At Cannabis Europa a panel of experts explored whether Europe’s CBD market has a bright future.
CBD companies have been popping up at a rapid rate but the industry has limited regulations and standards, with low barriers to entry. So, does this industry have longevity? Or, will CBD brands fall to the wayside as customers choose in favour of larger, already established brands that utilise the ingredient?
“I would argue there is the same low barriers to entry in the medical cannabis world,” commented Clifton Flack, founder and CEO of CiiTech. “Because all you need to do is have a good idea and promise to build a cultivation facility or promise to build the extraction facility and you can raise millions of pounds and you don’t have to worry about making revenue for two or three years. Whereas in the CBD world, there is no licensing, so to speak, required – the revenue is instant.
“Anybody can build a brand, anybody can build a website. It is very easy to build a mock-up and your logo and talk about something that might hopefully sell in the future – it is very, very different to build your brand that sells today. And I think that is the biggest barrier to entry in the entire cannabis industry – I am talking about THC and CBD.”
Flack highlighted the difference in regulation in different countries as a learning curve, raising the barrier to entry.
Stanton McLean of Artemis Growth Partners commented: “When we ask the question boom or bust, I am going to say boom, because for me personally, what it has done for me has been extraordinary. And I say that in terms of weight, anxiety, in terms of sleep – it worked for me. I definitely wanted to get more understanding about what was going on in CBD what was going on in medical cannabis.
“I think that we will continue to see a thriving opportunity for CBD and then for particular brands that invest appropriately in marketing to get their product known and get a good base behind it.”
“You buy CBD because it is giving you some kind of benefits – it is a lower dose health and wellness where you do not feel the effects, but you have got to have a blood test before, and in six months after,” added Flack. “It is absolutely healthcare – why would you buy CBD for fun? You do not get high from it. You think with THC, maybe the patients get medical cannabis for fun. It is healthcare. I think that is a really important way to look at the sector.”
Kingsley Wilson, CEO at Chrystal Capital Partners, commented: “That is an important point, you can look at the whole array of different products on the market, but when we look at it from an investment perspective – which are the segments where we can get the highest margins and the highest growth you know – you can start at the retails CBD brands, there is no differentiation.”
Wilson went on to say: “When you get towards the medical side, people attach a higher value to: this [product] helps me with my anxiety or my sleep and therefore I am willing to pay and once I find a product that works, I will continue to buy it. Therefore, the companies that are spending on marketing win those customers and then you get your long-term lifetime value of that customer and that is ultimately what drives profits which is what drives investor returns.”
Wilson also highlighted the importance of understanding regulation for CBD companies looking to make it in the competitive market.
McLean commented: “My personal view is that the money will continue to come from net worth and family offices for some time until we see some changes in this and it becomes more federally legal. I think seeing the institutional market come is going to take some time for now. I think we are continuing to focus on the high net worth and family office funds.”
“We need to educate institutional compliance departments and get them comfortable and investing and that is when you are going to see the bigger companies come and list in London,” added Wilson.
“In the next couple of years, we will start to see the bigger blue chips investing, and that will put a massive injection of capital into the European markets to enable us to fulfill these numbers that people are expecting.”
Irish rugby athletes invest in CBD skincare and drinks
Irish rugby player Rob Kearney has signed a two-year partnership deal with a CBD brand.
Irish rugby player Rob Kearney has signed a two-year partnership and investment deal with a CBD brand, where he will also act as an ambassador.
Kearney is one of Ireland’s most accomplished rugby players, with a career that includes two tours with the British Lions and four Six Nations titles. He has also become a successful entrepreneur investing in different industries including the CBD market.
Poko is an Irish unisex skincare brand that offers a range of vegan products including muscle recovery balms, moisturisers and eye creams. It was created by Justine O’ Hanlon to help with problematic skin caused by polycystic ovary syndrome.
The collaboration with Kearney is one of the first partnerships that the brand have planned as they look to move into the European and UK market. Kearney is said to be a fan of the product line and plans to promote the partnership across TV, radio, print and social media.
He is hoping the brand will appeal to the growing male beauty market.
This partnership is the first of many high-profile brand collaborations with influencers across the U.K. and Europe the brand has planned. He believes that CBD is a powerful and versatile substance that should appeal to everyone looking for strength in their skincare.
He said: “I chose to work with Poko as they share many of the same values I do. Their passion and drive to bring skincare solutions to everyone is something I really felt I could stand behind. The stigma around male skincare is an area I really feel needs to be highlighted and education needs to improve. We all need to look after our skin and that starts with accessibility to products that are suitable for everyone.”
