The CBD topicals marketplace continues to grow, and the prospects of added revenue from a new line of products that tap into this hot ingredient are appealing for any beauty company. But finding success in CBD isn’t as simple as ABC. For starters, there are myriad brands and products hitting the space and that means me-too products can very well get lost in this cluttered category, and making claims that take things a bit too far can bring unwanted attention from federal regulators.

What’s A Brand To Do?

“The first thing to think about is formulation, and how it fits with market expectations,” said Greg Dicum, co-founder and CEO of CWI Consulting Services, which provides functional product research and development to companies across several sectors from beverages to beauty products and more. The Fairfax, CA-based company specializes in cannabinoids.

When Dicum’s company was creating its recently released CBD Topicals Report, it discovered a crowded space, but also a “big gulf between the best products and rest of the pack.”

According to Dicum, the best CBD topicals tend to be natural products with simple ingredient lists and natural ingredients like essential oils that are understood and appreciated by consumers—think coconut oil and shea butter.

Since CBD topicals tend to be more expensive than topicals in general—CBD is often the most expensive ingredient—consumers expect to see high quality natural products, said Dicum.

“The typical price range is $20 to $50, so from the consumer’s perspective, these have to be high quality products in every dimension,” he said.

Claim This, Not That

In addition, Dicum said it is absolutely critical to focus on compliance throughout the entire product development process.

FDA routinely reviews CBD product packaging, communications and marketing materials, and will not hesitate to send warning letters to companies it finds in violation of FDA rules.

For example, in December 2020, Wellness BioSciences Rx, Houston, TX, received a warning letter from FDA after the agency reviewed its website (https://wbrxglobal.com) regarding CBD products.

According to FDA, the claims on the website and social media pages establish BioSciences’ CBD products as unapproved new drugs. In April 2020, FDA also flagged The Dragontree Apothecary LLC.

Among the products that caught the FDA’s attention was the Boulder, CO-based company’s CBD Muscle Melt Balm. FDA also reviewed the firm’s product labels collected during an August 2019 inspection. According to the FDA, the claims on the product labels and websites establish the product as a drug. Specifically, one claim for the CBD Muscle Melt Balm read: “[S]oothe uncomfortable muscles and joints more quickly and safely than oral pharmaceuticals.”

Dicum suggested a more cautionary approach. “Perhaps the biggest compliance challenge for brands is steering clear of language that suggests CBD can cure or treat any diseases or conditions,” said Dicum. “Of course we know from both widespread anecdotal experience and a growing body of scientific studies that CBD is fantastic for helping people with many different wellness challenges, including chronic pain, sleep issues, anxiety and more—just don’t say that on your labels!”

Unfortunately, according to Dicum, it has been rather common for CBD brands to make risky claims.

“Fully a quarter of the products we looked at claimed to treat pain, exposing themselves to FDA action and also disqualifying themselves from the shelves of mainstream retailers,” he said.

In general, it might be wise for brands to stick to vague wording like “relief” instead of “pain relief” and “de-stress” instead of “fights anxiety.” Additionally, Dicum said that companies should consult compliance experts who are up-to-date on the constantly changing CBD regulatory landscape.

Be A Smart Shopper

New brands that want to enter the CBD sector must nail down an ingredient supplier first.

“The good news is that CBD wholesale prices have never been lower,” said Dicuum. “There is a big glut out there thanks to farmers planting as much as they could in the past few years on the expectation that federal CBD rules would be clarified and the market would burst into the mainstream. That has not happened yet, so prices are unbelievably low.”

But as there are different types of CBD inputs, Dicum said it is important for formulators to know what they want and be savvy buyers in the CBD space. CWI advises clients to use a broad-spectrum oil which will have THC removed, but still contains other natural constituents of the hemp plant such as terpenes.

“The reason we like broad spectrum is that on the one hand, it contains the entourage of hemp compounds, while on the other hand, does not contain any THC. THC in low levels won’t hurt anyone—and in fact it helps CBD do its job—but there is residual paranoia in the marketplace about ‘getting high’ or failing drug tests, so broad spectrum presents a smoother path to market. For that reason, fully 49% of the top 10 CBD topicals use broad spectrum hemp oil,” said Dicum.

But, he warned that sourcing CBD isn’t like sourcing ordinary ingredients.

“Your ingredient house probably doesn’t have it, so you’re going to be working with new suppliers. It’s commonplace in the sector to request a sample and run your own lab tests prior to a purchase. In these tests, you want to see CBD levels confirming the seller’s claims, non-detectable THC, and no solvents, heavy metals or pesticides. If any of these are present, they should be well below regulatory standards.”

Looking Down the Line

Because they are not ingested and are therefore more lightly regulated, topicals have been leading the way in the entrance of CBD to the mainstream marketplace. They will continue to do so in 2021, opening shelf space for CBD in national key accounts and becoming an enduring category, insisted Dicum.

The big change for CBD products will come when the federal government finally clarifies the rules regarding cannibidiol.

“When that happens, we will have a uniform national CBD marketplace, free from residual restrictions and legal gray areas. That in turn will trigger the starting gun for the biggest brands in the world to launch their CBD products. They all have them—I know because some of them are our clients—but they’re waiting for legal clarity before launching,” he said.

While there’s no set timeline for any ruling, experts contend the Biden Administration is likely to move toward that end.

