CBD Trends and Regulations in Europe’s Food and Wellness Markets

By Esteban Rossi I., Ph.D., Special Contributor, New Frontier Data 

Since the early days of the cannabis industry, the biological properties of cannabidiol (CBD) and other cannabinoids have attracted the interest of the food and wellness industry. Yet, a general lack of vetted scientific research, along with regulatory and technical challenges, hindered product development. Presently, as a plethora of products have reached European and North American shelves, consumers are eager to try novel CBD products steadily gaining buzz in the markets and media.

In its latest release, EU CBD Consumer Report Series: Market Size and Demand (Vol. III), New Frontier Data summarizes recent advances in the markets for cannabis-infused products, and highlights opportunities for stakeholders throughout different European jurisdictions.

Regulatory challenges for CBD-infused products revolve around the status of the cannabinoid as an ingredient. In 2019, the European Commission (EC) categorized CBD in the European Union (EU)’s Novel Foods Catalogue, forcing producers to comply with a stringent regulatory process intended to ensure product safety and reliability while safeguarding against overstated or spurious marketing claims. The government’s mandate caused waves as it introduced a host of regulatory restrictions on previously existing and increasingly popular industry.

The European Food Safety Authority (EFSA) shoulders mandates to develop authorized scientific and technical guidance for both the preparation and presentation of novel foods (see: EU 2015/2283). Applications must include a detailed description of the novel food, its production process, compositional data, proposed uses, and recommended dosages as well as anticipated intake of the novel food. In addition, applicants must extensively describe the history of the novel food, its nutritional information, and impacts on metabolism and excretion, along with toxicological information.

Novel food applicants should be able to sufficiently demonstrate the safety of the novel food for its intended uses, and discuss any potential health hazards emerging from its consumption. A detailed description of the application process, dossier composition, and timeline can be found in the EFSA guidelines. As a rule of thumb, the application process likely takes 14-24 months. Meanwhile, application costs can range between €20,000 and €200,000 (EUR) for complex products.

To further complicate matters, the EC last year briefly considered whether food products containing CBD should be regulated as a narcotic substance, per the United Nations International Drug Control Conventions (IDCC). After careful analysis and feedback from hemp growers, food industry representatives, and the general public, the EC realized that regulating CBD as a narcotic would cripple the industry, force numerous firms into the grey market, and contradict the spirit of the IDCC. Presently, to do business hemp producers in Eastern Europe as well as Latin America must comply with established agronomical practices and, in some cases, with the EU’s Good Manufacturing Practices (GMP) Similarly, firms interested in producing supplements, beverages, and other CBD-infused products must adhere to applicable technical and legal requirements given force within the Novel Food Catalogue.

While government officials and industry representatives have debated the costs and benefits of alternative regulatory frameworks, product research & development has continued unabated. Numerous companies took advantage of regulatory delays by tackling various unknowns regarding the production, standardization, and dosing sizes of CBD (and other cannabinoids). Such efforts have led to some improved understanding of the biochemical and biological properties of CBD, and consequently to improved products and more satisfied consumers.

In fact, both sales data and consumer surveys indicate that the popular appetite for cannabis products continues unabated, driven by thoroughly documented health and economic trends, and unexpectedly boosted during the COVID-19 pandemic.

In its report, New Frontier Data summarizes those trends along with the uses of CBD, per capita spending, and various market estimates. For those firms developing business plans and financial projections, practical insights include interpretation of market sizes in relation to available distribution channels per product niches.

As previously reported, consumer surveys indicate that European as well as North American users mostly use CBD to manage pain, anxiety, and stress, having learned about it from a personal connection. As may be expected from the respective regulatory timelines, CBD awareness and usage rates are considerably higher in North America. Among European users, per capita spending on CBD varies widely by country, ranging from €7 to €57 EUR (i.e., an average of 21 euros). Total spending has surpassed common expectations in each Germany (€1.83 billion) and the U.K. (€1.71 billion). Across the EU, CBD sales project to top €6 billion (EUR) before the end of this year, with the market well positioned to grow rapidly in the near term. If the United States serves as a benchmark, annual per capita annual spending may reach $300 (USD). For more information about European markets for CBD products, see the report, EU CBD Consumer Report Series: Market Size and Demand (Vol. III).

Ultimately, producers, entrepreneurs, and retailers alike are likely to find interesting opportunities to consider in the space. With clear ground rules and detailed knowledge of consumer preferences, cannabis firms can better refine their marketing efforts and dedicate more resources to product development. In a similar way, compliant Latin American producers would do well to streamline their processes to meet growing demand for CBD (including extracts and isolates). For companies with detailed plans and strong compliance teams, the European market offers unique long-term opportunities. Undoubtedly, after a few years of ambiguous forecasts, the cannabis industry is reaching a seminal turning point.