For several years, industry giants such as Coca-Cola, PepsiCo, and Anheuser-Busch have made waves announcing future plans to explore the CBD-beverage market. And last week, Nasdaq published an article on the future of investment opportunities in cannabis-infused drinks. Perhaps most notable from the article was Nasdaq’s expected valuation for the CBD beverage market — a staggering $1.4 billion by 2023.
While it is true that certain investors are seeing green in the CBD-beverage market, the space is still plagued by a landmine of legal uncertainty and questions. Hemp-derived CBD was legalized at the federal level by the Agriculture Improvement Act of 2018, also known as the Farm Bill. However, as we previously discussed, the FDA and FTC have overlapping enforcement authority over the marketing of CBD products, which can include anything from food products to dietary supplements to beverages with CBD added. And as recently as November 16, 2021, the FDA reiterated that its approach to regulating the CBD industry will be same as it has been — a regulatory minefield. The acting Deputy Center Director for Regulatory Policy at the FDA’s Center for Drug Evaluation and Research recently emphasized the agency’s position that it needs additional CBD research and safety data before it will consider CBD for uses beyond prescription drugs, including usage as a food or beverage additive or dietary supplement.
Companies marketing CBD beverages should take careful steps to ensure compliance with the FDA’s labeling requirements and guidance regarding CBD products. Unless and until the FDA provides further guidance, we can expect the back-and-forth game to continue with CBD companies entering the beverage space and the FDA initiating periodic enforcement actions. At a minimum, CBD companies entering the beverage space should refrain from making health claims, such as a product “can prevent, treat, or cure” a disease, as these claims are ripe for FDA enforcement actions. We provided several marketing dos and don’ts in a previous blog post that apply with equal force to the CBD beverage industry.
With industry experts claiming that the “best way to consume cannabinoids is through a beverage,” and Nasdaq reporting on the investment opportunities that surround CBD beverages, it is no surprise that CBD beverages are exploding in popularity. Bradley will continue to survey the market and will report on any updates concerning CBD beverages as they arise.
* * *
Bradley's Food, Beverage and Hospitality team understands the unique challenges and needs of these dynamic and competitive industries. From national restaurant chains to craft breweries and from wine and beer distributors to hotel, resort, and club properties, our multidisciplinary team counsels food, beverage and hospitality industry clients on all aspects of the hospitality industry.
Bradley’s Cannabis Industry team is a leading voice in the cannabis sector. The National Law Review recognized our team as a “Go-To Thought Leader” for Cannabis Industry Regulation in 2021. Our attorneys have presented on cannabis issues at conferences around the country and have been quoted in an array of legal and mainstream publications, from Law360 and Westlaw Journal to the Atlanta Journal-Constitution, the Associated Press, and ABC News.