Joe: On this episode of the "CBD University Podcast," we are looking into the crystal ball as the industry continues to grow and evolve rapidly, what is in store for 2020? We've got the top five predictions for the industry and the year ahead as we look into the future on this episode of the "CBD University Podcast" and it starts right now.
I'm Joe Agostinelli, the host of the "CBD University Podcast." If you are a returning listener, thank you for tuning in again and if you are a new listener we are glad you found us on your favorite podcast app. We invite you to subscribe to the "CBD University Podcast" on your favorite app and get notifications when new episodes are published, and if YouTube is more your game we're also available on the Hemp Bombs, Nature's Script and Global Widget YouTube channel with full video episodes. And for those who have either listened to the podcast or watched our podcasts, you by now know who my guest is. He is an industry advocate and our attorney, Rod Kight, who joins me. It's 2020 already. Can you believe it?
Rod: It's crazy. The last time I was in here, it was 2019 and it's great. Things are already moving forward.
Joe: We're into the second month here of 2020. So, still a long ways to go in 2020 and one day sometimes feels like a long way to go in this industry because it's growing, it's changing every day. So, we thought we'd have you back and talk about some of the predictions that you've published on your blog for the year ahead. So, let's get right to it. First prediction for 2020, CBD going mainstream?
Rod: I think it's going to go mainstream. And I know that sounds ridiculous because CBD is so incredibly popular as John King, the CTO of Global Widget has said to the different groups that I've heard, you know, CBD is more popular than the Beatles and Taylor Swift. At least if you look at Google searches and you know, you see an article on CBD and it seems like every other magazine in the grocery store. That being said, the estimated market penetration is only at about 15% right now. And so, I think what we have seen so far has been the CBD going from something that only very, you know, people that are sort of buried in the industry really knew about to something that is now becoming sort of a household term. And from there, we now really start going mainstream with most people using it. And that'll take a few years to roll out. But this is the first year of that, I think.
Joe: And with CBD going mainstream and I heard a stat the other day when we talk about the number of companies who are in the industry now, and we're not talking just a couple hundred companies, we're talking thousands of new companies. So, with all of those companies and people trying to take advantage of the popularity of the industry and, you know, how can consumers know that the company they are purchasing from provides safe, effective, and compliant products?
Rod: That's a good question, Joe. So, I heard statistics that indicated that in 2019 alone, somewhere between 2,000 and 4,000 companies entered the market. And you know, that's all the different sectors. And not all of those are necessarily brands, but a lot of them are. And so, as someone who is new to the market's going in and they're wanting to buy a product, how do they know how to pick one? And I've got a lot of good clients and Global Widget is certainly, you know, one of my really good clients and I tell people that you want to look for a couple of different things. First of all, you want to make sure that the labeling is accurate. Now, the average consumer does not know, you know, the labeling requirements for dietary supplements or food ingredients under, you know, CFR 111 and so on and so forth. But, the main thing they can look for is does that label make a medical claim? If a product says that it cures cancer, that's probably a product that you don't want to get. If a product even makes more benign claims, you know, well, this can help with...well, epilepsy is not a benign claim. But something, you know, like, you know, can help with sleep problems or something like that. If it doesn't have a specific reason, like there's melatonin in it, then that company is making a claim that the FDA has said is absolutely not allowed. And when a company flagrantly violates the law then it's a good chance that that company is not just violating the law or are skipping steps when it comes to labeling, but it may go all the way down the line for the ingredients that are used, the processes and so on and so forth. So, a good indicator for a consumer is, are there medical claims on the label?
Second thing is, is there a QR code? And a QR code, as we all know, or something you scan with your phone and it will take you to a website with information. Well, the different states are now rolling out with requirements for CBD and hemp companies as to what needs to go on the label and what kind of information should be provided to consumers. And one of the most important things is a COA, as we call it in the industry, a certificate of analysis, that certificate of analysis should show a few different things. It should show, first of all, that the THC levels in the product do not exceed the legal maximum of 0.3%. But more importantly, even for the consumer, we wanna make sure that the certificate of analysis shows that products don't contain residual pesticides, mycotoxins and so on and so forth. Impurities that can actually harm them when they're trying to take a product presumably to help them. And so, you want to make sure there's a QR code and that you can access that certificate of analysis.
And then maybe a third thing to look for as an indicator of quality is that these certificates of analysis actually reference a specific batch. So, for those of you that are unfamiliar with manufacturing processes, you know, a batch refers to, okay, here's a group of products, whether it be gummies or tinctures that we are creating, you know, today and we're gonna make these, bottle them up, package them up and ship them out. Roughly speaking, that's a batch. And that particular batch should have its own certificate of analysis, meaning it should have been tested by a laboratory for all of those things. And one certificate of analysis doesn't work for a week or a month or certainly not a quarter's worth of stuff. I mean, you know, one batch is one batch and so the certificate of analysis should be able to track that pretty consistently. So, these are some of the indicators. Certainly, people nowadays go online and can scout out and look at reviews and see if the company has a nice presence and provides good information. And those are other things to look for as well.
