The New York Times article discussing today’s FDA hearings starts out like a scene from a farce. Hundreds of disparate groups and individuals were in attendance to testify either for or against the further legalization of CBD products. From the NYT: “It was Hempy Pet CBD Soft Chews, Mile High Labs and Women Grow, among countless others, squaring off against the like of the Marijuana Victims Alliance, concerned primary care doctors and a lawyer who admitted he couldn’t wait to sue…”
And that’s the backdrop for the process the FDA is going through to determine the future of CBD legalization in America.
Despite the vivid picture of seeming pandemonium that befell the normally tranquil FDA offices today, the Times does say that some important things happened. For one, Scott Gottlieb, the former FDA commissioner, said “I don’t think that CBD is doing anything approximating what people are purporting is its magic quality.”
CBD Up Close thinks that while that comment from the former commissioner is somewhat hyperbolic it remains a big concern for people in the industry. We believe that in order for the CBD industry to thrive it needs to create lifelong customers and those companies that are making wildly optimistic, maybe even deceptive, claims are hamstringing that effort. If your product only has a couple of milligrams of CBD in it then that is probably not enough CBD to do anything, much less alleviate pain caused by arthritis (this is just an example).
On this site, we have gone into depth about the need for more truth in advertising in the CBD industry. We believe that those companies that make wildly inaccurate claims about their products’ efficacy may sell one or two products to a customer but once that customer figures out they purchased a product that is tantamount to snake oil they will be much less likely to purchase another product. Our best recommendation is to be humble about what your CBD-infused products can accomplish and focus on creating lifelong customers.
And please don’t take this to mean that we think that all companies in this space are going about marketing in the wrong way. There are definitely some companies that are doing a good and honest job at promoting their products. One way that we have seen companies have success in this space is by offering 100% money back guarantees to customers. That way, even if the products were hyped a bit too much customers aren’t left embittered by the process because they can always return their purchase and get their money back.
Another interesting part from the Times article was the overview they gave of the regulatory patchwork that will oversee CBD (and cannabis) products:
“Oversight of cannabis is complex and crosses several federal agencies. The federal Drug Enforcement Administration issues registrations for growing and processing marijuana for medical research. The Department of Agriculture is developing a plan to regulate hemp, although the states may also do so if they meet certain criteria.
“The F.D.A. regulates drugs, including those derived from marijuana, and it can also take enforcement action against companies selling foods or dietary supplements that have CBD or THC ingredients, which are considered drugs. But it has done so sparingly, only in cases where the companies have made what were considered outrageous health claims for their products, such as to cure cancer, Alzheimer’s disease and other illnesses.”
And CBD Up Close is confident that before the dust settles and we are living in a time where cannabis prohibition has come to an end there will be more federal and state organizations overseeing the sale and distribution of cannabis and CBD products. That’s just the way the government works.
One interesting agency that the article doesn’t cover is the IRS. We know that the IRS is absolutely chomping at the bit to get into this space and make sure that it collects taxes. With an industry that may quickly supplant the beer industry once prohibition ends, cannabis can provide billions of dollars of additional taxes to the IRS. Currently, businesses in the CBD and cannabis industries have to continue to work in what is still somewhat of a grey area so it is harder to collect taxes from these companies.
But with uncertainty comes a lot of opportunity. We have seen more and more startups coming out of the shadows and attempting to raise money from traditional funding sources like angel investors and venture capitalists. And many of them are succeeding. We have also discussed at length the growing list of retailers who are entering this marketplace despite the fact that the regulations regarding the sale of CBD or still not 100% defined.
In conclusion, the CBD industry is at a crossroads. Unless something comes out of the blue, a black swan if you will, it looks like the industry is going towards complete legalization at the federal level and likewise with many states. The question is how long and how much pain with this process take. From a lawyer for the US Hemp Roundtable:
“Jonathan Miller, a lawyer for the U.S. Hemp Roundtable, a coalition of dozens of hemp companies, told the F.D.A. panel that CBD is safe but called on the agency to police the bad players in the industry
“‘Our enemy is not the F.D.A.,’ Mr. Miller said in an interview before the hearing. ‘Our enemies are CBD companies that make false claims or sell products that are bad.’ “
CBD Up close is in complete agreement with Mr. Miller. It is over the next 12 to 24 months that the relationship between the CBD/cannabis industries and the federal government will be formed and informed for the next generation. Do we want to have an antagonistic relationship with the government or do we want to be seen as trusted partners in this legalization process? We firmly believe that this industry must opt for the latter in order to ensure long term successes.
Think of it this way, if working in partnership with the government leads to complete legalization at the federal level a couple of years earlier than would otherwise happen naturally, that would be additional years availabe to grow the industry. Current expectations show that the CBD industry could get as big as $22B within the next couple of years; imagine how big it could get if it was completely legal. The upside is tremendous.