MJBizMag August 2020 - 14

HempNotebook | Kristen Nichols
Fighting Fakes
CBD manufacturers have no choice but to self-regulate and ride out
unscrupulous competitors
C
hicken on a plate can be
delicious. But chickens in a coop
are filthy and mean.
So when a CBD manufacturer I cover
got a phone call from a competitor
saying he planned to make CBD in
an old chicken coop to undercut my
source's prices, my stomach lurched.
The worst of it was, there was no
one for the ethical CBD maker-who'd
invested many thousands in a clean and
sanitary manufacturing plant-to call
to report his dirty neighbor. The health
department in his state doesn't regulate
CBD manufacturing, and production
guidelines from the U.S. Food and Drug
Administration appear to be years away.
In this issue examining how the
illicit cannabis market affects the
marijuana industry, I'm reminded that
it isn't just the guys and gals making
high-THC products who confront illicit
competition. Hemp entrepreneurs see
it, too.
Legal But Not Always
It might seem that because the U.S.
Congress legalized low-THC cannabis
varieties known as hemp, there's no
illicit market for hemp-based products.
But the truth is more nuanced.
Hemp is legal, but you can't grow it
without a license-even for personal
use. And, as the U.S. Food and Drug
Administration keeps reminding us,
that agency still has final say on
products that we eat, drink, smoke, rub
on our skin and even give to pets.
As long as the FDA considers
cannabis extracts such as CBD to be
drugs that are legal only with a doctor's
prescription-regardless of whether
the extract came from marijuana or
hemp-everyone making any CBD
product for over-the-counter use is
operating outside the law.
While mainstream retailers already
are carrying topical CBD products with
no interference from federal health
regulators, even the most expensive
and highly vetted skin cream isn't
without legal risk. In other words, any
CBD product sold without a doctor's
prescription flouts FDA direction-even
if the agency shows little appetite for
taking those products off shelves,
provided they don't make wild health
claims.
Fighting Fakes
The CBD situation makes everyone
in the supply chain vulnerable to bad
actors.
When all over-the-counter CBD
products are illegal, who's to decide
the correct way to make a CBD
product? Which production standards
should a scrupulous operator follow,
and how are consumers supposed
to know the CBD they're taking
was made in a sterile environment
and not extracted in a basement
or garage-assuming, that is, the
product really contains CBD at all?
This is why CBD makers and
retailers try to self-regulate. Every week
seems to bring new word of various
certifications and requirements CBD
manufacturers and retailers are giving
themselves-all expensive endeavors
designed to assure consumers and
avoid the worst-case scenario of
a public-health threat caused by
poorly made CBD.
This is the cost of FDA inaction.
The CBD industry simply has no
choice but to spend big bucks
following rules no one is enforcing,
12 Marijuana Business Magazine | August 2020
hoping that one day federal oversight
will knock out bad actors.
In the meantime, business threats
from unscrupulous CBD makers aren't
going away. Some consumers will
always choose the cheapest CBD they
can find, and no-name competitors
shilling cheap CBD in convenience
stores are ready to meet that demand.
I only hope that ethical players have
enough capital to outlast cut-rate CBD
makers while the feds take their sweet
time helping the American consumer
know which CBD products are safe and
which might be coming from an old
chicken coop.
Kristen Nichols is editor of Hemp
Industry Daily. She can be reached at
kristen.nichols@hempindustrydaily.com.
MJBizMag August 2020

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