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“Shut out and completely disregarded”: We’re being shunned for “big business” say CBD brands

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Small UK brands say they feel "shut out" and "completely disregarded" in favour of big companies.

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another UK trade association for the CBD sector, describes the fees as “outrageous” and cites companies that have withdrawn their membership for this reason.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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Novel food regulations look set to dramatically shrink the CBD sector

Only 42 products have been successful so far, out of more than 800 applications.

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Only 42 products have been advanced to the next stage

The UK’s CBD sector looks set to shrink significantly as the roll out of new regulations continues to batter the industry.

Companies were told to submit detailed applications to the Food Standards Agency by 31 March, in order to stand any chance of getting permission for their products to remain on sale in the UK.

It followed the British government’s adoption of European rules categorising CBD products as ‘novel foods’, an established regulatory status which puts the onus on businesses to demonstrate safety and quality in order to remain on shelves.

Last month the regulator began adding products which have been validated – meaning they have been temporarily approved pending further checks for full authorisation – to a public register.

But despite rising domestic consumer demand and a decision to to only allow products already on sale to apply for authorisation, it looks like the UK could come out the other side with a much smaller CBD sector.

The FSA has confirmed to our sister title Cannabis Wealth it received applications for 803 different CBD products – but only 42 have been advanced to the next stage of the process so far.

More than half of all applications (445) were ‘incomplete’ and a further 41 have been withdrawn altogether.

The FSA is still assessing 317 applications and the regulator believes there ‘could potentially be hundreds of products’ on the final list – but it now seems highly likely the process will significantly reduce the range of options available to customers.

An FSA spokesperson said: “To date only 42 products have advanced onto the public list, these are linked to four validated applications.

“This reflects the complex nature of the industry, the quality of the evidence provided and the number of suitable applications at present.

“Many of the applications that have been received have been incomplete applications and do not provide enough information to assess acceptability.

“In a high number of cases we have had to ask for further information from companies before we can progress the validation process.

“We still expect that there could potentially be hundreds of products on the list by the time it is complete later in the year.

“This list will reflect the products associated with companies that have taken the time to provide sufficient information to demonstrate the safety of their products.”

The public register – which can be accessed here – is not expected to be completed until June.

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Dutch cannabis experiment could see more patients turning to coffee shops

A four-year experiment aims to try and solve the Netherland’s ‘backdoor’ cannabis criminality problem.

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cannabis experiment Netherlands
Recreational cannabis use has been tolerated within the walls of the Netherland's coffee shops since the 1970s

A four-year experiment to try and solve the Netherland’s ‘backdoor’ cannabis criminality problem could see patients turning to coffee shops for easier access.

The cultivation and sale of cannabis for recreational purposes are strictly prohibited in the Netherlands – unless you are visiting one of the country’s famous coffee shops.

These establishments are allowed to sell small amounts of cannabis but operate under strict rules, including a limited stock of 500 grams.

On a municipal level, authorities can decide how many coffeeshops it will allow if any, and as the country deals with a growing number of “drug tourists”, individual municipalities can choose to ban foreign visitors from entering the region’s coffee shops.

Although the sale of the drug is tolerated, coffee shops face a contradiction in Dutch law known as the ‘backdoor policy’. Shops can sell the drug to their customers, but their suppliers are forbidden from cultivating and selling cannabis to them. In other words, sales through the front door are allowed, while sales through the backdoor are not.

“As a result of the policy of tolerance, the sale of cannabis to users is permitted, but the cultivation, sale and purchase of that cannabis is prohibited, which easily leads to crime. After all, the coffee shop needs to be supplied,” said Ellen Gielen, head of the life sciences group at global law firm, CMS and co-author of the company’s ‘Expert Guide on Cannabis Legislation’.

“The discussion to legalise the supply of coffee shops with cannabis has been going on for several years.”

A 2008 “weed summit” brought together 33 Dutch mayors from various municipalities and different political parties to discuss drug tourism in border regions. A survey carried out by the evening newspaper NRC Handelsblad revealed that 80 percent of the mayors in attendance were in favour of ‘regulating the backdoor’.

Over a decade later, the Netherlands is now embarking on an experiment across ten municipalities to evaluate the effects of a closed supply chain for coffeeshops.

Ten commercial cultivators will be made exempt from current laws, allowing them to sell and deliver quality-controlled cannabis to a total of 79 coffee shops.

The experiment is known as the ‘controlled cannabis supply chain experiment’.

The legally produced cannabis will have to be lab-tested and meet the Dutch government’s quality, labelling and packaging requirements. But there will be no limit to the THC concentration and producers can set their own pricing.

Cultivators applied to be part of the study in July 2020 and are due to be selected this month before the Dutch government kick starts the four-year experiment.

