The latest push from the CBD industry last week to secure legal clarity around the sale of products further exposes a divide between the ‘haves’ and ‘have nots’.

Those with Food Standards Authority novel foods-linked applications are for now – in some sense at least – the ‘haves’.

The FSA list – first published in April 2022 and containing more than 12,000 products – has served as a preliminary rundown of products permitted for sale in the UK.

It features companies like Goodrays, Love Hemp, InTune and Trip: nascent startups and challenger brands that – to their credit – have been pushing both the FSA and government to get their act in gear and provide a legal framework under which CBD products can be sold.

Those that didn’t make the FSA’s cut, but still wanting to release CBD products into a market estimated to be worth £690m (according to the Association for the Cannabinoid Industry), are the ‘have nots’.

Lack of legal certainty 

Notable market absences include wellness brand Vita Coco – which exited the category in mid-2022, having previously had two products on sale in Sainsbury’s – as well as many of the big soft drinks names like PepsiCo, The Coca-Cola Company and Britvic.

The FSA has indicated final application approval for the 12,000-plus products it is currently sitting on won’t yet be provided. Also, new applications won’t be accepted until the Home Office approves an amendment to the Misuse of Drugs act.

This amendment is needed because trace elements of controlled cannabinoids, like THC, are present in CBD products. What CBD campaigners claim is a simple tweak to legislation has thus far sat in the Home Office’s in-tray for over a year-and-a-half.

The FSA’s stance, coupled with the Home Office’s inaction, has created a situation where existing producers are allowed to continue making and selling products on the list, but can’t invest in NPD, and new entrants can’t enter the category.

The lack of certainty around the legal status of their products, and the total inability to innovate, are sources of frustration for incumbent CBD brands. How is a brand meant to increase penetration and excite consumers when it is stuck with a list of products submitted three-and-a-half years ago, those in the market ask?

There’s also the fear that – as the fiasco rumbles on – products could face further scrutiny and removal from the FSA’s list, as happened to more than 300 products made by 1 Step in February. This, some argue, could also scare off retailers from listing CBD products (although evidence so far would suggest that hasn’t been the case). 

Established brands may enter through acquisition

However, complaints from CBD brands should be tampered with the knowledge that – for now at least – they can continue to build brand loyalty and establish themselves as category leaders without fear of being blown out of the water by deep-pocketed soft drinks giants.

Take Trip as an example of a brand that has built up a strong following. Founded by Olivia Ferdi and Daniel Khoury in 2019, Trip quickly established itself as the dominant CBD drinks player, with sales growth of 522% over the past year [NIQ 52 w/e 12 February].

When the CBD industry eventually gets the legal clarity it desires (those in the know suggest this is unlikely to happen before 2024) it will take time for the big players to develop and launch their own propositions. They may decide – looking at the category – that an acquisition is an easier and safer bet.

If this proves to be the case, one would expect a brand like Trip to be in the forefront of their thinking.

So while on the one hand it may suit some segments of CBD industry to claim the ongoing delay represents an “existential threat” to the category, it’s not all bad news for incumbent brands.

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