The trouble with GMP – and why EU producers are at a disadvantage

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GMP compliance – and why EU producers of CBD products are at a disadvantage

 

Good Manufacturing Practices (GMP) certification means little, and European CBD producers are being held back by rules limiting varieties that can be grown, according to new analysis from CBD-Intel.

CBD-Intel’s wholesale pricing report on CBD products found that having GMP certification has little impact on the price that can be commanded for bulk CBD products such as distillates, isolates and refined oils.

This may be due to GMP not being a standard for quality between producers. CBD-Intel analysis of the data led to a theory that although GMP leads to quality assurance processes, it can take considerable time and capital to achieve. This means that not all CBD producers – even those that through their own means are achieving high-quality products – have been able to afford, or want to afford, the expense in time and capital that GMP certification requires.

“At present, very few producers of CBD wholesale products hold GMP certification. That is not to say that the producers without certification are not compliant – they simply have not undergone the certification process,” author Nate Erskine, CBD-Intel’s head market analyst, said.

 

Economies of scale

That said, the industry is starting to see the advantages of GMP compliance and certification as the industry matures and engages with more established industries such as the pharmaceutical or food and beverage, he added.

For certain categories, such as distillate and isolate, GMP-certified producers tend to be cheaper. This could be due to the larger companies, with better economies of scale throughout their operations, being among the first in the industry to go through the certification process.

“GMP certification will be a requirement as the industry matures and demand increases from other manufacturing industries. The costs of compliance and certification can be significant, but we are not seeing this being a barrier to maintaining price competitiveness,” Erskine said.

The report also found that producers in the European Union generally suffer in comparison to counterparts in North America and Switzerland, where a wider variety of plants (including ones with higher THC content) can be legally grown.

CBD producers in the EU get less CBD percentage by weight, while also producing fewer minor cannabinoids and other beneficial compounds. This means lower margins for production and a potential disadvantage when marketing products as higher quality.

 

European producers in trouble

“The European market is at somewhat of a disadvantage when it comes to CBD production due to regulations which only allow the use of approved genetics in the growing process – resulting in a crop with a lower total CBD percentage by weight,” the report explains.

“Furthermore, the genetics used in the North American and Swiss markets tend to produce a more diverse profile of minor cannabinoids and other beneficial compounds like terpenes – potentially allowing the final distillate or refined oil to be considered higher quality products than those derived from EU-certified hemp strains.”

This could mean European producers are in trouble. “With large and burgeoning consumer CBD markets across the EU, North American producers are looking to the EU for expansion opportunities,” Erskine added. “Competing with American and Swiss distillate will be a challenge considering the differences in specification.”

One suggestion may be to focus on isolate.

 

ENDS

About CBD-Intel: CBD-Intel provides impartial, independent and premium market and regulatory analysis, legal tracking, and quantitative data for the cannabidiol (CBD) sector. We provide our clients with the tools to navigate this fast-moving sector, tailor their business strategy, optimise resources and make informed decisions.

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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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