Two months before the deadline for novel food applications, smaller CBD brands describe feeling “completely disregarded” as the industry appears to take another step towards “shutting out” grassroots businesses.
This week, the Association for the Cannabinoid Industry (ACI) announced a partnership with Trading Standards.
Approved by the Secretary of State last week, the ACI is now the first UK cannabis industry to formalise a partnership with Trading Standards which will allow the ACI and its members to seek advice from the official body that will be enforcing the market from April onwards.
After the FSA’s 31st March 2021 deadline, any CBD product that does not have a validated novel foods application will be illicit.
As part of the agreement the ACI has agreed to run educational webinars and develop literature to enable Trading Standards officers to recognise non-compliant CBD products sold in the UK.
In exchange, the Trading Standards will provide webinars, training, general information and guidance on topics such as, labelling, advertising claims and food safety management plans to ACI members.
“We are thrilled to further support the sale of safe and compliant CBD in the UK through this partnership with Trading Standards,” Leila Simpson, ACI innovation director said at the time of the announcement.
“This will enable us to ensure our members are getting the best available advice to help raise the standards of the industry and more easily share intelligence with the regulator about non-compliant products after the novel foods March deadline.”
Although the ACI says the partnership hopes to raise the quality standards of CBD for sale in the UK, many CBD advocates and small businesses see it as another step towards “shutting out” smaller companies who are unable to afford the high membership fees.
Peter Reynolds from CannaPro, another UK trade association for the CBD sector, describes the fees as “outrageous” and cites companies that have withdrawn their membership for this reason.
In 2019, members of the ACI reported admission fees of £12,000 or £50,000 per annum.
The ACI confirmed to Cannabis Health that there is now just one fee, of £25,000 a year, but says this allows it to “hire the best people” in order to engage with those in the scientific and regulatory sectors on a “peer to peer” level.
According to Reynolds, CannaPro, which represents many of the UK’s smaller CBD companies, has not been provided with the same level of information as the ACI.
As a trade association, he believes both bodies should be treated on “exactly the same basis”.
“Essentially what the ACI is doing is setting up a club where the admission fees are tens of thousands of pounds,” Reynolds tells Cannabis Health.
“This is all about a campaign to destroy the small businesses that created the CBD market and seize control of it.
“These arrangements between Trading Standards and commercial organisations are not new. It has happened before but what these [partnerships] are usually trying to do is help retailers clarify what is going on.
“But when you have an organisation like the ACI, which is systematically engaged in trying to close down the majority of the market in favour of its members, it’s deeply shocking.”
Mike Peates, founder of CBD company Medivita, also fears the move will leave smaller businesses at a disadvantage.
“Whilst I understand the need to remove rogue traders from the industry and have helped Trading Standards with this, I can’t see how this will end up being impartial,” he says.
“The ACI has a membership paying huge fees for them to manipulate the decision makers. On the face of it this partnership means they will be both Gamekeeper and Poacher acting in the best interest of their membership.”
This echoes the sentiment of many smaller CBD companies that are feeling “cornered” by the events surrounding the FSA’s Novel Food Applications.
Speaking to Cannabis Health, director of Leafline CBD and All World Products, Paul Shrive, says: “As always, it’s monopolisation. We, the small guys, pave the way then big business comes in and takes over.
“Effectively what we have is a politician-fuelled trade body looking to monopolise and take over the cannabis sector. It’s as simple as that.”
Shrive believes the current situation extends back to 2016, when the UK “gave away” its cannabis sector.
“We gave it away by allowing American and Canadian companies to come over to the UK and influx the market with their products, whether they are isolates, whole-plant or full-spectrum,” Shrive says.
“We are now dealing with the consequences.”
Having first experienced the benefits of cannabis in the 1980s while living in Africa, Shrive has had a passion for the plant’s medicinal properties for over thirty years. Having launched his first CBD company in 2016, he says “it’s the most frustrating and soul-destroying situation to be in”.
Sam Connolly, owner of CBD oil brand, Bnatural is more understanding of the ACI’s actions.
“I get where [the ACI] is coming from,” Connolly says. “They want to police the industry because their members have forked out tens, if not hundreds of thousands to become members. They need to make sure they do what’s right for their members.”
Despite this, Connolly still feels that the UK’s CBD sector is under “systematic attack from all angles”.
Aside from its own brand, Bnatural has multiple other businesses relying on it to have its products available after the Novel Foods deadline. The company prepared itself early and took other routes to compliance without the help of consortiums such as the ACI.
“We have direct contact with the FSA and we’re getting information that way,” Connolly explains.
“But the [ACI] subscription is designed for the elite, isn’t it? It’s not designed for smaller [businesses] like us. Fees are way too high for most people.”
For CBD company, Karma Coast, the health of its customers is its primary concern.
As a producer of full-spectrum oils, the Newcastle-based company expects that many of its products will be deemed illicit after the March deadline, despite claiming that they are more effective than isolates.
Karma Coast’s founder, Dylan Mortimer says data from his company’s product development showed that an isolate product with a 50 percent concentration of CBD was less effective than a whole-plant product with just six percent CBD.
With many people now relying on Karma Coast’s products for managing their health conditions, the company is concerned about the future of the business.
“Our business is just a bit up in the air at the moment,” Mortimer says.
“We will look to supply something else, but unfortunately, it will be an inferior product.
“I feel like we’re being shut out and completely disregarded.”
In 2019, the ACI carried out the first major third party testing of CBD products in the UK. The report found only 38 percent of the products were within 10 percent of the advertised CBD content and 38 percent actually had less than half of the advertised CBD content, with one product containing no CBD at all.
According to the report the test exposed “regulatory gaps” and highlighted a need for “well-regulated, innovative and responsible industry” to protect consumers.
Speaking to Cannabis Health, Shomi Malik, external affairs director at the ACI, says: “This market has existed in a grey area for a long time and we in no way want to diminish the good work of a lot of the companies that have been around for a little while.
“We’ve got the same mission, we want to increase access to cannabinoids. We want to increase the levels of education and decrease the stigma and to see real mass adoption. If retailers can’t engage with the sector meaningfully [due to a lack of regulation] this will be harder to achieve.”
Malik admits that some of the events around the novel food applications have caused confusion in the sector and the situation has not been “ideal”.
He continues: “I understand that the novel food process is out of reach for a lot of companies, but the ACI didn’t push for novel foods, we pushed for consumer protection.
“We want safe CBD products out there and novel foods regulation is an imperfect model, but a happy compromise. If you look at any other food products, you have to prove it’s safe.”
However, he refutes the idea that the ACI is “in cahoots” with the FSA.
“We are supporting them and making this process simpler and smoother for companies. But we are diligent about what we want to achieve and won’t compromise on our quality standards and that gets used as a stick against us for favouring big business,” says Malik.
“Our membership fees allow us to hire an incredible team and carry out developmental work in science and policy, which in turn will make things more accessible for our members. We’ve made tremendous strides and the speed with which we’ve achieved clarity and a measure of quality controls can only be a good thing.”
He adds: “Not everyone can afford them, and we’re very open about that, but we’re also open about how smaller companies can work with the industry at large.
“We do have a lot of startups in our core cohort and we’re about to launch a project to help smaller brands work with larger companies.”
Cannabis Health has approached Trading Standards but they did not wish to comment.
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