The proposed reclassification of CBD as a narcotic: all you need to know
- The European Commision (EC) is deciding whether to reclassify CBD from a food product to a narcotic and is poised to make a decision by the end of the year.
- The FSA has announced that the UK has decided to take a different route and is set to continue classifying CBD as a Novel Food.
- If CBD is reclassified as a narcotic in Europe, the UK hemp trade is likely to grow exponentially, and there will be new opportunities for European based CBD companies to find new opportunities within the UK market.
- Despite the new proposed legislation, European countries still have the right to decide to make exceptions for the permittance of sale of CBD products within its own borders. This provides hope for European based CBD companies looking to continue trade within its own region.
- The EC’s lack of transparency on rules and regulations surrounding the CBD industry has left traders and cultivators confused as to where business stands in the European and UK market.
The UK could emerge as a market leader in CBD
Analysis of the UK market has shown it to be one of the primary reasons for ambitious growth in the European CBD market. The centre for Medicinal Cannabis (CMC) has estimated that in 2019, 1.3m consumers spent over £300m on CBD products, making it larger than the Vitamin C (£145m) and Vitamin D market (£114m) combined.
The UK CBD industry will continue to grow, and in fact, it will likely flourish into one of the hemp markets global leaders if the EC reclassifies CBD as a narcotic.
While uncertainty is facing the European CBD market, in the UK, the Food Standards Agency (FSA) has stated that it will continue to accept Novel Food applications and they will not class CBD as a narcotic or psychotropic.
On February 14 this year, the FSA enforced the regulation that every company marketing CBD in the UK must submit a valid Novel Food application to the FSA - as well as the European Commission - by March 31, 2021, for each of its products.
The FSA also stated that this ruling only applies to existing CBD businesses with Novel hemp products on the market and does not apply to newly proposed products. This means that new companies wishing to enter the CBD industry must get appropriate authorisation by the FSA before it can enter the market.
Although these rulings may seem restrictive, it means that UK based CBD businesses can market its products beyond the deadline for Novel Food applications, allowing the industry to continue its exponential growth.
With news surfacing of the EC’s proposed change in CBD's classification, the FSA has given assurances to hemp businesses in the UK that they will continue to review and accept Novel Food applications from January 2021. This is the same time as the Brexit transition period ends and the UK is free from the European court of law.
A spokesperson from the FSA told Alphagreen: “The FSA will be formally accepting novel food applications from January 2021, after the transition period ends. The EC remains the route for formal submissions until that time.”
“Narcotics are overseen by national legislation and the FSA’s view is consistent with the Home office in that CBD extracts themselves are not considered narcotics.”
UK’s potential as market leaders were reiterated by the Cannabis Trade Association and the Association for the Cannabis Industry. They both represent CBD material supplies, manufactures and hundreds of smaller CBD brands.
The CTA, a consultancy service which advises CBD businesses on the Novel Food application, stated: “The news that the EC may reclassify CBD as a narcotic is a crushing blow to the European hemp sector. The UK market, which falls under the auspices of the FSA, will not suffer the same fate.”
“The UK has always been at the forefront of the CBD market. Whilst we sympathise with the imprudent bureaucracy surrounding our European counterparts, this presents significant opportunities for CTA members and British businesses trading in the hemp sector.”
Steve Moore, ACI Founder and Senior Counsel, told Food Navigator: “It is very disappointing that the Novel foods process has stalled, but heartening to know that the FSA is both engaging with applicants, committed to reviewing dossiers and not deviating from supporting the regulation of CBD. It positions the UK to be a global leader in the research and development of cannabinoids.”
Alphagreen - Europe’s largest marketplace for accredited CBD products - recently published a study based on a survey of 5,000 adults that was subsequently reported on in Forbes. It showed that in the first four months of 2020, Britons spending on CBD eclipsed £150m, which puts the industry on target to reach revenues of £450m for the whole year. If projections are correct, the CBD market in the UK will have risen to 50% from 2019 figures (£300m to £450m).
