Steak recreational cannabis use was legalized to begin 2018, the cannabis business went to a roller coaster ride. It has been witness to changing government regulations, increased business, and shifting customer demographics. It is not obvious how the business will probably continue to grow, however some companies state barriers to entry are larger despite the sector being dominated by small company and ripe with opportunity.
“Cannabis is among the most regulated businesses in the usa at this time,” said Keegan Peterson, CEO, and creator of Wurk, a Denver-based cannabis company technology firm. “To have the ability to begin a company, you need to genuinely have a fantastic comprehension of what is necessary to be compliant in that sector — it requires plenty of cash to be in a position to accomplish that.”
Compliance has turned out to be tricky to accomplish. Back in September, the Bureau of Cannabis Control (BCC) stated that 20 percent of California cannabis products failed to analyze prerequisites.
Compliance has demanded to change of packing as advocated by Stage II of regulations, selecting a lawyer for advice on altering cannabis legislation, licensing fees, and much more. All of that may be hard for small companies to cover said Ruthie Edelson and Shelby Huffaker, the advertising team at San Diego dispensary Torrey Holistics.
“it’s quite expensive to initiate a dispensary of your or any type of cannabis company,” said Huffaker. “That may be extremely cost prohibitive.”
Torrey Holistics buying manager Kalina Fernandez believes a great deal of small companies will not make it in 2019 due to Stage III cannabis regulations happening at the close of the year. She judges off this of what occurred when Stage II regulations passed July 2018.
“A lot will not make it… I am just kind of biding time to find out who does. It happened July first — a great deal of these climbed and then they simply crashed,” said Fernandez. “Same thing will occur January 1. A good deal of individuals aren’t ready for this phase of testing that is going to occur.”
But there is still guarantee and possibility in the business. Recreational legalization spurred a business dominated by small companies, some who’ve been successful.
Rachel King, spouse and culinary manager of San Diego edible firm, Kaneh Co., has witnessed her client base widen in 2018. (Her firm has been around for three decades.)
“We have seen a great deal of different folks trying our merchandise. Before, people were afraid to attempt it,” explained King.
In terms of the future of small business in cannabis, King does not believe the challenges for existing companies will change considerably.
“I believe that the expansion is there and is a massive possibility,” explained King. “I think to get a brand new brand starting out it is likely to be a whole lot harder.”
There is little information on the possible trajectory of California cannabis, but accessible amounts are promising. Research businesses Arcview Market Research and BDS Analytics quote that California will likely see $4.7 billion in spending of recreational cannabis and $300 million in medical cannabis investing in 2019.
Even though it may be more difficult for cannabis entrepreneurs to generate their green, Peterson stated recreational usage created use increased cannabis demand, hence more chance.
“We have seen companies be made to fulfill that need,” explained Peterson. “Cannabis is most likely among the fastest growing worker foundations in the state of California at the moment.”
Is Charlotte’s Web in Trouble After Recent CBD Warning by FDA?
The cannabidiol industry is set towards an impressive expansion. According to a research firm forecast, CBD sales could reach $20B by 2024, almost tenfold from 2018’s sales of $1.8B. It could be attributed to upward trends in the industry, and as well as the great reception to CBD being a safe option compared to marijuana due to its low tetrahydrocannabinol (THC) content. THC is the substance responsible for the high in weed.
However, the Food and Drug Administration (FDA) has issued a warning recently that stated how some CBD-based products could cause serious health problems. This statement might affect one of the leading CBD companies in the US, Charlotte’s Web Holdings.
CBD may not always be healthy
In a consumer update published by the FDA regarding CBD product use, the agency stressed that cannabidiol might be the cause for various health issues such as liver injury, change in mood, and alertness. CBD used with other depressants and alcohol may also cause drowsiness. The FDA added that the said side effects could happen even without the user noticing.
The agency also reiterated that the alleged therapeutic benefits of cannabidiol are mostly unproven, despite several sellers highlighting their products as having several health benefits such as anti-cancer and pain-relieving properties.
The FDA also reminded the public that there is still a lack of data as CBD’s effects on the body in the long term. It is something consumers should ponder about according to the agency.
Is Charlotte’s Web Affected?
Charlotte’s Web is one of the most well-known US-based cannabidiol companies in the country and abroad. It sells a variety of CBD-containing products such as capsules and oil. It claims the biggest US market share in the CBD industry, with its products selling at nearly 10,000 stores nationwide. Its strong retail presence aids in the expansion of the company’s market share. Can the FDA warning affect their numbers?
Most likely not, and Charlotte’s Web can still maintain its top market position. The FDA has sent out warning letters to companies selling CBD products with false promotional claims, but Charlotte’s Web was not included. In a conference call of Charlotte’s Web CEO Deanie Elsner regarding their third-quarter earnings, he specified that the company fully supports the FDA’s stance on unfounded claims and are working with their business partners to maintain the effort.
Elsner also mentioned that while the FDA has little issuance on regulations, Charlotte’s Web is ready to adapt as soon as new directives from the agency are released. He said that the company is currently progressing on its expansion plan, getting its infrastructure and capacity to catch up with its growth.
The company is rooting for the FDA to set a clear regulatory framework, especially for dietary supplements. Charlotte’s Web is positive that its product portfolio and distribution channels will expand as soon as it happens.
The CBD industry looks to persist despite the warnings, and the supply of products will unlikely dwindle. Charlotte’s Web and its growth will remain unaffected. For investors, it might be wise to keep in mind that the CBD legal landscape is still an unfinished course, so evaluating whether a company is worth purchasing shares from is important.