Poko co-founder Justine O’Hanlon said: “I’m very inspired by Rob’s career and to see the enthusiasm he has shown for our brand. We’ve always had a focus on providing skincare for everyone, and creating a brand like Poko allows us to reach male and female audiences. Having Rob onside to promote skin health is so important for us and we can’t wait to see what the next two years will hold for us.”
Kearney isn’t the only athlete investing in skincare. At the start of 2021, footballer David Beckham invested in the CBD and CBG brand, Cellular Goods who have launched its first products ahead of Christmas. The products are thought to be the first CBG skincare range in the UK.
Irish rugby and CBD
Earlier this year, former rugby player, Alan Quinlan, mixed martial arts athlete Cian Crowley, Cork GAA players, Diarmuid O’ Sullivan and Brian Hurley invested in Mynd. Mynd is a plant-based, CBD drink that has just entered Irish supermarkets. The athletes invested a combined EU2 million.
The fruit drinks are formulated to be low sugar with 25 mg of CBD.
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What can CBD do for rugby players?
It’s not just rugby players that could benefit from CBD, but any athlete that suffers from inflammation.
Acute inflammation is the immediate response to something it perceives as a threat such as a virus, increased workout strain or an irritant. Although inflammation can be part of the healing process, it can be very painful especially for athletes who have a strict training schedule. Chronic inflammation builds up over time and can lead to conditions such as arthritis.
A pre-clinical study on inflammation related to arthritis revealed that the levels were reduced when treated with a localised CBD treatment. The researchers stated that ‘CBD may be a safe, useful therapeutic for treating OA joint neuropathic pain.’
Concerns over ‘ethically unacceptable’ CBD testing proposed by FSA
A new report has highlighted that the UK industry is struggling under ‘scientifically unjustified, and ethically unacceptable’ toxicity testing for CBD products.
The report by DevelRx LTD and The Canna Consultants has raised concerns about the testing that businesses must take part in under the FSA guidelines.
DevelRx and The Canna Consultants have stated in the report that they believe the testing is ‘unethically acceptable’ and ‘scientifically unjust’ while drawing attention to the replicated animal testing for CBD products.
The Food Standards Agency (FSA) determined that all CBD products were to be classed as Novel Food in the UK and EU. They developed testing guidelines with guidance provided by the Committee on Toxicology (COT) in 2020 and declared that all businesses must submit scientific proof that their products were safe if they were to remain on sale. COT developed the guidance for their guidelines using data from GW Pharmaceuticals.
The report also draws attention to the ‘cherry picking’ of data given that the guidance is based on just one of 15 trials by GW Pharma for Epidiolex. The report stated that this is ‘superficial, scientifically flawed and has placed reliance in part on a biased data source that was part of a pharmaceutical company’s lobbying campaign to the US government to restrict the non-medical use of CBD by the US public.’
The authors developed a list of issues that they found within the data and testing which has formed the basis of the report.
Speaking with Cannabis Wealth, Steve Oliver, one of the co-founders of Canna Consultants raised his concerns about the testing CBD companies are forced to undertake.
“When the COT made their assessment, it was based on a document that GW Pharma supplied. That document is clearly a lobbying document. They highlighted adverse effects which didn’t stand up scientifically and contradicted their own efficacy and evidence of the safety of CBD at the levels we mention. So we have concerns and we have been raising this with regulators for 18 months and it’s been falling on deaf ears.”
He explained: “We got to access all of the clinical data then we asked them to conduct their own assessment and have it peer-reviewed. We found ten points where we demonstrate there are several statements in the COT document that contradicted the data they presented.
“They essentially cherry-picked some adverse events which were not representative of the much larger study they conducted. Those adverse events can be attributed to the other drugs that people were taking. We are very concerned that COT swallowed this and didn’t have the scientific experience, or was not prepared to drill down and test that. So they accepted the commercial organisation’s data.”
Some of the data from the Phase I GW trial raised concerns about the effect of CBD on the liver and potential reactions with other drugs. This led to the FSA suggestion that consumers keep within the recommended 70 mg per day despite the data showing no cause for concern on doses much higher than this.
The result of the new guidelines and increased testing has caused chaos for brands, in particular small to medium companies who may struggle to afford to test. This has led to every manufacturing company planning on making an application for their products having to conduct an extended 96-day, repeat dosing, rat toxicity study for each individual item. The effect for some brands has been devastating. Not only that, it has raised serious issues for brands that label their products as vegan or cruelty-free.
Animals are often forced to take CBD in these trials which are required for each ingredient. In May 2021, it had been reported that there were already over 800 applications to meet the deadline of 31 March. A high percentage of brands were forced to withdraw their applications due to costs or were rejected due to not being able to meet the high standards set.
