How Much Real Potential is there in Cannabis?

Marijuana's two main components, CBD and THC, have very different uses and potentials in food and beverage products. In our June cover story, we get blunt about breaking down the bud.

By Dave Fusaro, Editor in Chief

Jun 06, 2019

"Welcome the holidays this year with Vertus THC-infused champagne." So read a December 2018 advertisement from a Seattle company named Tarukino. That's how far we've come on this subject.

Mondelez is considering it. Lagunitas is brewing it. Constellation Brands is owning it. Coca-Cola apparently won't touch it.

If ever there was an "it," it's cannabis, whether you're talking the cannabidiol (CBD) component of the marijuana plant or tetrahydrocannabinol (THC). Actually, unless you've been living under a rock for the past year, there's no real need to spell out what those two acronyms stand for. Just as we don't spell out FDA or USDA, the two cannabis acronyms seem to be in everyone's lexicon.

But are they in every food and beverage company's product development plans? Definitely not. Is there some quick and serious money to be made with either or both? Definitely yes.

CBD and THC are just two of the 104 chemical compounds known as cannabinoids found in the cannabis or marijuana plant, cannabis sativa. They represent possibly the biggest opportunity in the food and beverage industry since the end of Prohibition… or the biggest non-starter since Olestra. 

If you are interested in one or the other, neither is something you can just drop into a formula for soda or brownies like you can add a pinch of salt or sugar. Each has a distinct, unattractive flavor and can complicate formulations and manufacturing in other ways.

And neither is legal for food and beverages, yet, at least in interstate commerce. In the most simplistic terms, THC is only legal within the states where it's legal. CBD is legal everywhere, and corner stores selling it seem to be popping up everywhere. But neither cannabinoid can be used in food until FDA says its "generally recognized as safe" (GRAS).

However, state laws can pre-empt FDA regs, but only for sales within that state. That's why you see cottage-industry companies selling chocolates and gummies in California and only in California or THC-laced (but alcohol-free) beer only in Colorado.

Let’s take care of the big-picture prognosticating first. Nielsen has some projections, all of which are predicated on CBD being allowed in food nationally and THC becoming legal for three-quarters of the population. Under those circumstances:

The total CBD market by 2025 will be $5.98 billion, with $950 million in edibles and $1.7 billion in beverages.The total marijuana/THC market by 2025 will be $34.8 billion, with $7.7 billion in edibles and $1.1 billion in beverages.

Beyond that, let's look at the two ingredients separately.

CBD

CBD is the non-psychoactive component in marijuana or cannabis. Although some of the science is debatable, it's often mentioned as a treatment for pain, anxiety, depression and sleeplessness. Some research links it to a reduction in acne, dealing with cancer-related symptoms (nausea, vomiting and pain), and it may have general neuroprotective and heart-health properties.

"Is it a good thing? We believe this is a great thing," says Lance Aasness, executive vice president of Hinds-Bock Corp., which makes equipment for depositing, filling and pumping for the food industry – although its newest system, designed specifically for the cannabis market, can automatically fill and cap vaping cartridges and tincture bottles.

"Having access to an oil such as CBD that has shown to help people throughout the world with chronic pain or other medical issues is a huge step forward," he says.

CBD most often comes in vials of oil that can be taken by the drop, and also in softgels and capsules, but it's beginning to appear in food and beverage products – whether or not that's legal. Gummies are an increasingly popular format. Product developers typically use as ingredients one of three forms of CBD: oils, butter or water-soluble CBD.

Even though it can't get you high, its legal status is a little murky. Until the 2018 Farm Bill, even growing hemp, the "other" source of CBD, was illegal in the U.S. Even with the now-legal status of the source, the Farm Bill acknowledged FDA still has authority over uses of hemp derivatives.

More importantly, just like any other substance, CBD cannot be put into a food or beverage product until the FDA determines it's GRAS. "Aside from three hemp seed ingredients … no other cannabis or cannabis-derived ingredients have been the subject of a food additive petition, an evaluated GRAS notification or have otherwise been approved for use in food by FDA," the agency told us in a statement.

To further complicate matters, no FDA-recognized prescription drug can be used in food, and CBD is the key ingredient in Epidiolex, an epilepsy treatment, which the FDA approved last summer.

But the FDA has promised to create "lawful pathways by which appropriate products containing cannabis or cannabis-derived compounds can be marketed." To that end, the agency held its first public hearing on the subject, including a request for comments, on May 31. Electronic or written comments will be accepted until July 2.

"Three years ago, we were hiking in Colorado and my wife fell and hurt her back," recalls David Klein, who in 1976 created Jelly Belly jelly beans. "Normal painkillers didn't help. But because we were in Colorado and CBD already was legal, she tried it and it worked."

