Companies’ CBD craze cools
Patchwork of state, federal regulations limit growth of products featuring cannabis
A few glass bottles of Vybes sit just below rows of energy and kombucha drinks at a deli in the Chelsea neighborhood of New York’s Manhattan. The drink, which comes in flavors including strawberry lavender and blood orange lime, is made with cannabidiol, more commonly known as CBD.
But a lack of federal rules and a mishmash of state regulations have made it impossible for Vybes to be distributed by a national retailer like Target or Walmart. That has hindered the potential growth for the drink, said Jonathan Eppers, who left the tech industry to create Vybes in 2018.
“For the first two years, we were riding a rocket ship,” he said. “But the patchwork of laws and regulations around the space has made it tough to grow our business.”
A little more than six years ago, CBD, the nonintoxicating component that is derived from cannabis or hemp, was poised to be the next big “it” ingredient, part of a wave of beverages and foods that were promoted as having healthful benefits or providing relaxation. Startups flooded the market with products, many promising to soothe stressed-out and anxious consumers.
At its apex around 2018, CBD was everywhere, appearing in water, chocolate bars, tinctures, gummies and skin serums. Consumers could buy athleisure apparel infused with CBD oil and feed their nervous pups CBD chews and snacks.
Big corporations even jumped in. Molson Coors teamed up with a Canadian cannabis firm to create a line of CBD-infused drinks. Constellation Brands, the maker of Modelo beer, made a $4 billion investment in a publicly traded cannabis company. Ben & Jerry’s began looking into creating CBD-infused ice cream.
In the past couple of years, however, the industry has stalled out. Molson Coors ended its joint venture, and Constellation has written down more than $1 billion of its cannabis investments. Large companies have shelved plans for CBD products, and hundreds of startups have either shut down, shifted to other ingredients or simply tempered their growth projections.
Also contributing to the precipitous fall of the industry is the simple fact that many people are befuddled by what CBD is, whether it is legal and if it will get them high.
The compound comes from the cannabis plant. Cannabis plants that contain high levels of tetrahydrocannabinol, or THC, are marijuana and can get users high. Cannabis plants with lower levels of THC are known as hemp.
Five years ago, Congress legalized hempbased CBD, although CBD made with higher levels of THC remained illegal at the federal level. But the Food and Drug Administration has declined to create rules allowing CBD to be used in dietary supplements or conventional foods. The agency said a new regulatory pathway for CBD must be created and there is not enough evidence to determine how much of it could be consumed and for how long. (The FDA has approved one drug that contains CBD and is used to treat some epileptic seizures.)
Like marijuana, which remains illegal at the federal level, CBD has been legalized by many states, creating a morass of varying rules and problems for manufacturers.
The FDA has issued warning letters to manufacturers and retailers for selling unapproved CBD products or making unsupported claims around the products.