Steve highlighted that there are a huge amount of companies who have tried but are unable to afford the fees causing them to ‘go to the wall’ as a result. He stressed that small companies are trying to do everything they can while the pharmaceutical companies already have their applications validated.
Steve said: “It forced people to go down the consortium route because some people who are selling wellness products brand them as vegan and cruelty-free. They are being corralled into sponsoring or contributing to animal testing which they don’t want to do. They have been told that if they don’t do that then they won’t have a business. Ethically, that is outrageous and morally it’s wrong.”
He added: “We are not against animal testing as required and needed for certain drugs but there is a requirement for that. Why would you go and retest on rodents when you already have the data for humans?”
The testing on animals raises serious ethical concerns for an industry that often carries products with cruelty-free or vegan labels. While some companies do publically make the choice, the report draws attention to the fact that many consumers may not know what is involved with this testing.
“It is important that people understand what is being tested. They are not sitting there cuddling these animals. They are being killed at the end of the trial and a necropsy takes place. Animals don’t naturally like to eat CBD oil or isolate so they are force-fed. It’s fundamentally wrong and we think it’s probably unlawful if it was put to the test.”
The effect for the industry if it were to gain a reputation for animal testing could be devastating. It raises further questions about how much retailers who supply a variety of brands know about what exactly is involved in the testing.
Steve said: “I’m not sure that some of these retailers know. If you have high-end retailers such as supermarkets or chemists selling a product that they thought was tested on animals then it would be removed. It’s very strange and damaging for our industry. So many people have gone down this route without challenging it.”
As the industry has moved to accept the regulations, guidelines and increased testing, is it now so far gone that it cannot change? If the guidelines were to change, how does this affect the companies that have already paid for extensive reports? The expense of testing for companies could mean companies would take issue with changes.
“We’ve got to realise that a lot of this testing isn’t taking place in the UK under good laboratory practices. The vast majority is taking place in America where you can go to places and as long as you have a chequebook, they will test it on whatever species you want. We hope someone will take notice because it’s wrong but the problem is, they have encouraged people to do this testing and now they have submitted it.”
He concluded: “They are tied up in knots now because if you are a company that spent a million pounds doing all of this testing, submitted your dossier then probably, quite rightly, you are going to have an issue with the regulator if they were to have a policy change. That can’t stop you trying to do the right thing and this is not the right thing on so many levels.”
Cannabis Wealth has reached out to the FSA and COT for comment.
Lamborghini Lifestyle Company moves into CBD industry with new beverage
The product line will contain CBD and CBG.
The Flora Growth Corp has signed a licensing agreement with Tonino Lamborghini to produce and distribute CBD beverages in North America and Columbia.
Tonino Lamborghini and Flora Growth Corporation stated that the product line will contain CBD and also cannabigerol (CBG) as part of the licensing deal. There has been an increase in interest surrounding CBG in products from oils to skincare as it is thought to offer many benefits alongside CBD including regulating appetite and sleep.
The products will be produced in Florida initially with a focus on e-commerce and retail channels and will launch in the first quarter of 2022.
The Lamborghini brand is best known for luxury cars and Formula One but they also offer menswear, sunglasses and suitcases as part of their lifestyle brand. The brand is also involved in real estate projects.
Luis Merchan, CEO of Flora said: “We are excited to partner with such a well-known luxury brand as Tonino Lamborghini, which already boasts a very successful line of beverages and aligns with Flora’s brand portfolio of high-end products.”
“This partnership is yet another step in the execution of Flora’s strategic plan to build a world-class house of brands and is also a major component of our sales and distribution strategy in the lucrative US market,” he added.
The CBD industry is thought to develop into a US$20bn dollar market by 2024 with a large percentage of growth from the edible and beverage sectors.
The company will be using Applied DNA Sciences. Inc molecular tagging and authentication technology to ensure product verification. The new technology will allow Flora to reduce the concerns of any illicit market or counterfeit products.
Molecular tagging, which is similar to small DNA particulars acts as a type of molecular barcode. It can be used to advance tracking and tracing in the cannabis industry. The molecular tags can be added to plants, oils, lotions, edibles, and packaging. It is invisible to the eye and safe to ingest according to the Food and Drug Administration (FDA).
Ferruccio Lamborghini, CEO and VP of the Italian company said: “Together with Flora, we aim at creating new and innovative products and experiences for the modern consumer’s wellbeing. Our branded beverages are studied to help people to achieve a sense of calm and coolness in both stressful times and ordinary daily routine.
“I am especially enthusiastic about the molecular tagging and authentication technology Flora will use to track with full transparency the top-notch ingredients origin.”