In the meantime, small brands will have the playing field to themselves, said Dicum.

“CBD topicals are a very crowded space, yet no brands dominate and most of them will fail. Rather than being scared away by this dynamic situation, brands that have a clear vision of why they want to include CBD in their products, who they are making them for, and are up to the challenges of quality and regulatory excellence, can find a place in the sector,” he insisted. “It’s early enough that anyone focused on doing it right can help define the next stage in the evolution of CBD topicals.”  

CBD: Just Another Crop? Wholesale prices for CBD inputs such as isolate and extracts have been tumbling since they first became readily available. According to Greg Dicum, prices have been falling because hemp and CBD are evolving into normal agricultural products. Prior to this evolution, markets for hemp-based cannabinoids were restricted and unevenly and capriciously regulated; the risks were high and the supply was low. “As things change toward more openness—hemp remains subject to higher regulatory burdens for farmers than other crops, but it’s nothing like it used to be—hemp is becoming just another crop. When CBD follows suit a little later to become just another supplement, both hemp and CBD will be pure commodities, like corn and corn-based vitamin C,” predicted Dicum. In any agricultural commodity, it is not the farmers or the primary processors in the value chain who make the money; it is the brands that bring the finished product to consumers. “Starbucks captures the value chain, not Juan Valdez,” quipped Dicum. “The same thing is happening with hemp and CBD. Brands are becoming the primary center of gravity in the industry, not producers.”

FDA Officials: More Research Is Needed on CBD The knowledge gap remains. In January 2020, then-FDA Commissioner Stephen M. Hahn, MD and Principal Deputy Commissioner Amy Abernethy, MD, PhD, released a statement about the need for more research related to CBD due to the “limited understanding of the safety profile of CBD and many other cannabis-derived compounds,” including potential safety risks for people and animals.  “At the U.S. Food and Drug Administration, we see these knowledge gaps as an opportunity to develop new ways of building the science to inform public health decisions,” they said in a joint statement. FDA said it thinks that real-world data (RWD) on CBD use and safety has a crucial role alongside data from other types of studies to fill in the current gaps in its understanding. Sampling and testing of marketed CBD products is another way the FDA said it has gathered more information about the safety profile of CBD products. According to FDA, this is an important component of its work because little is known about the amounts of CBD and various related cannabinoids, as well as the occurrence of toxic elements, pesticides, other possible chemical contaminants, and adulterants, that may be present in CBD products marketed to consumers. In the letter, FDA noted it is testing CBD product samples in the following ways: The FDA, at times, tests products as part of its compliance and enforcement activities. For example, in connection with several warning letters sent to firms for marketing unapproved new drugs that allegedly contain CBD, the agency tested the cannabinoid content of certain products and many were found to not contain the levels of CBD they claimed to contain. The FDA has also designed surveys of the market and currently is conducting a two-phase marketplace sampling and testing study. The first phase involved a small sampling and analysis study (approximately 200 samples) conducted by the agency. While the data collected so far are from a limited sample size and are insufficient to draw definitive conclusions regarding the prevalence of results in marketed products, FDA said general observations indicate fewer than half of the tested products which presented label claims contained CBD at concentrations within 20% of their claimed amount and some products contained the psychoactive, intoxicating cannabinoid THC. FDA said it is currently working with a third party on conducting the second phase of the sampling plan that will involve a much larger sample set (1,000-3,000) that includes collection of CBD-containing products of various types. In the letter, FDA officials said they are “encouraged” by the many groups that are interested in helping to develop better data on the use and safety of CBD products, but also noted that existing efforts generally are not adequate to fill the outstanding knowledge gaps. “Filling these gaps will not be a trivial exercise but will require high-quality data analyzed using robust methods. We believe there is an opportunity to develop better sources of RWD to provide incremental improvements in our scientific understanding of the safety profile of CBD in the general population and, potentially, in specific populations,” Hahn and Abernathy wrote. According to FDA, in the coming months, the agency intends to develop and refine plans for research projects that use the following strategies, among others, to address the gaps in current CBD data research capabilities: Work with existing and emerging data systems; e.g., poison control databases, electronic health records, opt-in consumer/patient registries, to enable precise identification of CBD products that may be associated with reported adverse events through appropriate coding, data curation, and other means. Evaluate approaches to link adverse event data with CBD product sampling and testing data. Collaborate on the development and evaluation of systems and methods, such as an open, opt-in registry for users of CBD, to gain a better understanding of safety outcomes of interest and incorporate data from other sources. Evaluate the use of market-research data and other data sources that provide insights on the use of specific CBD products in different populations. Evaluate use of data linkage approaches to provide insights about safety risks that may appear across time while protecting the privacy of patients and consumers. Evaluate the value of combining multiple research and data approaches to synthesize an aggregate view of CBD safety and quality across the market and across time. Evaluate which strategies are best for safety and quality monitoring for different types of CBD products. According to FDA, the use of novel data sources to complement other scientific data (e.g., toxicology studies) will be key to providing the foundational science needed to more fully understand the safety profile of products containing CBD. The Hahn and Abernathy statement concluded with the following: “we see significant promise in small, targeted projects that improve data methods in the near-term and point to future opportunities for collecting and analyzing data on CBD products and, potentially, other types of products in the future.”

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