New EU Stance on Novel Foods Leaves CBD Market Up in the Air

By William Sumner, Hemp Content Manager, New Frontier Data

The European Union (EU) is one of the fastest-growing markets for cannabidiol (CBD). Home to 446 million people, the EU market has the potential to reach up to €17.57 billion (USD$20.71 billion) in annual sales by 2025, according to New Frontier Data’s latest report, EU CBD Consumer Report Series: Market Size and Demand (Vol. III. Yet, it is facing what many consider to be an existential threat by the regulatory European Commission (EC).

Late last month, the EC announced its preliminary view that CBD and other extracts from hemp flowers should be regulated as narcotics under the United Nations (U.N.) Single Convention on Narcotics of 1961. Though not yet final, such a ruling could spell disaster for the burgeoning market.

Under existing EU regulations, ingestible CBD products are considered novel food products and are required to undergo a series of safety evaluations before being sold on the EU market. Though some advocates may consider CBD’s novel food status as less than ideal, more than 50 novel food applications have been submitted by CBD brands for review by EU regulators.

Since the EC came out with its preliminary finding, novel food applications have been suspended pending finalization of the decision. It has remained unclear why the EC retreated from the novel foods approach in favor of the more hardline position.

Possible explanations for the change include the EU’s using the new tack in order to soften CBD advocates on the novel foods application process, while others speculate that the EU is ceding to pressure from pharmaceutical companies which view CBD as a threat to their bottom lines.

While the EC’s position would all but gut the EU CBD market, it would also create opportunities for other countries to fill the void, namely the United Kingdom (U.K.). The U.K.’s Food Standards Agency posits that CBD products should be treated as novel food products, and is planning to accordingly accept applications for CBD products starting on January 21, 2021, when the nation’s Brexit transition period ends.

The U.K. is currently the EU’s second largest CBD market, second only to Germany’s. By the end of 2020, New Frontier Data estimates that the U.K. will spend €1.71 billion (USD$2.02 billion) on CBD products, with sales growing to €2.8 billion (USD$3.3 billion) by 2025. Should the EU ultimately classify CBD as a narcotic, a gray market economy would almost certainly emerge, with the U.K. acting as the EU’s primary CBD supplier.