Across America, federally and state-wide, there’s a push for legalizing cannabinoids. Some forms of by-products of the Cannabis plant are already legal federally, and in most states. Others have received medical use permission, while some consumers prefer others for recreational use. Each passing day brings new uses for these products. Some smoke them, others eat them, while there are products for mixing in shakes and brews or used as rub-on topical creams and salves.
The big question is: What is the cost to individuals, families and broader society of broad-based legalization? And more importantly, is anyone counting?
Market facts
Globally, analysts expect the industrial hemp market will grow at a projected 34% compound annual growth rate (CAGR), from USD 4.6 billion in 2019 to USD 26.6 billion by 2025. The passage of the 2018 Farm Bill legalized hemp and hemp-based cannabidiol (CBD) products federally. Although hemp isn’t legal across all States, the Bill now does give cover for manufacturers and sellers of hemp and derivative products, in most states, to tap into the financial benefits of the cannabis plant and its compounds.
Just a year prior to the Bill’s passage, with hemp sales of $1.2 billion, China (33%) was the largest player in a $3.7 billion market in 2018, followed by the U.S. (28%), with 2018 sales of approximately $1.2 billion, and Canada (27%), with sales of slightly under $1.0 billion.
Other global players in the growing industry had market shares in the single-digits – not nearly comparable to the Giant 3 heavyweights. However, thanks to the 2018 Bill, in the U.S., hemp-related revenue is expected to grow to $5.7 billion[3] by 2022. This market expansion represents a 3-year CAGR of 17.5%, and will likely establish U.S. producers, manufacturers, distributors and consumers as global leaders.
Pricing opportunities
Although the general trend for hemp pricing has been negative thus far, there has been price up-ticks more recently which, according to industry watchers might signal “…that the U.S. hemp industry may have seen the current market bottom”. This includes prices for most refined CBD – which is good news for growers.
Growers might also see opportunity from the fact that input costs, notably prices of seeds, have declined. For instance, while feminized seed saw a marginal drop in the most recent analysis, the price of non-feminized seed plummeted by 50%. Since pricing typically transfers up-stream, from raw materials to finished goods, this development is positive for product manufacturers (such as CBD oil and smokable hemp products) as well as for the end customer.
But are these products safe for the end consumer to use?
What the FDA says
To date, the FDA has only approved only one CBD product – a product to treat two rare, severe forms of epilepsy – available only by prescription. No other CBD product, Cannabis-derived compound or CBD-related substance, regardless of what a producer or distributor might say, is FDA approved. In fact, the FDA has these warnings to give to potential CBD/derivative product consumers:
There’s also concern around product quality and reliability.
The Mayo Clinic reported results of a study of 84 CBD-based products purchased online. Of that sample, 18 contained tetrahydrocannabinol (THC) – a compound that CBD products are not supposed to have. The same study also found that a quarter of the products tested had CBD levels that did not match their product labels.
Most consumers, whether they are shopping for oils, creams, edibles or vaping products, trust in the reliability of supplier claims. The study cited by the Mayo Clinic, and many warning letters issued by the FDA, question not only the reliability of the dosage, but also the purity of the products.
Personal health concerns?
The liver processes some cannabidiols, once consumers ingest them. As they travel through the bloodstream, they impact other vital organs too, such as the brain. However, such substances take longer to deliver a “hit”. Others, like inhaled products, enter the system quicker, and start delivering “results” immediately. Regardless of what those “results” might be – mellowness, perceived pain relief, seeming alleviation from chronic aches – there is serious concern about addiction.
Promoters of CBD hemp, smokable and edible cannabidiols and other associated products are also adamant that their wares don’t cause addiction. They consistently maintain that, like any other great-tasting food, products made from CBD hemp flowers and derivatives thereof are not addictive. Yet, they insist that, although most of their customers might love experimenting with their products, they’ll find that they taste delicious – but they don’t get addicted. But not everyone is convinced of that argument.
Critics point to the fact that, as in the case of food addiction, anything that appeals to our sense of taste – like diabetes-causing sugary treats, or artery-clogging fatty burgers and fries – can be addictive. In fact, research, summarized from 52 studies, and published by the U.S. National Center for Biotechnology Information (NCBI):
- Supported the “…validity of food addiction as a diagnostic construct, particularly as it relates to foods high in added sweeteners and refined ingredients”
- Proposed that “…the food addiction construct merits serious attention in regard to its presentation, prevention, and treatment in humans”
These findings are in line with other research that concluded that edibles that are hyperpalatable in nature, are addictive. That research also warned that such foods may lead consumers to have adverse mental, physical, psychological and physiological reactions as a result of consuming those types of foods.
Of course, it also depends on many other factors, including each consumer’s metabolism, the diligence they exercise in choosing their products, the reputation of the manufacturer, their track record of safety and their integrity. However, the fact that an alternative research-backed opinion (whether these are safe or addictive) exists, ought to give society and regulators pause to consider the potential costs of addiction.
Dealing with the cost of addiction
A report prepared for the U.S. Substance Abuse and Mental Health Services Administration (SAMHSA) estimated that public health care spending, on substance abuse, will soon exceed $280.5 billion. Just a decade ago, that amount was $171.7 billion. That’s a more than 63% increase in just a decade for fighting addiction.
Recent figures released by the Recovery Centers of America (RCA) pegs the cost to society, for dealing with the aftermath of addiction, at a whopping $1.45 trillion a year. This includes economic loss of $578 billion, including lost productivity, costs to employers and the economy. It also includes $874 billion in other societal costs such as addiction-related crimes and the staggering health care costs, rising insurance premiums and taxes.
Perhaps, before sweeping State legislations make hemp and derivatives legal across the board, it’s time for America to do a cost-benefit analysis and decide on its priorities: Weigh the costs to society versus the economic benefits of a thriving globally-dominant CBD industry?