”said Deborah Morton.

JJ Murphy, an employee of Green Toad Hemp, a member of the AgriUnity cooperative, prepares CBD-ready … [+] rolls out April 19, 2021 in Metter, Georgia. The AgriUnity Cooperative is a group of black farmers founded to improve their chances of success by pooling their resources to lower their farming overheads, enable market expansion, and create demand for their products to increase Make profits and have a sustainable business plan. The American rescue plan, signed by President Joe Biden on March 11, 2021, provides $ 10.4 billion to support agriculture, half of which goes to disadvantaged farmers and benefits black farmers in ways that have since been the Civil Rights Act of 1964 no longer happened (Photo by Michael M. Santiago / Getty Images)

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As explosive as the growth of CBD has been in recent years, there are still many unknowns and hurdles to overcome. Christopher Fontes, Founder and CEO of Trojan Horse Cannabis, currently serves on the Government Affairs Committee of the National Industrial Hemp Council. He says the next big trend for the industry is realizing that Delta-9 THC is a legal product as long as it’s made from hemp under a Farm Bill-approved program and below the state threshold of 0.3 percent Delta 9 THC remains by dry weight. When that happens, attempts to create THC alternatives like D8, D10, and THCp will slow down or go away.

More and more manufacturers are realizing that FD&C [Federal Food, Drug, and Cosmetic Act] Regulations will treat their products like dietary supplements for safety and truthfulness, Fontes said. “The industry assumes that dietary supplements made from hemp will at some point be regulated as dietary supplements by the Food and Drug Administration. This creates a regulatory framework for consumer safety and is welcomed by the good players in the industry. This could also have a significant impact on the hemp supply chain. “

Recent laws legalizing commercial hemp cultivation have resulted in explosive growth in the CBD industry. However, the market is still in its infancy with many obstacles and unknowns remaining.

Minority farmers need grants, and a stigma still lingers – some studies have shown that CBD “users have been labeled as irresponsible and unreliable stoners by a wide variety of people, including employers, colleagues, and even health care providers”. Consumers are increasingly interested in the benefits of CBD, but quality control and safety need to be addressed and regulated quickly.

Lisa Chau is the author and founder of Clover Canal.