CBD Boom

Within the last year, we could witness an increasing news flow around legalised marijuana and CBD – a non-psychoactive substance of hemp that quite recently became en vogue. In the Austrian media you could read for instance the following:
„Österreich im Cannabidiol-Rausch,“[1] (Austria in Cannabidiol buzz)
„Gehören Marihuana-Aktien zur Altersvorsorge ins Portfolio“[2] (Marijuana stocks – part of every retirement provision portfolio?)
„Coca-Cola will Cannabis-Drinks herstellen.“[3] (Coca-Cola about producing Cannabis drinks).

One CBD shop after the other is popping up in Vienna. According to estimates, there are about 250 CBD shops in Austria (as of December 2018).[4] In the Viennese traditional pastry shop Aida you could savour CBD-brownies and macaroons. However – and this shows the legal limbo issue around CBD – the sale of food, drinks and also beauty products was handled quite nonchalant in Austria, but now it is handled strict to the European law and above: the sale of CBD products in food and beauty has been stopped.[5] The reason for this: CBD is a Novel Food and therefore it first must be liberalised in order to be used and traded in F&B. Nevertheless, this does not mean a final stop of CBD products in Austria. Still CBD products can be sold in Austria, in pharmacies for instance. Also e-liquids for vaporizers can be bought – if you are above 18 years old.[6] And – if you claim the product as Aroma-Product it can be sold anyway. This reflects for sure a „typical“ Austrian situation, because other European countries, and especially the USA and Canada are far ahead of Austria, regarding CBD and cannabis legalisation and the regulations of taking.

The QC·VENTURES research team was looking at CBD, the potential of CBD and legal Cannabis as food & beverage and wellbeing disruptor.

What is CBD
CBD stands for Cannabidiol and is a non-psychoactive substance of the hemp plant. The more known THC (Tetrahydrocannabinol) is likewise on of the 80 Cannabinoids. But in contrast to CBD, THC is psychoactive and creates the „high“ feeling when consuming marijuana.[7]

CBD: Legal or Not? A Grey Area[8]
In short: CBD products are legal in Austria under the following conditions:

• they are no medicine and no food or supplement
• the THC percentage is under a certain level (in Austria under 0,3%, in Germany under 0,2%)[9]
• the hemp must be listed in the EU-type index
• may only be consumed/bought from the age of 18 (applies in particular to CBD flowers and e-Liquids)
• the dispatch of CBD flowers is not allowed[10]

Basically, CBD is

• a Novel Food (in the EU), therefore it may not be contained in food or beverages in European countries[11]
• as been approved as a cosmetic product in the EU, but not in Austria[12]

Nevertheless – resourceful sellers bypass the stricter regulations in Austria. They sell CBD products as aroma products, i.e. they are not recommended for taking in Austria.[13]

CBD’s Effect
CBD is considered to be

• pain-relieving
• soothing, anxiolytic
• anti-inflammatory
• cell-protecting
• appetite-suppressing

It is used at: Epilepsy, depression, insomnia, nausea, headaches, arthritis, anxiety, stress, PMS, or even for the physical and mental balance of pets. In addition, CBD is used in cosmetics (for acne, as it is anti-inflammatory, or as a muscle relaxant after exercise). There are hardly any side effects.[14]

Trigger of the CBD Boom
The concrete trigger of the interest around CBD products was a CNN documentation around the girl Charlott Figi from Colorado who suffers from the Darvet syndrome (severe early childhood myoclonic epilepsy) and received clear relief of her symptoms by CBD.[15] 

Increasing Cannabis/THC Legalization: Medical & Recreational Use
And what about the THC-containing cannabis? The possession, trade and distribution of cannabis containing THC is basically illegal in Austria (only the consumption is legal).[16] In more and more countries marijuana is now legalised – especially for medical use (a prescription is necessary) but also for leisure use.[17] In Germany, a law was passed in March 2017 amending narcotic drug legislation, which expanded the possibilities for prescribing cannabis drugs.[18] In California, the consumption of marijuana is free from 21 years of age as of 1.1.2018.[19] Canada legalized the cultivation and sale of cannabis in 2018.[20] Accordingly, the demand as well as start-up and investment activity for cannabis & Co is growing.

Cannabis & CBD: From Pothead Cliché to a Lifestyle
Due to the increasing legalization of cannabis and CBD products, hemp products are moving into the legal mainstream. Largely positive press reviews, hemp trade fairs and conferences, TV series about cannabis contribute to the fact that cannabis and products from the cannabis periphery lose their infamous image and are seen as lifestyle products. New CBD shops are also moving away from the “weed image” and positioning themselves towards premium and wellness.

CBD Products & Brands: Diversity Increases
CBD is available in countless dosage forms. The best known is probably CBD oil with different CBD concentrations. CBD is best used as oil because other additives do not dilute it. Other CBD dosage forms are: Sprays, gels, flowers, thalers, tablets, dragées, crystals or e-liquids. However, CBD is also increasingly found as a component in beverages or snacks.
Likewise with CBD brands, the choice seems endless (such as Biobloom from Austria, Cibdol from Switzerland, or Endoca from the Netherlands), as with online marketplaces (such as CBDNOL from Austria, MediCann from Switzerland, or meinCBD from Germany).

