The legalization of hemp has opened the doors for the beverage industry to invest heavily in CBD
Passed in December 2018, the $867 billion Farm Bill allocated billions of dollars in subsidies to farmers who had been struggling due to the trade war with China, maintained the Conservation Stewardship Program that financially rewards farmers for sustainable practices, and established permanent funding for local food programs and farmers markets. However, the bill’s most widespread impact could be its legalization of hemp.
Hemp has now been declassified as a Schedule 1 drug and reclassified as a commodity, allowing it the opportunity to become one of the United States’ leading cash crops. In addition to its ability to be used for paper, fuel, clothing, and more, hemp contains cannabidiol (CBD), which has been suggested as a treatment for everything from common pain, anxiety, and PTSD to cancer, dementia, and arthritis. Whether or not CBD proves to be the miracle drug its proponents claim, between the interest of its staunchest proponents and of the curious looking for alternative treatments, the market for CBD is expected to grow to $22 billion by 2022. As such, businesses are scrambling to get their share of the emerging market — most notably in the beverage sector.
The Endocannabinoid System and CBD Soft Drinks
Although CBD does not have the psychoactive effects of THC (both compounds are found in marijuana), it does affect the body’s endocannabinoid system (ECS). CBD functions in the ECS by protecting the neurotransmitter anandamide. Sometimes referred to as “the bliss molecule,” anandamide is naturally produced by the body throughout the day but is quickly destroyed by enzymes which CBD can block. Allowing anandamide to remain in the body longer is how CBD leaves its adherents with a sense of well-being and increased alertness.
While it seems to be only a matter of time before big players in the soft drink game get into the CBD market (rumors of varying reliability have been swirling for months regarding Coca-Cola and Pepsi acquiring various smaller companies), several companies are already establishing a foothold. Sprig has established itself as an early leader in the CBD-infused soda market, while New Age Beverages is an established health beverage company that in mid-December committed to expanding its portfolio into the CBD realm with sparkling water, shots, and green tea options.
It’s hard to think of something that could make coffee even more popular, but the addition of CBD could do exactly that. Kickback Cold Brew specializes in vegan, organic, CBD-infused coffees and teas which use the CBD to prevent the caffeine crash suffered by many coffee drinkers. Those who prefer tea also have options for their CBD-infused caffeinated drinks, with companies such as Buddha Teas and the Brothers Apothecary selling a variety of flavors of cannabidiol-infused teas.
Alcoholic CBD Drinks
As with the medicinal benefits of CBD, the compound’s effects when combined with alcohol are a bit opaque. Some say that the combination of the two acts to increase intoxication, while a 40-year-old study showed that combining CBD and alcohol resulted in “significantly lower blood alcohol levels” in volunteers as opposed to when they had alcohol alone.
Dad and Dude’s Breweria in Colorado, the first brewery approved by the TTB to sell CBD-infused beer nationwide, seems to be more interested in the antioxidants in CBD along with the aroma it provides when infused in their General Washington’s Secret Stash beer than how it may or may not affect one’s buzz. Still, the interest — and potential profit — in CBD-infused alcohol is attracting breweries, distillers, and distributors of all sizes, especially since the passage of the Farm Bill.
Prior to reclassification of hemp in the U.S., alcoholic beverage companies began partnering with and investing in cannabis companies in Canada (where cannabis was legalized in October 2018). In many cases, the companies have done so to explore infusing alcoholic drinks with both CBD and THC (the psychoactive ingredient in marijuana). Anheuser-Busch partnered with Tilray, with each company committing up to $50 million to research the market for infused drinks. Constellation Brands acquired a 38 percent share of Canopy Growth for more than $4 billion, and Molson Coors paired with Hexo. With the passage of the farm bill, marijuana conglomerates in the United States are surely champing at the bit, eager to find their big partnership to take their products to a wider customer base.
Future Challenges
While the exponential growth of the market for CBD-infused beverages seems to be more a matter of when and not if, there are still some hurdles to be overcome. Immediately after the Farm Bill was signed into law, FDA Commissioner Scott Gottlieb issued a statement reasserting his agency’s dominion over the regulation of products containing CBD. The statement read, in part, “… it’s unlawful under the FD&C Act (Federal Food, Drug and Cosmetic Act) to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. This is because both CBD and THC are active ingredients in FDA-approved drugs and were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements.”
The FDA does acknowledge “significant interest” in CBD products and plans to establish an efficient way to safely bring such products to market. Eventually, CBD-infused drinks will be in stores and bars across the nation, thanks to the Farm Bill — once all the red tape is cleared.
