Is Canada (finally) going to allow CBD to be sold in mainstream retail?

A watershed CBD recommendation expected this summer from Canadian health authorities could resolve one of the oddest differences between the cannabis industries in Canada and the U.S. – their starkly different approaches to hemp extracts.

In the United States, hemp is legal and broadly available, while higher-THC cannabis remains an illicit drug on the federal level – despite broad disregard for marijuana prohibition by state governments.

The Canadian government, by contrast, legalized high-THC cannabis in 2018.

But CBD remains a controlled substance in Canada, regulated in a similar manner to high-THC marijuana.

Canada’s CBD sellers commonly operate in the illicit market because of federal rules requiring CBD sales to occur in provincially licensed stores, which tend to specialize in high-THC products and aren’t able to import U.S.-made CBD for commercial purposes.

But Canada’s stifled CBD market could soon be opening up.

That’s because Health Canada, which oversees both pharmaceutical drug sales and the nation’s high-THC cannabis industry, is expecting final recommendations this summer on CBD and what it calls “health products containing cannabis that would not require practitioner oversight.”

A three-year review by a Health Canada advisory committee is expected to conclude this summer with “appropriate safety, efficacy and quality standards” for those products, agency spokesperson Tammy Jarbeau told MJBizDaily.

Jarbeau could not say how long it might take the agency to make a decision on CBD sales after the release of the recommendation.

If it all leads to market opportunities outside the nation’s marijuana retailer sector, Canada could see a huge new market open to cannabis as well as mainstream businesses.

“The opportunity is significant” for a vibrant CBD market outside traditional cannabis retailers, said Bethany Gomez, managing director of the Brightfield Group, a cannabis-focused consumer-research firm in Chicago.

“Canadian regulations have been a huge barrier to the CBD category gaining traction. If the regulations change, there’s a real opportunity for significant growth for CBD.”

According to Sean Karl, a Vancouver, British Columbia-based supply-chain consultant who specializes in cannabis logistics, many mainstream Canadian retailers are eager to start selling CBD.

He used a hockey term to describe the way retailers there want to carefully maneuver to maximize profit without violating any restrictions set by health authorities.

“Everyone’s trying to stickhandle through the regulations,” he said.

Why Canada started slow

Canadian regulators say they want more information on over-the-counter CBD before allowing it, and retailers have largely complied.

That has prevented a national market for hemp extracts from taking off.

CBD products can be found in some of Canada’s 3,000 or so cannabis retailers.

But the cannabinoid can’t be found legally in convenience or grocery channels.

None of Canada’s 13 provinces or territories maintain hemp laws that contradict those of national authorities.

Among Canada’s 74 approved hemp cultivars, only a handful produce enough CBD for commercial viability.

Extracting CBD from a hemp cultivar bred for its fiber or grains is possible but is “kind of a money-losing operation,” said Deepank Utkhede, a Canadian native and chief operating officer at Vantage Hemp, a cannabinoid manufacturer in Greeley, Colorado.

“It’ll almost cost more to extract it than you’re going to get for it,” Utkhede explained.

Meanwhile, Canadian import restrictions have prevented the nation’s product manufacturers from tapping cheap wholesale CBD supplies in the U.S.

With limited exceptions for medical and research use, Canada doesn’t allow foreign-made CBD into the country.

Because of those CBD limitations, cannabis entrepreneurs in Canada have almost exclusively gone after existing cannabis users, who are interested mostly in THC profiles, Gomez said.

“Canada has not successfully wooed over people who were not high-THC cannabis users before,” she said.

“In the U.S., CBD was everywhere in 2019. Celebrities were all talking about it. It was in every headline.

“In Canada, businesses were much more focused on legacy cannabis users.”

Different story in the U.S.

Things have gone differently for CBD in the United States.

For years now, U.S. health regulators have been making the same arguments as their northern colleagues, saying there isn’t enough research on CBD to allow it to be sold outside pharmaceutical channels.

The difference?

Despite those health warnings, retailers in all 50 U.S. states can be found selling over-the-counter CBD anyway.

From head shops to hair salons, yoga studios to farmers’ markets, thousands of CBD products are openly sold and promoted. Gummies, tinctures and capsules are especially popular.

Some U.S. retailers point to contradictory state laws regarding hemp extracts to justify sales.

Others simply ignore health regulations at all levels of government and hope that the federal legality of low-THC hemp plants equates to low legal risk from selling extracts from those plants. It’s a cavalier business approach that has worked with few exceptions.

Indeed, lax enforcement of unapproved CBD use in the United States has emboldened hemp operators to experiment with further manipulating extracts to produce intoxicating isomers such as delta-8 THC and HHC. (HHC, short for hexahydrocannabinol, is a hemp derivative occurring naturally in small quantities in the plant.)

Perhaps ironically, those intoxicating hemp products are most widely available in states that don’t yet allow products made from naturally occurring THC.

Northern hope

Hemp businesses making CBD aren’t just hoping Canada will open new sales opportunities.

Some are counting on Canada to correct some of its southern neighbor’s mistakes.

American CBD manufacturers struggle to position themselves as quality brands when U.S. health authorities repeatedly decry CBD as unsafe but then do little to take low-quality products off shelves.

Among those companies is Charlotte’s Web Holdings, a Colorado-based CBD maker that holds more than 3% of the $5 billion American CBD market in 2022, the largest share of any U.S. manufacturer, according to Brightfield sales data.

Charlotte’s Web has been working since 2019 to have a proprietary CBD-rich cannabis variety approved to be grown in Canada, partnering with Canadian producers to avoid import restrictions.

That cultivar was approved last year, making 2022 the first full growing season.

(Charlotte’s Web actually can get some of its CBD products imported into Canada, via one of the rare exceptions for medical use. But the exemption applies only to a small number of patients and doesn’t allow Charlotte’s Web to sell CBD to new Canadian users.)

Charlotte’s Web Chief Operating Officer Jared Stanley said his company has been preparing for years to begin widespread Canadian sales and sees potential benefits from Canada’s careful CBD approach.

“My hope for Canada is that they don’t make the same mistake that U.S. made,” Stanley told MJBizDaily.

“(The U.S.) legalized the category, then we allowed it to be marginalized into lollipops at gas stations.

“We want to see a market open up in Canada that keeps the highest level of quality control and consistency to the consumers.”

Gomez acknowledged that a potential CBD market in Canada would open under far different market conditions than those seen in the U.S. in the heady months after hemp cultivation was legalized via the 2018 Farm Bill.

“It’s not the latest new health ingredient anymore,” she said. “Canadians may be a bit less motivated to go try it.”

That doesn’t deter CBD makers.

“What we see in Canada is a great opportunity for the category,” Stanley said.

Source: https://mjbizdaily.com/when-will-canada-allow-cbd-to-be-sold-in-mainstream-retail-stores/