The success of the European CBD market has long been dictated by the restrictions of government legislation, particularly that of the European Commission. Historically, over the last century, CBD oil distributors in Europe have had to lie dormant due to regulations and guidelines that essentially outlawed cannabidiol and other cannabis-derived products. This has severely limited the growth and size of the CBD market as well as the larger cannabis industry. But in light of the recent wave of pro-cannabis reform, the barriers to the CBD market may finally be starting to relax in a substantial way.
While there is now hope for a completely transformed legal landscape regarding CBD EU regulation, there is still a lot of work to be done and progress that needs to be accomplished. In order to profitably enter the European CBD industry, you need to be familiar with the set of laws and regulations that currently define the commercial and industrial parameters of the business. Here is a brief overview of the legal boundaries that potential CBD investors need to be aware of order to see a profit.
Novel Food Regulation
The European Commission’s Novel Food Legislation has been a significant obstacle for CBD oil distributors in Europe for quite some time. The concept for novel food regulation was introduced back in 1997 under Regulation (EU) 258/97. This set of standards aimed to establish a legal mechanism that controlled and monitored the safety of newly developed synthetic or genetically produced foods. Any food item that was produced after 1997 is subject to the restrictions outlined in the legal document. The argument that many CBD manufacturers have made is that cannabidiol and its products were sold and consumed prior to 1997 and should be considered a novel food.
This battle against the European Commission’s ‘hastily written’ novel food legislation has been consistently fought by the European Industrial Hemp Association (EIHA) for decades. Many of the organization’s complaints address the inconsistency and vagueness of their ruling on cannabinoids and cannabis sativa L.
In January 2019, the Member states’ representatives of the European Commission updated their novel food standards on cannabis-derived products but failed to include the mention of hemp leaves and flowers. Considering this was stated as not falling under the scope of the EC 258/97 regulations back in 1997, a lack of discussion on this matter in the 2019 update created a high degree of confusion amongst industry producers and distributors. Moreover, traditionally produced hemp extracts were also missing from the amendments. Producer confusion was only made worse when “cannabinoid extracts with naturally occurring levels of cannabinoids” were removed from the new novel food entry despite their appearance in the previous iteration. Fortunately, any prior vagaries were abolished following the EC’s most recent ruling.
Earlier in 2020, the European Commission announced that it would revisit its ruling on cannabinoid extracts as novel foods based on the information provided by a United Nations study. By December of the same year, the United Nations declared cannabis as a global medicine and removed its Schedule IV narcotic classification. In response to this ruling, the European Commission had no choice but to reverse its standing on the regulation of CBD and other cannabinoids.
For the last decade or so, leaders in the hemp industry had to prioritize synthetic CBD as the product of choice when it came to cannabinoid extracts because it was not classified as a narcotic. Now, with the EC’s change in position and the lack of narcotic classification, CBD oil distributors in Europe may finally have the space they need to grow their business and expand the market. Thankfully for hemp producers, this isn’t the only piece of good news coming from the European Commission.
The fear surrounding CBD and other cannabinoid extracts has been its association with tetrahydrocannabinol, otherwise known as THC. Unlike cannabidiol, THC can induce some psychoactive and cardiovascular effects that rank it higher on the abuse potential scale. As a result, governments around the world have limited THC’s concentration in any recreational application of cannabis. For a while, this limit was capped at 0.2%. Anything over this percentage would have to be immediately destroyed and disposed of. This has created a whole new sector of waste management, but also significantly increased the costs and difficulty of manufacturing wholesale CBD. Fortunately for CBD manufacturers, this section of CBD’s EU regulations may also change.
Towards the end of 2020, the European Commission finally made the decision to follow the United States’ movement towards a more forgiving THC limit. In response to the United States’ confirmation to raise the THC limit to 0.3%, the European Parliament followed suit in an attempt to re-establish the European CBD industry. While this is a relatively substantial increase in concentration, it still does provide producers with much leeway. To put this into perspective, Mexico’s CBD legislation has the THC limit set at 1%. The argument here is that a cannabis-derived product is not considered psychoactive until its THC concentration is 1% or greater.
While the theme amongst these legal barriers is that they are starting to relax in terms of restriction, their limitations are still quite imposing on CBD extractors, manufacturers, and distributors. Similarly, though these barriers are moving in the right direction, a lot of time and resources must still be devoted to navigating these laws. For some firms, this can be unreasonably costly, and understandably so. That is why it may be beneficial to leverage the existing economies of scale of an already well-established CBD manufacturer such as CanX.
CanX CBD Processing Corporation is a wholesale manufacturer of premium CBD that is vertically integrated along the supply side of the industry. Our long history with CBD has allowed us to be successful within the confines of CBD’s EU legislation. Whether it’s CBD marketing laws or CBD manufacturing, we can help empower distributors with a process that has proven to work. To learn how you can take advantage of CanX’s capabilities, contact us today.