Joe: And something I've seen and maybe some folks have seen on the internet or in the news recently when it comes to CBD is some other products or other forms that consumers may be hearing about and CBG and CBN and...what's up with that prediction?
Rod: Yeah. So, I think that this is gonna be the year where, you know, much as CBD is going mainstream, I think these other...they're called minor cannabinoids, although they may become major someday, are going to be actually present on the market and you'll be able to find them at reasonable prices. And so, for those of you that are brand new to the industry, you know, the cannabis plant, whether we're talking about marijuana, which is illegal cannabis, at least at the federal level, or hemp, which is legal cannabis, this plant produces all sorts of cannabinoids, compounds that interact with our body. THC is the most notorious or famous or whatever one that gets you high. But CBD is the one that's getting all the action right now and attention, it doesn't get you high. It's used for all sorts of purposes. The plant itself produces over a hundred of these types of cannabinoids. And CBG, which stands for cannabigerol is the next most likely candidate for being a cannabinoid that people are going to hear about and use. CBG much like CBD is non-psychoactive, meaning that it does not get you high, you won't feel its effects. But much like CBD, it seems to have a lot of potential health benefits. And so, CBG is being grown now for a number of reasons or plants are being grown that contain a lot of CBG. There's some others though. There are CBC. As you mentioned, there's CBN, which could potentially be a sleep aid. There is THCV not to be confused with THC. THCV, which could be used as appetite suppressant and so on and so forth. So, I think that we're going to begin probably see CBG this year and the next several years, some of these others are going to come out and be a little more mainstream as well.
Joe: And moving on with your predictions, two others to cover. Let's first talk about internationally and the podcast obviously, this podcast, we do have customers overseas. So, the international market, what's that look like?
Rod: The international market is beginning to unfreeze. I think cannabis generally is a hot topic across the world and in most areas of the world, and CBD in particular, you know, it picked up in the United States and became very popular and that popularity is not limited to the United States. What we see is that CBD that is lawful in the United States can be lawfully exported to other countries provided that it's legal under those country's laws. And that's where we, from a legal standpoint, where the rubber meets the road. So, a lot of clients will come and say, well, I've got a product or whatnot. I want to ship to another country. And can I? And then we do some research and very often we'll collaborate with a law firm from overseas to see, you know, the conditions under which we can ship those. There's a lot of interesting things going on with the European Union. They have sort of an analogous agency or group to our FDA and they have some analogous rules. They have what's called the Novel Food Regulations and they are looking very...this group that enforces that is looking into CBD. And I believe that we'll start to see CBD quite a bit in Europe and also Southeast Asia seems to be opening up as well.
Joe: So, we've talked about the international market. We talked about the thousands of new companies. So, how does this all sort out in the year ahead?
Rod: Well, you know, this is going to be a volatile year. I think anyone who's in the industry is sort of prepared for that. You know, every year in CBD is volatile in its way. A lot of the battles and the obstacles and the issues up to now has been, is CBD even legal? Is it a crime to possess it or not? And it's clear that it's not. And now that it's out there in the public awareness, it's clearly a lawful substance. It's getting international attention. Consumers are really wanting it. Well, where are we with all these things coming together? And I think we're gonna see a few different things. First of all, we're going to see a lot of companies that aren't gonna make it. And up to now, companies that have gotten involved in CBD, the margins have been pretty high, they haven't had necessarily run a tight ship. A lot of companies have run a tight ship, but they haven't had to and they've made money and it's been fine. That's no longer the case. There's a lot of competition, there's a lot of regulatory oversight that these companies have to comply with. And so, these companies are gonna have to struggle in many cases to survive. And so, I think we're gonna see some closures. We're gonna see potential bankruptcies. We may see some of the first of the CBD bankruptcies. On other end of the spectrum, I think we're going to see a world market really open up both in CBD and other cannabinoids. And we're going to see the companies that do survive and do it right are really going to expand. And then finally, I think from the regulatory standpoint, certainly in the United States, we're gonna see some potential movement from the FDA, either coming from Congress, there's a bill in Congress right now that specifically says CBD can be used in food and as a dietary supplement, that may or may not get passed. Alternately, we may see that the FDA comes in and imposes its, you know, implements its regulations. So, all of this is up in the air. It's going to be another exciting and volatile and, you know, crazy fun year for CBD, that's for sure.
