The regulation of the CBD market in the US has presented obstacles and resulted in lackluster sales, but the introduction of federal rules could shape its trajectory and unlock its growth potential. However, concerns over consumer safety remain paramount.
Market Challenges
The US CBD food sector has been impacted by macroeconomic factors, including high inflation and limited consumer spending, as well as difficulties in raising capital for manufacturers. Sales in some food and beverage segments, such as functional beverages, have been weaker than anticipated, as CBD remains an afterthought for many consumers due to the challenges of quantifying its benefits.
The absence of a clear regulatory framework at the federal level and the patchwork of state and local requirements have hindered the entry of new players and discouraged large retailers and consumer packaged goods companies from fully embracing the CBD market.
The Potential Impact of Federal Regulation
Earlier this year, the FDA acknowledged the inadequacy of the current regulatory framework for CBD foods and expressed a willingness to work with Congress to develop new guidelines. A consistent national framework ensuring safety, transparency, adherence to good manufacturing practices, and independent third-party testing is needed to boost consumer confidence and industry compliance. Experts believe that the introduction of federal regulations is expected to unlock significant growth potential.
While the passage of regulatory guidelines could take time, the 2023 Farm Bill presents an opportunity for the inclusion of CBD regulations, allowing for the sale of CBD as a dietary supplement and food additive.
Consumer Interest in Health and Wellness
Consumer interest in health and wellness continues to drive demand for CBD products, particularly those associated with potential health benefits. Hemp-derived CBD products, such as oils, have gained popularity, and hemp oil is increasingly being incorporated into various food applications beyond protein shakes and smoothies.
Concerns over Copycat Food Products
The FDA and the Federal Trade Commission have recently issued warning letters to companies illegally selling copycat food products containing delta-8 THC, a psychoactive compound found in Cannabis sativa. These products resemble traditional snack foods and pose risks of accidental ingestion or higher-than-intended doses, particularly among children. Consumer safety remains a significant concern, and the FDA emphasizes the need for a regulatory framework that protects public health.
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