Products infused with CBD derived from the hemp plant seem to be cropping up everywhere. And not just as stand-alone tinctures and salves, but in your coffee, cookies, cereal, tea, jellybeans…even your liquid Happy Hour libations. Farmers are growing it in their fields, and food and beverage manufacturers are fortifying their products with it.

For anyone still confused about CBD, THC, hemp, and marijuana, here’s a quick rundown: Hemp and marijuana are two different species of the cannabis plant.

Marijuana contains a minimum 5 percent of the psychoactive chemical THC. Hemp holds only a trace 0.3 percent. The former gets you high, the latter does not. CBD is a non-psychoactive chemical found in both plants. Food and beverage manufacturers derive their CBD from hemp.

Help in the Hemp

CBD possesses no mind-altering possibilities. But what it does pack that’s making it the latest supplement craze is calming, pain-relieving, anti-inflammatory, and other medicinal powers.

Though you may find copious government-linked reports that claim CBD’s therapeutic properties bear no scientific basis, it is curious that GW Pharmaceuticals recently celebrated becoming the first drug developer to have a CBD-based therapy (for epilepsy) approved by the FDA.¹

And even Harvard Medical School admits that “…CBD may prove to be an option for managing anxiety, insomnia, and chronic pain.“³

CBD-Infused Revenue

Food and beverage (F&B) manufacturers are jumping on the wagon to cash in on CBD’s reputed road to wellness.

With an estimated 706 percent growth for 2019 – and a projected market growth flying high from $5 million in 2019 to 23.7 million in 2023 - the CBD industry is looking to be the next big billion-dollar food supplement trend² – despite the FDA’s refusal to remove CBD-infused food items from illegal status.

This is Your FDA on CBD

Curiously, the FDA cannot yet separate hemp-derived CBD non-psychotropic makeup from marijuana’s THC active psychotropic character - even though the federal government passed the Farm Bill, which declared hemp farming legal and removed the hemp crop from Schedule I of the Controlled Substances Act.

The FDA suggests that adding benign CBD to food is not legal as they lump hemp-sourced CBD and marijuana-sourced THC together under the “cannabis” umbrella. According to their website's Q&A:

FDA is aware that some companies are marketing products containing cannabis and cannabis-derived compounds in ways that violate the Federal Food, Drug and Cosmetic Act (FD&C Act)…FDA has therefore concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce and food…to which THC or CBD has been added.⁴

However, FDA Commissioner Gottlieb did state that “…the FDA has authority to issue a regulation allowing the use… in a food or dietary supplement" and that FDA is "taking new steps to evaluate whether [FDA] should pursue such a process."

Promising.

And so far, the harshest repercussions the FDA has doled out to CBD-inclined food producers are temperate warning letters.

For now, CBD production and distribution remains a state-by-state governance. Places such as WA state, where recreational marijuana is now legal, see CBD flowing freely on food shelves. In contrast, Maine is bringing its hatchet down and all that is CBD, declaring it illegal.

Never Mind the Roadblocks

With ambiguous and vacillating regulations aside, F&B makers are looking to satiate consumers’ appetites for CBD. Even Walgreens, CVS, Rite Aid, and Kroger are all set to dispense a handful of CBD-based topical creams.

So much like the trend of vitamin-enhanced water and other food and drinks, F&B producers have now put CBD on top of their product-infusing supplement list.

Research Relief

Though convincing evidence does exist that CBD harbors a field of various medicinal benefits, the government and businesses alike are want for more research.

Food and beverage manufacturers who want to take a bite of the CBD pie, can cash in on valuable R&D credits to help fund their research and development of CBD-infused products.

Companies can take dollar-for-dollar tax credits when they conduct eligible activities in the pursuit of developing new or improved products, processes, techniques, or formulas. Activities conducted to research, develop, and test new formulations of CBD-based products are ripe for potential eligibility.

The money saved in taxes through the R&D credits can then be invested back into further research or other business expenditures.

Not only that, discoveries made through companies’ CBD research could help push CBD towards federal acceptance. More quantifiable positive proof and businesses’ staunch determination just may be enough to convince the federal government to set CBD free.

Food and beverage producers may continue their research into CBD - and leverage the R&D tax credits to help them in their quest. And because the R&D landscape can pose a plantation of complexities, partner with a tax specialist for the most accurate and abundant credit claims.

1. Forget THC! Cannabidiol (CBD) Is the Marijuana Industry’s Moneymaker, The Motley Fool, 2019
2. S. CBD Sales to Grow an Average of 107% Annually Through 2023, 2019
3. Cannabidiol (CBD) – what we know and what we don’t, Harvard Health Publishing, 2018
4. FDA Regulation of Cannabis and Cannabis-Derived Products: Questions and Answers, FDA, 2019