Joe: Well, that's a fun thing with predictions is now we have them in writing, now we have them...
Rod: Right. This time next year, we can chat and see.
Joe: ...digitally so at the end of this year into January of, as crazy as this sounds, 2021, we'll have to take a look back on the predictions from 2020 and see what happened. You know, we talk about the federal level and some of the most recent news and you just did mention it with the most recent bill. Just elaborate on that a little bit more and what that means to the consumer should it end up being passed.
Rod: Right. Sure. So, I think, well, the bill itself, it's a fairly short bill and it is a congressional change of the law so that essentially says that CBD can be used as a food ingredient and products containing it can be marketed as a dietary supplement. And the reason for the bill is that the FDA, which normally regulates these types of things has not implemented regulations for CBD for a number of reasons. We could have a whole hour-long podcast about that, but essentially the FDA is still gathering data and determining under what circumstances it believes that CBD should be marketed and presented and used and so on and so forth. There's a lot of industry pressure, a lot of consumer pressure to get that moving ahead more rapidly, hence this bill, which would essentially override the FDA's process and say, no, here it is right now.
But, you know, from the consumer perspective, what I think will happen if that bill is passed is the consumer will see a lot of the multi-national, you know, industries, the, you know, consumer products companies using CBD. Right now, a lot of those multi-nationals are a little bit hesitant to use CBD without a clear line in the sand from the FDA or from Congress which has allowed a lot of smaller private companies that are a little more nimble and can navigate these rapidly evolving laws and regulations to thrive. And so, I think, you know, you're going to see some pressure on some of the smaller companies, frankly from these bigger companies and the consumers will have, I don't know if they'll have more choice or not, it kind of depends on who ends up really taking the ball and running with it. But from the consumer standpoint, I think really regardless of whether this bill is passed or not, a consumer can continue to count on seeing CBD in more and more places in more and more different types of products.
Joe: And then, you know, we talk about, and you touched on this a little bit, the legalization of marijuana, you know, from the maybe potential on the federal side but it seems like that's a while away. How do you think something like that would affect or has it affected the industry at all?
Rod: You know, I don't think that it has. So again, cannabis is the same plant. Marijuana is the federally illegal and hemp is the federally legal versions of it. The only difference is the levels of THC in them. You know, by and large, they are sort of different markets. And so, I don't know that we're necessarily certainly gonna see a big change in the way that CBD and CBD products are marketed and sold with marijuana legalization.
Joe: I want to thank industry advocate and attorney, Rod Kight, for coming back on our podcast as we look into the crystal ball for 2020 and as I mentioned, you know, we're gonna have to now have a year in review podcast at the end of the year. So, we look forward to having you back throughout 2020 and talk about the ongoing topics in the industry.
Rod: Well, I'm always happy to be here and always nice to speak with you, Joe. And appreciate what you're doing.
Joe: And in addition to our podcast another great educational tools, we always like to plug when he is a guest on our episodes is your blog, so why don't you, if they have not yet subscribed to your blog, why don't you remind our listeners and viewers how they could also stay on top of industry news in addition to just keeping on a track of our podcast?
Rod: Sure. So, I write and edit a legal blog that's focused on the hemp cannabis and CBD industry and we try to take issues that are new, novel or that needs a good analysis and we try to put a real good, unique and solid analysis out there for people to read and address issues and that you can visit it. It's Kight On Cannabis, kightoncannabis.com. And that'll take you to the blog. You can subscribe, there's just a little window, you pop in your email address and you'll get all the blog articles as they pop up. And it's usually one to three per week. And we definitely don't sell anyone's information or we don't market or peddle any products or anything like that. It's just we try to provide a good solid analysis and some think pieces for people to consider.
Joe: Great. Well, once again, Rod, thank you for taking time out of your busy day to join me on our podcast. We look forward to catching up again real soon.
Rod: Look forward to it. Thanks, Joe.
Joe: And for those of you who have not yet done so, you could subscribe to our podcast on your favorite podcast app of choice. We're on a number of those podcasts including Apple Podcast, Google Podcast, TuneIn, Spotify, SoundCloud, Stitcher, Radio FM, and look for more apps and ways to listen to our podcast coming soon. You can also watch full video episodes on the Global Widget YouTube channel. We're also on a couple of our brands on their YouTube channels from the Hemp Bombs YouTube channel and the Nature's Script YouTube channel, full video episodes of all of our podcasts. I'm Joe Agostinelli, the host of the "CBD University Podcast." Thanks for tuning in.
These statements have not been evaluated by the Food and Drug Administration. CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This podcast is not intended to provide legal advice regarding the legal status of CBD and CBD products.