Did the EU Just Move to Decimate Its Legal CBD Industry?

The European Commission about to kill the hemp sector: preliminary view states natural hemp extracts are a drug, against all reason, the latest scientific literature and the EU green ambitions. Catherine Wilson, EIHA vice president refer to those matters on Leafreport’s interview
Joan Oleck
Written by Joan Oleck, Cannabis Journalist
Last Updated
EIHA

“The European Commission about to kill the hemp sector,” blared a press statement from the European Industrial Hemp (trade) Association on July 27.

The EIHA’s phrase was hardly overkill. The action it was reacting to was shocking.

In fact, word has trickled out in recent weeks – with no official announcement – that the EU’s executive body is considering slapping the label of “narcotic” on CBDs, for reasons known only to itself.

In a related move, the Commission also halted applications for its “Novel Food Catalogue” designation – which, somewhat like the American Food and Drug Administration (FDA), approves applicables for new edible products incorporating technologies and processes unknown before 1997. Applicants must prove their ingredients’ safety and the accuracy of their consumer labeling.

CBD, short for “cannabidiol,” is the cannabis plant’s hemp-derived ingredient that’s widely credited for treating pain, insomnia and anxiety but lacks the psychoactive component of its cannabis cousin, marijuana. CBD is being infused into more and more ingestible products and is hence subject to the EU’s “novel food” review.

That’s why labelling CBD a “narcotic” (under the aegis of the U.N.’s 1961 Single Convention on Narcotics) would bring Europe’s above-board, legal CBD industry to a screeching halt. No surprise then that that industry is fighting back.

As Catherine Wilson, EIHA vice president, wrote in an email to Leaf Report, “In the midst of the most damaging economic period for 100 years, to destroy farmers’ livelihoods and thousands of SMEs in this future proof-proof and popular industry, is plain wrong.

“When common sense fails, we look to law, but when the law has become nonsensical, we need to revert to common sense,” Wilson continued.

How will her Brussels-based organization respond officially? “Look out for our forthcoming releases this September,” Wilson answered, cryptically.

Meanwhile, reaction emerged from other sources. ‘I was shocked and confused, and I wondered if I had read it correctly [since this] wasn’t a big broad announcement that came out officially,” Molly McCann said in an interview. McCann is director of industry analytics at New Frontier Data. She said she had been just putting the finishing touches on her data company’s newest report, ironically about the €8.3 billion CBD market in Europe, when she began hearing disturbing reports from producers about the Commission’s move.

“So it started as rumors and hearsay,” McCann said. “Everyone was completely perplexed.”

She quickly rewrote parts of the report: “The ruling would not only make it impossible for Europe’s CBD market to exist in its current form, but also constrict cannabinoid research and innovation throughout the continent,” the revised text now reads.

As to why the EU might be making this move – something EIHA’s vp didn’t address in her email – McCann pointed out that the pharmaceutical industry might benefit because the EU Commission’s “preliminary conclusion” would declare plant-based CBDs narcotics but still allow synthetic CBDs

In addition, McCann speculated on a possible power move by the EU. “Given the low numbers of applicants for the Novel Food Catalogue, the EC may be hoping that producers will recognize that complying with the novel food regulations is preferable to complete prohibition,” the analyst wrote in the report. “The EU may be responding to pressure from pharmaceutical companies who see plant-derived CBD as a threat to their markets for medications and nutraceuticals.”

“My thought at first,” McCann continued in the interview, “was [that this was] a strategy to maybe threaten them or remind [CBD producers], ‘We have the power to take this industry away from you,’ and eventually they’ll go along with novel foods.” Still, that motivation wouldn’t explain the hush-hush nature of the Commission’s move, McCann acknowledged.

Whatever the Commission’s motive, the result would almost certainly benefit the gray market (i.e., operating outside the novel foods designation) and even the black market, the analyst suggested. As she wrote in the report, “The quality of the CBD bought and sold on the unregulated gray market would be of dubious and indeterminate quality, resulting in higher risks of contaminated or low-quality products, improper labeling and unfounded market claims.”

Consumer experiences would be negatively affected; and public health might be endangered, the report continues.

In its own press release, the EIHA made its own defensive points. Certainly THC-infused products are illegal in the EU under the Single Convention, it pointed out, but industrial hemp and its downstream products are neither narcotic nor psychotropic drugs and therefore exempt from the Convention.

Hemp products have been “consumed in Europe for centuries,” the EIHA noted. In addition, authorizing synthetic extracts is “nonsense,” it contended, because the chemical end-product would be essentially the same as the natural one. Yet farmers and food business operators would be deprived of the market opportunity CBDs offer.

Finally, the EIHA release addressed “EU green ambitions”; and in her email, EIHA’s vice president similarly addressed how hemp products are “environmentally friendly” and innovative in that sphere.

All of this, of course, is occurring in tandem with the release of the New Frontier Data report, which surveyed 3,100 Europeans in 17 counties and revealed that:

  • Annual spending on CBD among the 446 million members of the EU’s population is projected to total an estimated €8.3 billion for 2020 and a CAGR of 10.4 percent, to reach €13.6 billion by 2025.
  • Europe has sizable national CBD markets like those of Germany and the U.K./Ireland (projected to be €1.8 billion and €1.7 billion, respectively) in annual spending for 2020. Then there are expanding markets like those of the Netherlands/Belgium/Luxembourg (€863 million) and Austria/Switzerland (€842 million). . When it comes to the U.K., there’s the possibility of an independent CBD market there once Brexit begins in 2021.
  • Some 15 percent of Europeans surveyed said they had tried CBD, and 56 percent had an awareness of CBD (compared to 86 percent of U.S. citizens surveyed).

In short, CBD is known and used across the EU regardless of what the EU Commission does. “The [European] market is still young compared to the U.S. market for CBD. But it’s growing and it’s there; it’s not going away,” McCann said.

Then there was this from McCann’s colleague, New Frontier Chief Knowledge Officer John Kagia, who chimed in during the interview that the EU Commission’s move could have the opposite effect of what it intended.

“The throttling of the emerging European cannabinoid market by the declaration of CBD as a narcotic,” Kagia said, “may actually put much greater pressure on the UN and World Health Organization to reclassify CBD in such a way that enables countries around the world to harness its therapeutic potential.”

 

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Joan Oleck
Joan Oleck
Cannabis Journalist
Joan Oleck is a freelance writer currently specializing in the cannabis industry and cannabis tech. She has been an editor and reporter on staff for such publications as Forbes.com, Business Week, Newsday and The Detroit News. She won the Jesse Neal Award for best feature series in a trade publication, Restaurant Business, and a GLAAD Award for a Salon story about discrimination in adoption against single and gay parents

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