International CBD Investment News
We can derive the following CBD developments from current CBD News:

• Investments in CBD are increasing
  As an example: Wayland – medical and non-medical cannabis brands collected USD 40M in 2018 (www.waylandgroup.com, formerly Maricann, *2013, Canada) [27]
• CBD sales increase
  Example: CV Sciences – producer and supplier of hemp-based products triples CBD sales in Q2/2018 to USD 12.3M (cvsciences.com, USA) [28]
• US- and Canadian companies invest in European CBD/Cannabis manufacturers/dealers or expand to Europe themselves
  As an example: TGOD The Green Organic Dutchman Holdings Ltd – producer and retailer of high quality cannabis invests USD 35M to buy and expand the Polish producer and distributor of the CBD brand Cannabigold (tgod.ca, Kanda, IPO 05/2018; hempoland.eu/en/)[29]
• European CBD/Cannabis companies expand their products into the USA
  As an example: Isodiol – Swiss producer of industrial grade hemp + CBD extracts buys into Compass Clinics, which connect patients with physicians to get faster prescriptions for medical cannabis (Isodiol.com; www.compasscannabis.ca, Canada)[30]
• Branding/positioning of CBD: a clear orientation towards a lifestyle-wellness-natural-good4me-image with application areas in health, wellness, sports and beauty can be observed when analysing the presentation and description of the websites of relevant brands and manufacturers (e.g. Organigram from Canada or Eviana from Canada).

 CBD Soon Level with Cannabis
The US-CBD market is growing rapidly. Until recently, figures around USD 2.1 billion for the US CBD market in 2020 were quoted. This figure was already called an “astronomical jump”, while the US CBD market was still at USD 202M in 2017.[33] In autumn 2018, the forecast for the 2022 US CBD market was USD 22 billion.[34] In comparison: the legal Cannabis market is forecasted at USD 32 billion for 2022.[35]

Europe also believes in strong CBD growth.[36] However, there is still little meaningful data available for the CBD industry in Europe as to why exact forecasts cannot be made. Nevertheless, in its 4th European Cannabis Report, the UK-Cannabis Research Agency Prohibition Partners confirms a similar CBD growth in Europe as in the USA.[37]

It will show how the CBD market will develop and how steep the growth curve will be. The fact is: more and more retailers are entering the market with very high margins. At the same time, the price of CBD is falling due to increased production capacities. In 2017 the CBD price halved from 5-6 CHF/gram to 2-3 CHF/gram.[38] On the other hand, the number of consumers and applications for CBD is increasing. The same development was described in talks with CBD dealers in Vienna. As in every market, sooner or later there will be a consolidation where brands with quality, innovation, service and good branding will prevail.

Cannabis Ecosystem: More than just CBD Oil
There is no doubt that CBD & legal cannabis is a new booming industry – and this goes far beyond CBD drops and medical cannabis. A whole ecosystem of new companies is emerging: from cannabis cultivation, legal issues to marketing and e-commerce. CBInsights is clustering the cannabis world into the following categories:[39]

• Next-Gen Cultivation. New methods for cannabis cultivation (e.g. Front Range Biosciences, USA, www.frontrangebio.com TF (Total Funding) USD 14.6M)
• On-Demand/Delivery. Startups for on-demand and subscription services (e.g. eaze, USA, www.eaze.com, TF USD 51.5M)
• Consumer Information Platforms. Tools to inform and connect consumers (e.g. Leafly, USA, www.leafly.com, purchased from Privateer Holdings)
• Business intelligence. Platforms for optimizing business processes (e.g. Baker Technologies, USA, www.trybaker.com, TF USD 12.5M)
• Compliance. Tools for ensuring legal compliance (e.g. flowhub, USA, flowhub.co, TF USD 3.8M)

Of course, there are also the classic categories such as:

• Cannabis production (e.g. Aurora Cannabis, Canada, auroramj.com, IPO)
• Medical cannabis. Marijuana for medical purposes (e.g. PharmaCannis, USA, pharmacannis.com)
• Healthcare Products. Focus on health aspect of cannabis (e.g. CannaKorp, USA, www.cannakorp.com, TF USD 4.1M)
• Consumer Products (e.g. Canndescent, USA, www.canndescent.com, TF USD 29.5M)

Trends: Industry Disruptor
CBD & Cannabis is seen as an industry disruptor – from the nearby medicine/pharmaceutical industry to the wellness and beauty industry, food & beverage, agriculture, packaging, textiles & fashion, construction and banking (yes, there are also banks specializing in cannabis producers, traders and local companies) – CBD & Cannabis bring product innovation, new business models, new approaches and rethinking to these industries.[40]

With regard to Food & Beverage, we at QC·VENTURES see the following trends in connection with CBD & Co:

• increase in cannabis-containing FMCG, beverages & edibles, especially in functional food & beverages,
• or those with a wellness background (cannabis/CBD as a natural component in beauty & wellness products) such as personal care products with special cannabis-infused beauty and makeup series (e.g. www.milkmakeup.com, cannuka.com, hokaran.com)
• CBD drinks as a substitute for alcohol or energy drinks (e.g. non-alcoholic beer from www.provenicebrands.com)
• CBD as an ingredient in normal foods (e.g. coffee, Pot-o-Coffee by Isodiol)
• increasing acceptance of CBD/Cannabis in the field of “natural medicine”, medical-related products, as well as regenerative and preventive products (sports, nutrition, health), for example in the field of fitness & active nutrition (e.g. powerplantwellness.com, ReGen by willpower-products.com, isodiol.com)

Conclusion
CBD is increasingly positioned in the overriding themes of recreation / wellness / treats / beauty and is becoming the new functional ingredient in these areas. CBD thus becomes part of the megatrend Longevity & Wellbeing – products & services that aim to proactively and preventively prolong our lives while at the same time improving our quality of life.