At the end of 2018, the US government passed the Farm Bill, which approved the growth of hemp and no longer classified the plant as a scheduled one controlled substance. But the primary component in hemp is CBD, and under the FDA it is still illegal as an ingredient.
This has created a problem for farmers who are growing hemp, but cannot manufacture, transport or sell CBD products. Due to demand, they are entering the business anyway. But navigating the market without regulation is tricky and risky.
Hesitation despite light enforcement
At the International Dairy Foods Association (IDFA) Forum last week, the outlook for dairy and CBD was discussed. Martin Hahn, partner at Hogan Lovells US LLP, explained that even with the FDA’s restrictions on CBD, almost nothing has been enforced.
The only form of punishment that’s been seen so far has been a few ‘sternly worded’ letters and an occasional occurrence of products being pulled from shelves. The majority of food and beverage brands selling CBD products are smaller startups, and they haven’t been scared off by the warning letters.
In their view, according to Hahn, the risk is worth it to them if they can get the advantage of serving consumer demand first. They have been extremely careful about the claims they make and wording on their packaging, so they are largely counting on consumers to already know what CBD is and what potential benefits it may offer.
On the flip side, larger companies are staying away from CBD because they find there is just too much to lose. They don’t want to take the risk on a new product now, in case regulators eventually crack down.
Is ice cream the place to start?
But that’s not to say bigger brands aren’t keeping a close eye on the market, and even working on preliminary products behind the scenes while waiting for regulations to change. Ben & Jerry’s announced in May that it intends to create a CBD ice cream as soon as it is federally legal.
The brand committed to sourcing its future CBD locally from its home state of Vermont, keeping in line with its practices of ‘values-led sourcing’ and a social justice brand focus. At IDFA, senior beverage analyst at Rabobank Jim Watson agreed that ice cream may be the obvious choice for CBD in dairy.
“Fluid milk doesn’t make the most sense if you’re thinking of a product that has a marijuana association. Fluid milk has more of a kids’ association so you wouldn’t go anywhere near that,” he said.
Ice cream has more application with adults, and the occasion of eating ice cream before bed aligns with CBD’s relaxation properties. He also sees potential in whey protein-fortified workout beverages.
CBD is known for its anti-inflammatory benefits, and is already reaching the sports drink market. Combining protein, milk and would be a natural progression. CBD-infused coffee products have also already hit the market, so CBD coffee creamers could offer a good solution to balancing out the caffeine.
Startups are taking the risk
On the startup side, CBD in dairy and non-dairy does already exist in the market. Last year, Brooklyn-based artisan ice cream brand Van Leeuwen introduced a limited CBD flavor. Couch Potato was made with potato chips, chocolate covered pretzels, roasted peanuts, caramel and 5mg of CBD oil per scoop.
UK-based milk alternative brand Good Hemp introduced a CBD beverage in fall 2019. The Barista Seed Milk is designed for use in coffee and contains 60mg of full spectrum CBD per carton. HempWorx has a line of CBD Keto Coffee Creamers that also contain MCT oil, and are available in Hazelnut, Vanilla and Mocha.
The category is not nearly as saturated as others like beverages, in which dozens of brands and products are available. Flavored water, seltzer, juice, soda, coffee, tea and non-alcoholic beer and cider are all represented in the illegal CBD market.
But even with beverages forging a mainstream path for CBD, Hahn and Watson do not expect there to be change any time soon on the regulatory side.
"FDA is not going to come out this year or next, in my view, and say, 'Kumbaya, we hear you America. We are going to allow up to 50mg of hemp extract that contains CBD in foods and dietary ingredients.' I don’t see FDA doing that," Hahn said.
For now, they advise brands to be very careful with labeling, wording and claims on any CBD or hemp-adjacent products. And because of the lack of regulation, staying strict and meticulous with supply chain sourcing is important for quality.