“The aim is to see if and how cultivators can supply quality-controlled cannabis to coffee shops in a decriminalised way,” Gielen added.

“In addition, the government wants to examine the effects of the experiment on the problems that some municipalities experience – for instance, on crime and public health.

“The experiment means that more suppliers and cultivators are contracted by the government and there are more options for the sale of seeds and or cannabis.”

Gielen anticipates that recreational use through coffee shops will, in part, substitute medicinally prescribed cannabis.

“Doctors are holding back from prescribing cannabis and health insurance companies, in general, do not reimburse for medicinal cannabis,” Gielen said.

“Some patients therefore choose to get their cannabis at coffee shops.”

Although it has been legal for any physician to prescribe medical cannabis in the Netherlands since 2003, treatment guidelines do not encourage prescribing due to the lack of clinical evidence.

“Especially now that the government is planning to supervise the supply and quality through the experiment, expectations are that medicinal users will switch to the freely available recreational cannabis, as they have to pay for it anyway.”

A research consortium that includes Breuer & Intraval, Rand Europe and the Trimbos Institute was commissioned by the Dutch government and will carry out an evaluation over the four-year period.

The consortium will investigate the impact of the experiment on health, user experience, nuisance and displacement effects.

Stijn Hoorens cannabis experiment

Stijn Hoorens, senior research leader at RAND Europe

“We will conduct numerous interviews with coffeeshop owners, municipalities, police and other stakeholders,” said Stijn Hoorens, senior research leader at Rand Europe.

“We will count coffeeshop visitors and conduct a survey amongst customers and ask them about their purchasing and consumption behaviour.”

The Trimbos Institute, meanwhile, will take cannabis samples from coffeeshops in both experimental and control cities and have them lab-tested and compared.

“At RAND, we will also aim to measure some of the developments outside the coffeeshops and whether we could observe any displaced effects on the illegal market,” Hoorens continued.

“This is very difficult, because we don’t have a reliable picture of what’s happening in the illegal market in the first place, let alone as a consequence of the experiment, but we’ll try.”

The results from the ten multiplicities involved with the experiment will be compared with a control group of ten other regions where the current laws are maintained.

The conclusions of the study will later be used by the government to decide on its next steps for designing the future of cannabis policy, however Hoorens said the main objective was not to reduce illegal production or curb organised crime.

“The primary objective is to test whether it is at all possible, or feasible to design, operate and enforce a closed supply chain for decriminalised cannabis,” Hoorens said.

“If the main actors in the supply chain, producers, distributors, coffee shops, consumers, local authorities and law enforcement are happy, the experiment has succeeded. However, we are also asked to attempt to measure the effects on public health, public safety, nuisance, crime, and displacements effects.”

At such an early stage, it is difficult to predict the outcome of the experiment, but Hoorens believes it is unlikely that the “backdoor” policy will still exist in the Netherlands after the four-year experiment.

“We have a number of hypotheses that we will test, but anything could happen,” Hoorens added.

“If customers don’t like the legally produced cannabis, the illegal market might thrive. If the legal products turn out to be a success, there might be a displacement from the illegal market, and perhaps even from other cities towards the coffee shops in intervention cities.

“I think it’s fair to say, that it is unlikely that the situation with a decriminalised front door and a criminalised back door will still be present in the Netherlands.”

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Greenheart’s ‘groundbreaking’ tech is set to revolutionise hemp farming

Cannabis Health speaks to the Irish CBD company that is on track to revolutionise the sector. 

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Cryptocurrency, state of the art cold-press technology and an AI drone that allows cultivators to produce up to five times the yield of an average farm: Cannabis Health speaks to the CBD company that is on a path to revolutionise the sector. 

Hemp cultivators will know that only female plants can grow flowers; the component from which cannabinoids are extracted to make CBD products. Male plants on the other hand only produce pollen sacs, a useful tool for breeding but detrimental for farmers seeking to produce a high yield of usable hemp. 

In the 1970s, cannabis and hemp growers discovered that growing only female plants or removing male plants before they matured boosted both the yield and potency of their end product. 

They found that the longer a female plant is left unpollinated, the larger it will grow, meaning farmers can produce a greater number of flowers with a higher yield of cannabinoids. 

A 1998 study confirmed this, revealing that pollination of female plants resulted in a yield 56 percent lower than an unpollinated crop.   

To maximise their profits, some farmers inject a huge amount of time and resources into identifying and removing male plants before they release their pollen. However, distinguishing between the two sexes is a near impossible task. Male and female plants look almost identical until the flowering stage, at which point it is too late to prevent pollination. 

Farmers can buy feminised seed to sidestep this issue, however very few can justify the significantly higher costs compared to scattered seeds which contain both genders. 

