The United States has seen incredible progress in the legalization and commercialization of cannabis in just 5 years. Today, marijuana is legal in 12 states for recreational use and legal in 33 states for medical use (National Conference of State Legislatures). Hemp, also a cannabis plant like marijuana, is now federally legal to grow, produce, and sell, which includes hemp derived CBD. Cannabidiol (CBD), is a cannabis extract that is used for different health issues like relieving pain and inflammation and reducing anxiety and stress. Despite little, yet emerging research, this CBD trend is due to disrupt the consumer healthcare category, including over the counter medicine and nutritional supplements. The trend has begun attracting the interest of the biggest consumer health companies as products flood shelves with CBD products. Many are jumping on the band wagon despite regulatory, dosage, effectiveness, and side effect uncertainty.

At the end of 2018, a new farm bill was passed in the US that changed the future of CBD. The bill removed hemp from Schedule I controlled substances, which effectively decriminalized CBD derived from hemp. Despite this legalization, hemp-derived CBD still exists in a grey area of uncertainty as to what products are legal or illegal. Once the FDA finishes formulating its policies and regulations that will govern CBD in the consumer product industry, products can be deemed unequivocally legal.

CBD in Consumer Healthcare

With loosened restrictions, CBD has begun to impact many industries from health and beauty to food and beverage. Even banking and law have felt a need to cater to this new product and service opportunity provided by the 2018 Farm Bill. An industry can certainly become fragmented by such an influx, with existing products potentially cannibalized by products never before produced due to past regulation. The Consumer Healthcare category is also experiencing the entrance of new CBD products. CBD products entering the Consumer Healthcare space could present a major shift in the way large companies will target their research, place products in retail stores, and potentially claim marketing.

From a regulatory perspective, products in the consumer goods space, including Consumer Healthcare, will fall under the direction of the FD&C Act. These CBD companies will need to have quality systems in place to properly support the science behind their claims. In an already heightened state due to the media attention, the industry will be under increased scrutiny making it even more important for manufacturers to have these systems effectively in place to ensure transparency and safety.

Despite FDA regulations currently in limbo, retailers like Walgreens, CVS, Whole Foods, and Amazon have taken the risk of introducing CBD products. The (muscle) pain relief category is one experiencing this influx of new CBD products. Manufacturers have taken different stances on claims, some combining with approved active ingredients (such as Menthol USP) to claim temporary relief, while others avoid all claims. Still, these products are placed within the muscle pain relief aisles at retailers even if they are not making claims. No matter how beneficial these CBD products have been proven to be and claim to be, the bottom line is there is still a lot of research to be done. There is no way for retailers to be sure the products on their shelves are effective or, more importantly, safe to consume in a variety of dosages.

Dosage labeling is another area in consumer healthcare that competitive products have an advantage right now. Your typical pain killer will have a tablet number based on consumer weight along with a dosage timeline for effective pain relief. Currently, many CBD products are presenting this information in mg/bottle and it is very difficult for consumers to fully grasp how much pain relief they can receive and properly dose over long periods of times. This is a barrier to entry for many consumers and also may explain varying results consumers are experiencing with little education or guidance.

Lastly, side effects are still an unknown entity that will only become clearer once more research is conducted over long periods of time. For decades, research on CBD was deemed illegal so our knowledge base consists of short-term research and scientific theory. As a precaution, it is communicated to consumers that they should be notifying their doctors if they are taking CBD for pain, sleep, anxiety, or whatever ailment from which they’re seeking relief in order to minimize any unwanted interactions with other drugs, medications, or supplements.

CBD products have the potential to become a significant player in the consumer healthcare category, though companies will need to assess their level of risk with regards to entering the category at this time. With no regulation in place, companies competing for early market share will need to assess the tradeoff of being penalized. Vice versa, companies can also wait until more research and regulation has been published, though that poses the risk of being a late comer to the category and missing initial adopters as well as market share. Many big players like in the consumer healthcare market are starting to research the benefits and side effects. 2020 has the potential to be a big year for CBD with increasing research and the expected FDA regulations to be published in the coming months. This could truly be the year to kick-start the US CBD market which, uncertainties aside, is already expected to reach $23.7 billion by 2023.

Contributions by Charlotte O’Halloran.