Unregulated and Exploding
How the CBD Market Is Growing Amid a Labyrinth of State Approaches and Rampant Consumer Confusion
The cannabidiol (CBD) market is exploding. But the Consumer Brands Association’s latest survey shows that Americans’ knowledge about CBD is not.
On a scale of one to ten, consumers regarded their knowledge of CBD at an average of 3.3. The alarming lack of understanding about CBD is made worse when paired with the fact that 74% either incorrectly assume CBD is federally regulated or have no idea if it is regulated.
The desire for safe, innovative products will drive market growth, but continuing to grapple with misinformation, misconceptions and misunderstandings will cripple CBD’s potential before it can prove its value.
While 28% of Americans have tried CBD, very few understand the intricacies of the emerging market. It’s no wonder.
Today’s patchwork of inconsistent, and often contradictory, state regulations — coupled with the lack of methodical testing and safety requirements — is calling consumer protection into question.
Smart, clearly articulated regulations are essential to providing consumers the information they need to make the best choices for themselves and their families.
Consumer Brands found that there are 135 CBD proposals moving through 38 states right now. The labyrinth of state approaches has wreaked havoc on the market’s potential, creating conditions that allow bad actors to emerge and keep established, trusted brands on the sidelines.
The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) routinely send warning letters to these companies, who claim their products can treat or cure serious diseases and health conditions, including cancer, autism or, most recently, COVID-19. To date, 81 warning letters have been sent since 2015.
Consumers deserve and need to feel safe when buying CBD products. But as it stands today, the market is rife with uncertainty that should prompt more than concern — it must prompt action.
It is time for the federal government to engage more meaningfully on researching and regulating CBD, before the consequences of a runaway market hurt the very people CBD is supposed to help.
A Growing Market and a Concerning Knowledge Gap
A July 2021 Consumer Brands/Ipsos poll of 1,000 American adults found that Americans rated their knowledge of CBD as a 3.3 on a scale of 1 to 10.
On a scale of one to ten, consumers regarded their knowledge of CBD at an average of 3.3.
The knowledge gap mirrors a poll Consumer Brands conducted in December 2019, which showed that nearly four-in-ten (39%) respondents believed CBD was just another name for marijuana and more than half (51%) thought it could intoxicate users if enough is consumed. In fact, CBD is the non-psychoactive component of the cannabis plant and does not have the psychoactive properties of tetrahydrocannabinol (THC), the compound that gives a “high” sensation.
The lack of understanding about CBD is not inhibiting the burgeoning market. Nearly three-in-ten (28%) of Americans have used CBD, a number that is poised to grow. Grand View Research reported that the global cannabidiol market was valued at $2.8 billion in 2020 and forecasts the annual growth rate will be 21.2% from 2021 to 2028.
Despite a thriving market, CBD is only approved for use by the FDA in very few scenarios, including for the treatment of epilepsy through a drug called Epidiolex. The FDA website states, “There is very limited available information about CBD, including about its effects on the body.”
Originally passed in 1938, the Federal Food, Drug and Cosmetic Act makes it illegal to sell an active ingredient in drugs in foods and dietary supplements that will be sold across state lines. Despite Congress legalizing hemp-derived products such as CBD in the 2018 Farm Bill, as it stands today at the federal level, CBD cannot be used as an additive in foods and beverages because it is an active ingredient in the prescription drug, Epidiolex.
The majority (63%) of Americans admit they do not know if CBD is federally regulated. Only around a quarter (26%) are aware that it isn’t and the remaining 11% incorrectly said it is federally regulated.
The absence of federal regulation has led to an explosion of approaches in the states. There are currently 135 bills in 38 state legislatures for CBD and hemp derivatives alone. It is dizzying to follow, introduces uncertainty for consumers and exemplifies the value of federal regulation. And, perhaps most importantly, adds urgency to the need for research and testing on CBD.
- Is CBD Federally Regulated?
- "I don't know"
Urgent Need for Clear Regulations
A regulatory framework would be a substantial step toward giving consumers consistent, accurate information on CBD. Absent this framework, consumers cannot have confidence their products are being manufactured in compliance with existing and applicable manufacturing, processing, distributing and claim requirements.
Federal government regulation and oversight must move at the same pace as the rapidly expanding CBD market.