Marketplaces such as Alphagreen are having a significant effect on the growth of the CBD industry in the UK, as it offers a portal for consumers by filtering out CBD brands that fail to provide an accurate Certificate of Analysis (COA). This provides customers with the trust, transparency and confidence to know that the products on offer are safe for consumption.
With the growth of Alphagreen and other trusted CBD brands, the UK market is expanding rapidly. If the EC does reclassify CBD as a narcotic, the UK’s CBD industry will be at the forefront of research and development for the foreseeable future, and it will likely solidify its position as global leaders of the cannabinoid industry.
What this Means for the European CBD Industry
If the classification of hemp-derived products changes, CBD would lose its status as a food ingredient and would be unable to enlist in the EU Novel Food approval system.
Over 50 applications have been thwarted while the EC decides whether hemp extracts should be prohibited for sale across Europe’s alternative medicine retail sector. It was thought the first movers in the industry would have been paid off with control of the market, but this evidence now shows the wait and see approach may have been more valuable.
The EC has invited all the concerned applicants to offer their views by the beginning of September. The EC said: “The commission has informed the concerned applicant of these preliminary views and invited them to provide comments. The commission will take a decision on the validity of the concerned applications afterwards.”
While CBD businesses in the EU require authorisation to sell products on the European market, individual countries have the right to decide whether to remove unauthorised CBD products from retailers. Countries such as Spain and Austria have taken the EC’s position seriously by enforcing rigorous rulings - others, such as the UK and Slovenia, have taken a more tolerant approach.
According to the Single Convention, ‘Cannabis and cannabis resin’, and ‘extracts and tinctures of cannabis’ are classified as narcotics. It also states that any breed of cannabis is prohibited - regardless of THC content - the psychoactive component in cannabis.
The single convention is yet to sanction CBD, but the EC is now arguing that CBD extracted from flowers or fruiting tops of the cannabis plant should be considered an ‘extract of cannabis’, regardless of THC content.
The EC provided a statement to Alphagreen. It said: “The commission’s preliminary view is that CBD extracted from the flowering and fruiting tops of the hemp plant (Cannabis sativa L.) should be considered as a narcotic falling under the United Nations Single Convention on Narcotic Drugs, 1961.”
“As a consequence, such substances could not be qualified as ‘food’ according to the General Food Law and would fall outside the scope of the Novel Foods Regulation.”
The EC has not clarified yet what the change of a narcotic classification will mean for the cultivation, formulation and import and export of CBD, or the processes which are imperative for isolating CBD.
Prof. Mike Barnes, the director of The Medical Cannabis Clinics in the UK, believes the EC will be making a mistake if it prohibits the use of CBD across Europe, and endorses the UK’s approach to the proposed regulation, he said: “If the EU is trying to move CBD into a narcotic category, which is patently daft, then that does give the UK CBD industry the advantage of developing ahead of EU competition.”
“Good for the UK CBD industry but the over-regulation via either novel foods or the narcotic route is clearly detrimental to many hundreds of thousands of consumers who are helped by safe, good quality CBD products.”
The EIHA, an institution which provides protection for hemp businesses for EU and international policy-making, provided a statement on its views on the proposed change of classification. It said:
“EIHA, as the representative of hemp farmers, produces and traders are more than willing to work hand in hand with the EU institutions and invest in studies that will provide science-based evidence to demonstrate the safety of these products to ensure the best health and quality standards for EU citizens.”
With the help of the EIHA, businesses are likely to re-label products as non-food products in an attempt to get market authorisation. There are still alternatives for European based hemp companies for marketing its products - such as creating a synthetic version of CBD, using new product formats and relocating internationally.
Three Synthetic CBD Isolate alternatives have passed the validation stage and have now been passed over to the EFSA (European Food Safety Authority) for review. Safety tests are underway - the first review is on CBDepot’s product, and the results are due from 2020 onwards. This provides hope for other businesses in that they can produce synthetic alternatives.
