Little fear of a glut in the UK market if EU decides to classify CBD as a narcotic

Companies do not feel much risk of a glut of CBD-containing food, drink and dietary supplement products or cannabinoid ingredients coming into the UK market if the EU follows through with its initial opinion classifying CBD as a narcotic.

CBD ingestible products will have to have a novel food application under way with the UK Food Standards Agency (FSA) if they are to remain on the market beyond 31st March 2021. This means a flood of new food, drink or dietary products is unlikely as any new introduction would require the rigorous testing necessary for an application to be accepted.

There may be a further swing to cosmetics and topicals but that is a trend already under way, companies suggested.

White label manufacturer Taylor Mammon told CBD-Intel that it believes CBD could be diverted to use in cosmetics – which has not been impacted by the narcotics question – if the EU was to follow through on its preliminary opinion.

The EU decision has already led to some firms refocusing on cosmetics, so any further action would be a continuation of an ongoing trend, it added.

 

‘Surprised and concerned’

 

Taylor Mammon did warn that the UK could see its own smaller parallel action with companies unable or unwilling to meet 2021 compliance requirements looking to unload food, drink and dietary supplement products before the deadline.

It added: “The onus is on raw material suppliers to make full applications, although they have made supplementary submissions as an intermediary, for example with product stability studies.”

Vape specialists Infused Amphora said they were surprised and concerned by the preliminary European Commission decision and that the EU market was significant for them. But inhalant products are not liable to novel food approval, so in the UK the company believes supplier compliance is enough but is also considering whether to seek additional approvals.

Dragonfly CBD does not expect to see much impact on its operations. It makes cosmetics which could continue to be sold in the EU market regardless. It does think that a designation would make it focus on the UK market more for its tincture products but, overall, believes any reclassification in the EU would not have a major impact.

Meanwhile, most companies believe that any downward pricing of ingredients from a surplus to EU needs may be more likely to affect the more standardised products sold at the lower end of the price range.

 

Downward pressure on prices

 

For example, Infused Amphora uses specific distillates manufactured in the US, so says a potential market glut of more standardised – or perhaps lower quality –  isolates and phyto-cannabinoid rich (PCR) distillates previously destined for EU countries would not affect its supply chain. And the firm says there is already a lot of pressure on CBD prices.

Provacan, a CBD brand subsidiary from the company CiiTech, agreed that there is already downward pressure on the cost of CBD, adding that beyond Europe there is already growing competition from US and Chinese sources of production. A reduction in prices for end-users is long overdue, the company argued.

But Provacan also sees the European Commission threat as something of an opportunity for UK firms, saying that UK novel food approval and British production which Provacan values could become an international sign of quality for CBD products, and potentially even a benchmark adopted by other countries.

Bristol-based Amma Life was less bullish, however, warning that there could be “huge implications”, as the UK industry relies heavily on EU farmers and manufacturers for raw materials of hemp and CBD production “especially as, historically, it has been very difficult for a UK licence to be approved to grow industrial hemp for the purpose of producing CBD-rich crops”.

– Simon Ferrie CBD-Intel contributing writer

Photo: Donald Judge

CBD-Intel does not provide legal, strategic or investment advice. Tamarind Media Limited, the publisher of CBD-Intel, does not accept any liability or responsibility for information or views published.

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