Last Friday we had our first ever Slack Chat, which was kind of like what would happen if Twitter chat and a Reddit AMA had a baby. Led by industry experts, each chat explores a different topic making waves in food tech. For the first installment, we decided to tackle cannabidiol, better known as CBD.
The chat was led by Kris Taylor of Lumen, a hemp elixir company; Caroline Yeh of Kiva Confections, a marijuana edibles company; and Merril Gilbert and Rhiannon Wallstedt Woo of TraceTrust, a marijuana dose-verification startup. We only had 60 minutes (time flies when you’re Slack chatting, am I right?), but still managed to take a deep dive into some of the biggest opportunities and challenges of the CBD edibles market. In case you missed it, here are a few of the takeaways:
Quick refresh — what’s the deal with (hemp-derived) CBD?
According to our experts, chemically there’s no difference between CBD from the marijuana plant and CBD from the hemp plant. Nonetheless, only CBD derived from hemp is legal under the Farm Bill, which passed a few months ago. And the FDA still considers CBD to be an illegal food ingredient. So while the sale of hemp-derived CBD may be legal, the sale of food or drink containing CBD is not. The FDA will open a comment period around the use of CBD in food soon — our panel guessed some point over the next six months.
When will Big Food get involved?
The panelists were pretty unified on this: Big Food will get on board when the FDA concludes that CBD is GRAS (Generally Recognized As Safe). Until then, big corporations — like Coca-Cola, which was rumored to be researching CBD — won’t make any significant moves.
While major CPGs may not launch products until the FDA gives the green light, our panelists guessed that many (if not most) of these Big Food companies are already at work developing CBD-infused products. But for now smaller, artisanal producers are dominating the space.
The Spoon founder Mike Wolf wondered if we might see a unicorn in the cannabis/CBD edibles space over the next few years, as has happened in other food tech markets like food delivery and meal kits. (Again, as soon as the FDA declares CBD as food-safe.) “I have a feeling we’ll see some big new entrants that become big mainstream CPGs,” he wrote. That is, as long as they’re not acquired by larger CPG companies first.
But not all startups will be subsumed by Big Food. Woo wrote that “I think it will be more like coffee where the explosion of the industry made room for so many small brands to flourish.”
Who’s the target CBD consumer?
Our panelists concluded that the target consumer is… everyone. Well, pretty much everyone. “[It’s] a broad segment of the population,” said Yeh. “People who are already taking supplements, interested in wellness products, etc.” Gilbert agreed, also citing those interested in health and wellness, especially older consumers — for example, ones who might use CBD to treat problems like arthritis.
But if CBD is going to achieve this widespread appeal, it’s going to need some seriously good marketing. “This is where branding and marketing comes in,” wrote Taylor. “I firmly believe that most people have a use for CBD in their lives. It’s just when and how they choose to incorporate it that is the question.” Friend of The Spoon Surj Patel had an even more optimistic take: “It’s the new quinoa,” he wrote.
So, what’s next for CBD?
“We have not scratched the surface on what is possible,” said Yeh. As the technologies evolve and companies develop new methods of extraction, new products and marketplaces will unfold.
While Taylor wrote that there’s no need for more CBD-processing capacity, there are new opportunities in terms of technology. For example, CBD naturally has a bitter taste; companies can use tech to develop better flavor-masking agents.
Going forward, brands will play a bigger and bigger role. As long as they can make themselves stand out from the sea of companies hustling to enter the growing CBD edibles space. That level of competition could make fundraising a challenge, especially if investors are wary to support a company making products that aren’t FDA-approved.
Until the FDA designates CBD as GRAS, there’s still plenty of opportunity for education about this trending ingredient. Brands can begin teaching consumers about the effects, (potential) benefits, and versatility of CBD now, so that when the FDA gives the thumbs up, the market is already in place.
Our next Slack Chat is slated for February 15th from 10:30-11:30am PST, and will be all about food robotics! So sign up for our Slack channel (if you haven’t already) and mark your calendar!