While many people are worried about the EC’s new position on CBD, there will still be a plethora of opportunities for businesses to thrive in different markets. With the UK’s position on CBD, it also allows European CBD based companies to relocate into the UK market. There also could be opportunities for businesses to move from Europe, as many countries permit the sale of CBD.
Background of the confusion surrounding European hemp trade
The blurred lines surrounding the regulation of the hemp industry has been evident since CBD trade has become prominent across Europe.
The confusion is evident in the example of the trade of CBD flowers. Several countries - such as Belgium, Austria, Spain and Switzerland - have permitted the sale of CBD flowers, with each having its ruling on the limit of THC content, ranging from 0.2 per cent to 1 per cent.
Countries such as the UK, Germany, France and Italy have classed CBD flowers as illegal. However, flowers are still widely marketed across these countries due to businesses finding loopholes by marketing their products as ‘hemp tea’ or stating ‘not for consumption’. This means that as long as the flower falls within the ruling of a THC limit in an individual country, it is difficult for authorities to enforce legal action against the trader.
The current legal framework is incredibly patchy, which could be the reason why the EC is attempting to enforce further regulation for CBD trade and cultivation.
More stringent rulings have recently been sanctioned in a host of other European countries. Switzerland now requires all hemp-derived cosmetic products to label ‘not for oral use’, and the higher court in Germany changed CBD’s status from a Novel Food, meaning that the ingredients in CBD products require pre-market authorisation.
In Sweden, there has been back-and-forth deliberation and decision-making from governing bodies and regulators. The Swedish Medical Agency tried to sanction legislation that would classify hemp-derived products as a medicine. The Swedish Administrative Court rejected this ruling and decided to allow legality for the classification of CBD as a food product.
Despite this new ruling, two Swedish CBD companies who were consciously engaging with new market guidelines, and were also complying with regulators to improve standards within the CBD industry, were blocked from discussion by The Swedish Medical Agency and it subsequently enforced a trading ban on both.
Its decision was based on that CBD could be interpreted as a medicine in the eyes of the consumer. The companies have taken further action and appealed the ban.
France was the first country to put a blanket ban on the marketing of all hemp-derived CBD products, and there have been rumours the country will take it a step further and classify CBD as a narcotic. Currently, under French law, only seeds and hemp fibre which are used for industrial and commercial purposes can be cultivated and exported.
The French company, Kannavape, was recently prosecuted for importing CBD goods from the Czech Republic. The matter has diverged to the European Court of Justice (CJEU), and it is due to issue a ruling at the end of the year regarding whether stopping the sale of hemp-derived products legally produced in different Member States breaches single market laws.
The CJEU Advocate General issued an opinion in May this year which declared that CBD is not classed as a narcotic drug. If this ruling is implemented at the end of the year, then the EC would have to change its position on CBD, as the CJEU decision is legally binding on European institutions.
This draft opinion offers hope for the European hemp industry, and while discussions are still ongoing, the position reiterated from the CJEU seems to be strong and is promising for the growth and development of CBD moving forward.
While many CBD businesses across Europe are panicking, here at Alphagreen, we think we should still be encouraged about the future of the hemp industry. It is still up in the air whether the EC will enforce this change, but if it does, there are still reasons to be optimistic for the expansion and development of the CBD industry:
- The UK market will continue to thrive and will offer fresh opportunities for CBD companies to relocate.
- There will still be a chance for European based companies to create a synthetic alternative.
- Cultivators should still have the opportunity to continue trade for commercial and industrial purposes.
- The CJEU stance over Kannavape could overrule the EC’s decision despite its view for change in classification.
- Organisations such as the EIHA will continue to offer European based businesses support for farmers, traders and producers despite the uncertainty that faces the industry.
There has never been a more crucial time for the hemp industry to stand together, and at Alphagreen we promise to be at the forefront of resolution.