You may have heard of Willie Nelson’s cannabis company Willie’s Reserve, but he’s now turned to the non-psychoactive part of the plant to launch a line of health and wellness products called Willie’s Remedy. His first product: a hemp-infused coffee with “flavor notes of cherry and cocoa”. Next up: topicals and confections. According to Nelson’s wife Annie who is overseeing the brand: “The Willie’s Remedy line is a purposeful departure from Willie’s Reserve… It’s not about getting high, but it’s still all about Willie and the benefits we believe cannabis has to offer.”
While the marijuana market receives a lot of attention at the state level, hemp-derived cannabidiol products are an underappreciated aspect of the industry that now has national reach unlike marijuana. Here’s why and what it is:
- Cannabidiol (CBD): The cannabis plant has two prominent natural compounds with different physical effects. People mostly know about tetrahydrocannabinol (THC), which is the psychoactive compound that produces a high. What we are referring to, cannabidiol (CBD), is a non-psychoactive compound that does not produce a high like THC.
- Hemp: There is also a difference between marijuana and hemp, which are both subtypes of the cannabis plant. Hemp contains mostly CBD and negligible traces of THC, whereas marijuana has a higher concentration of THC which is how people get high.
- The 2018 Farm Bill: This changed the game for CBD after it was signed into law in December of last year. It allows federally legal products for sale to include CBD and hemp extracts as long as the concentration of THC does not exceed “0.3% on a dry weight basis”. This means it is now legal to grow, sell and transport hemp and its extracts without facing Federal prosecution. Unlike marijuana, hemp and hemp-derived products like CBD will no longer be classified as a Schedule I controlled substance.
Does this make CBD legal? Yes as long as CBD products don’t market its therapeutic benefits or market it as a dietary supplement without FDA approval. Selling/buying CBD from marijuana, however, is illegal since marijuana is still a Schedule I drug.
So why are CBD products growing in popularity and what does this mean for business?
- Benefits: People have claimed CBD helps treat everything from pain/migraines, depression and seizures to anxiety/stress, insomnia and inflammation. That said, because it was illegal up until late last year it is not well researched.
Even still, we did find a study here in the US National Library of Medicine National Institutes of Health that found CBD as promising to treat anxiety-related disorders. The FDA also approved GW Pharmaceuticals’ CBD medication Epidiolex last year, which treats two rare forms of childhood epilepsy. Additionally, the World Anti-Doping Agency removed its ban on using CBD in sports.
- Products: CBD comes in many forms, including but not limited to oils, tinctures, drinks, lotions, capsules, edibles (i.e. gummies), etc. It’s also becoming more mainstream. Some bars and coffee shops now offer CBD-infused drinks, for example. I’ve even seen CBD products (lotions, creams, face masks) sold at my local Whole Foods in New Jersey, while Nick now sees CBD oil sold at bodegas in NYC. CBD products are also sold for pets to treat pain, nausea, anxiety, or seizures in epileptic animals.
You can find a slew of CBD products (most highly reviewed) for humans and animals sold here on Amazon.
- Market Opportunities: We see the CBD market as an important opportunity for a host of industries to diversify their product offerings. For example, last year there were reports that suggested Coca-Cola was in talks with a Canadian marijuana company to develop beverages infused with CBD as Americans are drinking less soda. Although CEO John Quincey told investors they didn’t have any plans, that was last year before the 2018 Farm Bill passed and legalized CBD products derived from hemp.
Moreover, the WSJ recently had an interesting article about how alcohol companies are diversifying their products with non-alcoholic beverages as Americans’ consumption of beer/liquor has declined/slowed. We’ll include a link at the end of this note so you can read the details, but now that CBD is legal in the US we would not be surprised to hear plans for product launches from public beverage companies on that front. Molson Coors (owner of Corona) and Constellation Brands have already taken stakes in Canadian marijuana companies. The legality of hemp-derived CBD could give them a foothold into the US market within the hemp as opposed to marijuana industry.
Bottom line, there are numerous market opportunities for public companies to take advantage of hemp-derived CBD now that it is legal in the US, unlike marijuana. This includes sleep aids, sports drinks to help recovery and treat inflammation, medications for epilepsy and stress/anxiety/depression, and health and wellness products from lotions to Willie Nelson’s coffee beans, etc. Look out for public companies moving into the CBD space going forward, as it could change the make up or revitalize certain industries.