The safety of CBD is also a primary concern. Product manufacturing facilities are not inspected in some states and many states cannot verify if products contain CBD at advertised levels due to lack of testing rigor. Compounding the problem, the cannabis plant is also a bioaccumulator, meaning it absorbs heavy metals, pesticides and toxins from the soil around it.
Unfortunately, there aren’t consistent, clear standards for testing and control of products using CBD like those that exist for other ingredients added to food and cosmetics.
A federal regulatory framework would provide a needed roadmap for other companies to enter the market, creating competition and weeding out bad actors.
Clear, consistent regulations would also strengthen consumer confidence — helping to fuel the further expansion of the CBD market. Consumer Brands’ 2019 poll found that a combined 68% of Americans who have not purchased CBD products said they would (41%) or might (27%) if a federal agency, like the FDA, were to regulate CBD.
Unfortunately, limited information about CBD is not stopping it from being marketed as a panacea for every ailment. The FDA’s webpage on CBD cautions consumers, “Misleading and false claims associated with CBD products may lead consumers to put off getting important medical care, such as proper diagnosis, treatment and supportive care.”
How Consumers Are Using CBD
|Pain management or relief||58%|
|Reduce stress, anxiety or depression||43%|
|Improve quality of my sleep||31%|
|Curious about CBD||19%|
|For my pet||13%|
|Skin health or acne treatment||7%|
|Treat neurological disorder||4%|
|Improve heart health||3%|
|Alleviate cancer symptoms||3%|
|Improve bone health||1%|
|Thought it would give me a ''high''||1%|
Consumer Brands’ poll found that few CBD users purchased it with the intent to treat cancer, neurological conditions like Alzheimer’s and Parkinson’s or other serious ailments, but even the low percentages of consumers who are using CBD for these purposes should prompt concern.
The Digital Citizens Alliance did an investigation that was released in March 2020 and found higher incidences of consumers using CBD in place of medication for cancer (9%), Alzheimer’s (7%) and diabetes (7%). The same investigation purchased a variety of CBD products for testing and found that many of them claimed to have far more of the active ingredient than was discovered — one product had only 3% of what its label claimed.
Currently, the FDA — and, to a lesser extent, FTC — have taken action to curb bad actors through warning letters, the contents of which are alarming. Within the 81 warning letters that have been sent to date, a story emerges of companies making illegitimate claims to exploit consumers.
Some of the most egregious claims the government flagged include:
These claims are symptoms of an unchecked marketplace and another proof point of the need for a federal regulatory framework.
The exploding CBD market is unprecedented, making the government-as-usual pace unacceptable. Federal government regulation and oversight must move at the same pace as the rapidly expanding CBD market.
Consumer Brands’ call for swift action is not about being for or against CBD. It is about being pro-consumer. The desire for safe, innovative products will drive market growth, but continuing to grapple with misinformation, misconceptions and misunderstandings will cripple CBD’s potential before it can prove its value.
Americans need and deserve clearly articulated, uniform federal regulatory standards. And they cannot afford to wait — even if they don’t know it.
Consumer Brands Advocacy Efforts
Consumer Brands advocates for progress that enables the government to craft durable, science-based rules.
✓ Stressed to the FDA that federal engagement on CBD is critical to ensuring consumer safety, outlined the components needed in a federal regulatory framework that would empower regulators to protect consumers.
✓ Urged Senator Ron Wyden (D-Ore.) to advocate for full funding for federal regulators and expressed support for S.1698, Hemp Access and Consumer Safety Act.
✓ Formed a CBD Advisory Board and Coalition for Smart CBD Regulation to advise on best practices and convene stakeholders committed to protecting consumer safety and advocating for uniform federal policies.
✓ Advocated for federal regulation of the CBD market and secured a total of $6 million in congressional funding to support regulatory activity, research and policy development.
✓ Succeeded in including a provision in a congressional spending bill to direct funding to the National Institutes of Health to study CBD.
✓ Successfully encouraged congressional committees and FDA officials to allow resources for CBD research at the National Center for Toxicological Research.
Consumer Brands Statement on Funding for Enhanced Regulatory Activities and Research of CBD
Consumer Brands Applauds FDA Study, Urges Congress to Fund FDA to Ensure Consumer Safety
Consumer Brands Applauds House Appropriations Subcommittee for Including CBD Funding Recommendation in 2021 FDA Budget
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