But Irish company Greenheart CBD has partnered with Canadian technology firm, Zenadrone, to develop an artificial intelligence drone that can solve the problem. 

Greenheart CBD

Greenheart CBD co-founders Mark Cavanan and Paul Walsh

The six-foot drone features a robotic arm that can pinpoint and remove the male plants before pollination. The result is a crop consisting only of unpollinated female plants with space to grow to their maximum size. 

According to Greenheart co-founder, Paul Walsh, an average farmer in Ireland would expect to produce around 200kg of dried flower per acre. Using its drone technology, Greenheart is able to yield 1,000kg per acre. 

“There’s nothing else like it in the world, it’s completely groundbreaking,” said Walsh.

“It’s like when the tractor first came to the farm – well this is the new tractor.”

The drone also serves as a security tool, with camera systems which are connected to a mobile app meaning farmers can monitor their crop 24 hours a day. And as well as boosting profitability by allowing for a higher yield, it also collects data throughout the process, ensuring full traceability of the hemp plants from the farm, through its production facility, where cold press technology is used to extract cannabinoids and terpenes from crops. 

As opposed to the more popular methods of extraction using CO2 or ethanol, cold-press technology subjects hemp flower to high pressures at relatively low temperatures to produce an extract that contains the entire spectrum of cannabinoids and terpenes. 

Greenheart has now developed several cosmetic products along with three flavours of CBD-infused popcorn, with a new range of protein-based CBD products under development. 

Before venturing into the cannabis and CBD sector, Walsh built a career in blockchain technology, working for a number of multinational tech companies, including PayPal. After several years in the sector, he decided to return to his home country of Ireland to integrate the cryptocurrency system into the Irish hemp sector. 

In 2019, he teamed up with fellow entrepreneur, Mark Canavan, and the duo set out to address some of the key challenges faced by the sector.

“While doing market research for a previous company, I noticed that a lot of farmers were in a bad state of affairs,” Walsh said. 

“A couple of farmers were taking the risk and trying to grow hemp. When I got to them and asked them what the problems were, they had no infrastructure, they had no sales channels, they really didn’t know what they were doing or how to get this crop to market. 

“They could grow an absolutely fabulous crop, but when it came to the processing of the crop, and getting it to the market it was something that they were lacking [expertise] in.”

The strict laws and regulations surrounding cannabis has led to CBD companies facing various issues with banking and payment processes. Many struggle to build relationships with mainstream payment providers and instead have to rely on high-risk payment processors with high fees to sell their products. 

In an effort to tackle these issues, Greenheart CBD made the bold decision to launch its own cryptocurrency called Punt, named after the old Irish currency. Through Greenheart’s mobile application, customers can buy its products and earn rewards and exclusive discounts for using the new Punt.

“It solves a lot of issues,” Walsh said.

“There are lower transaction fees and it is very adaptable for our customers. The benefits of this cryptocurrency is that as the project grows, the price grows.”  

With the data gathered from the AI drone, coupled with the financial data collected through its mobile app, Greenheart is able to trace all of its products back to the original source and make the information available to the end-consumer. 

“We have a completely transparent chain, literally from the farm itself to the currency,” Walsh explained. 

“In our mobile app we have a QR code scanner so on every product that you get, you can scan the QR code and get access to all the information about the plants,  the farm where it was grown, the processes it went through, the blend that it went through, what it was mixed with and the travel lifecycle of the product. 

“All the information needed for you to make a sound decision on whether this product is high quality, and whether it’s worth the money.”

Greenheart’s efforts to bring cutting edge tech into the hemp sector hasn’t gone unnoticed. This year, the company received an All-Star Award from the All-Ireland Business Foundation and Walsh was accredited as a thought-leader in innovation, technology and sustainability. 

Greenheart has experienced exponential growth since its launch and is now shipping its products to 49 countries. In its first year, the company grew by 500 percent and is expected to grow by a further 1,000 percent in 2021. 

The company is now developing a “plug and play system” so other farmers can use the innovative technology. The 40ft container can be installed on any farm and allows cultivators to immediately start growing their own hemp crops, manufacture products and get their products out to market. 

“This technology is very low cost and efficient,” Walsh said.

“We’re taking all this technology and combining it together, making a plug and play system that you can drop onto any farm or any location in the world.”

The young company now has its sights set on international expansion with a new production facility under construction in New Jersey, USA and plans to build another facility in Queensland, Australia.

“We’ve grown exponentially and now we’re looking to expand globally to any farm or location in the world,” added Walsh.

“This will enable farmers to start growing the hemp crop and producing a high quality product and with the drone recording the data we can relay that back to any government or government agency which requires full transparency.”

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