China Cashes in on Cannabis Boom Despite Being Illegal in the Country
Marijuana is a dangerous narcotic in China, and being caught possessing it incurs a grave offense. However, this does not hamper the booming production of cannabis products in the region.
China has been growing hemp for textile and alternative medicine for many centuries and remains to be one of the largest top producers in the world. The giant’s footing in the cannabis industry has given producers an edge in the booming CBD craze. CBD or cannabidiol is a derivative of the cannabis plant that is now infused in virtually anything, from pet products to skincare serums.
The heart of the production
Yunnan, a province in China’s southwestern region, is the first to make industrial cannabis legal. The farm plots in the area are filled with tall hemp fields that span miles. The plant’s flowers and leaves are harvested by hand during the fall, sun-dried, and then turned into export quality CBD oil and powder. Yang Liu, manager of some hemp fields in Qujing, Yunnan, said that the cannabis industry looks to bring great benefit to him and the farmers in the future.
China holds 11% of the $800M worldwide CBD market last year, trailing after the US and Europe.
The industry is still maturing, but manufacturers and other key players in the CBD market are investing in land to increase hemp production. It may have existed for thousands of years, but hemp growing wasn’t adequately regulated until recently, with the government now being intimately involved in the development of the CBD industry.
Henri Sant-Cassia, a CBD advocate representing Cannabis Fund who tours Asia to find new CBD enterprises, exclaimed that China is moving into the cannabidiol industry at the speed of light.
Farmers in the US are also upping their hemp cultivation to cope with the rising CBD demand. This cannabis derivative is said to relieve anxiety and pain without causing a high that marijuana gives. The Brightfield Group predicts the CBD market to grow to a $23.7B industry by 2023.
Despite the astounding numbers, China’s stance on marijuana is unlikely to bend. If anyone is found to be harboring tetrahydrocannabinol (THC)-based products, they can be charged with a life sentence or worse, the death penalty. National Narcotics Control Commission deputy director Liu Yuejin said last April that China would strictly supervise industrial cannabis production amid its legalization in many countries.
Ingestible CBD is also regulated in China, which means that almost all hemp harvested and processed in China is sent overseas. It competes with other major hemp producers like Canada and the US for CBD market share.
CBD industry in China
The second province to legalize industrial cannabis farming is Heilongjiang, which is located along the Siberian border in the country’s northeastern area. Neighboring province Jilin is also poised to follow in their footsteps. Government officials are starting to encourage growers to consider hemp production, citing additional income and crop diversification as the benefits.
An influx of new companies entered China’s CBD industry recently, which Hanma Investment Group Co. Co-Founder Tan Xin believes will make it harder for newcomers to gain profit.
Since HMI started their cannabis venture in 2013, a kilo of CBD was valued at $50,000 when sold in the US, as stated by Tan Xin. In 2018, it fell to $6,000 and would most likely drop to $1,000 per kilo in 2020, according to him.
Nevertheless, Tan is positive that they can still cash in, provided that the price does not fall below the $300 mark since processing and labor cost less in China.
Untested CBD-infused Products Could Pose Health Risks as Market Grows Stronger
Cannabidiol products have recently spiked in sales and availability, granted by its popularity as an alternative cure to anxiety and pain. However, medical authorities warn about the potential health hazards of CBD and the many unproven therapeutic claims of the said substance.
Cronos, a Canadian company, recently bought a $300M CBD company, 7-Eleven stores now have CBD-dispensing robots, and HempAmericana Inc. started a live e-commerce portal to foster online CBD sales.
Dr. Dipesh Navsaria, director of the University of Wisconsin’s Doctor of Medicine-Master of Public Health Program, stated that cannabidiol might have numerous benefits, but most of these claims have not been tested for accuracy.
He cited the clinical trials of CBD for intractable seizures as the only benefit proven to be true. Intractable epilepsy is a kind of seizure that does not respond to therapy or any treatment. The CBD-containing drug, Epidiolex, is the only FDA-approved cannabidiol medication given for such cases.
Navsaria reiterated that several claims lack strong evidence for them to count.
Earlier this year, the FDA gave out warning letters to companies that sell new yet unapproved drugs that allegedly have CBD. Three of these firms are located in Florida.
CBD is widely available in stores and online, including big retailers like Walgreens.
Navsaria pointed out the lack of guarantee in terms of a product’s purity, and its active ingredients are what make it hard for medical practitioners to say yes to patients asking whether they can try CBD. It’s is the same dilemma they face for homeopathic remedies and herbal supplements, Navsaria added.
Research on CBD
Forbes revealed cases of people testing positive in urine drug tests from using CBD. This situation poses a risk for people whose jobs stipulate routine drug testing.
Natalie Schmitz, associate professor at the University of Wisconsin School of Pharmacy, studied the labeling accuracy for CBD products in her research. She stated that the literature related to CBD is limited and cannot support the claims of effectiveness.
She added that further research should be done to support all claims, including the benefits of CBD for pain and anxiety so that a conclusive statement can be made.
Some studies show how CBD can cause liver problems. There is also evidence of the substance causing several side effects like irritability, fatigue, and nausea.
Schmitz further stated that there is a need for FDA-approved guidelines for standardization and state-proposed quality measurements to help ensure that CBD products do not pose health hazards for the public.
Navsaria said that people should question products that are claiming to have several benefits without proper evidence. He cited profit motive as a drive for the proliferating CBD market. He believes that sellers are taking advantage of the trend to maximize sales, making it questionable whether these products are actually made to help people.
He further added that claims could easily be made, but there is little to no support over its factual value.
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