Klein had been out of the jelly bean business since 1980, when he sold the company. But with his non-compete contract expired, Klein decided to get back into the business he loved. The result was Spectrum Confections and its CBD-infused miniature jelly beans in 38 flavors in regular, sugar-free and sour. Each bean has 10mg of CBD.

Why jelly beans? Aside from that being Klein's strong suit, "Unlike gummies, there's no gelatin, which is a turnoff for some. And they don't melt. And CBD is pretty nasty. You have to learn how to mask the taste. Jelly beans are particularly good at that."

Another reason for using jelly beans: "I got a call from a lady last week. Her six-year-old was prescribed CBD for anxiety, but was ostracized in school for taking pills," Klein relates. "Now he can discreetly eat a jelly bean and no one notices. And she says the CBD does help him."

All that leads one to believe CBD has as much healing power as ibuprofen – but nobody's putting ibuprofen or other medications in foods and drinks. Why do some companies and consumers believe that's how they want to consume CBD?

"You shouldn't get headaches all the time, but when you do get one, take an ibuprofen," says Keith Woelfel, research & development and supply director at Stillwater Brands, Denver. But if you're treating a chronic condition, like migraines, you want to treat it pre-emptively and constantly, so a gentle and natural ingredient like CBD might be better. "For regular dosing, food products are a natural," he says.

Also, there's a general belief "if you can get your vitamins and minerals from foods, they're better absorbed," he says. "Same with CBD."

"CBD has gotten associated with wellness trends and natural remedies, so there's desire to see it in foods and beverages rather than in pills," says Kristi Knoblich Palmer, COO of Kiva Confections, Hayward, Calif. Kiva makes gummies, chocolate bars, mints and chocolate-covered blueberries, coffee beans, caramels and peppermint patties with THC and/or CBD. Its "artisan confections" can be gotten through "hundreds of dispensaries in CA, AZ, NV, IL and HI."

Products like Snaac protein bars and Floyd’s of Leadville CBD Recovery Protein are targeted at athletes who are looking to use CBD as a way to lessen the pain of recovery after workouts.

A number of pet-calming products also incorporate the ingredient. But speaking from personal experience -- mine and that of Food Processing's senior editor – they didn't quiet or calm the dogs in our lives.

There are some applications that appear off-limits. Although gummies are well established, don't look for any other candy-like product that could appeal to children. There also are some formulations where CBD just won't work.

"There is definitely potential for off-flavors. We've never gotten a pomegranate flavor to work well with CBD," says Knoblich Palmer. "A lot depends upon the dosage you're seeking. If you want a gummy with 50mg of CBD, you'll get an off-flavor. For 20mg, you may not notice it."

There also are differences in extraction types, different isolates of CBD and the overall quality of the raw ingredient, all of which impact off-notes and other formulation considerations.

THC

"You can get [both of] these things in many forms – pills, oils, smokables – but edibles seem to be a natural for THC," says Knoblich Palmer. Perhaps because the stuff can make you hungry.

"You have to be careful of the audience you're formulating for. It's easy to eat just one mint and see how it affects you. But if you put enough THC [to get a high] in one piece of a five-piece chocolate bar, there are going to be people who eat the whole chocolate bar because they like chocolate."

One of the ways regulators are being careful is not to mix THC with alcohol, the similarly buzz-inducing product it will replace for some consumers. While Health Canada hasn't completed rule-writing for how foods and beverages can use THC and CBD, it quickly came out with the direction that it will not allow THC to be mixed with alcohol.

The same signal comes from U.S. regulators, even though they are even further from a possible national legalization of cannabis.

As a result, Lagunitas Brewing Co., maker of one of the leading IPA beers in this country, launched a "hoppy" sparkling water, not a beer, laced with either THC or CBD. Hi-Fi Hops is created with the help of AbsoluteXtracts, a CannaCraft business unit, and is available only in California dispensaries.

It comes in two dosages: one with 10mg of THC, which should be enough to give a mild but discernible buzz, and one with 5mg of THC and 5mg of CBD.

In another nod to expected safety and regulatory rules, Hi-Fi Hops comes in child-resistant packaging. "We want to keep it away from the kiddos," says a company statement.

But clearly marketed as a beer is Grainwave from Ceria Brewing Co. Although it claims to be a Belgian-style white ale, Grainwave is "de-alcoholized," so it can hold 5mg of THC in every 10-oz. bottle. Co-founder is Keith Villa, who was the brewmaster behind Coors' Blue Moon beer 24 years ago.

Other THC-containing products include Kiva's "artisan confections"; Venice Cookie Co.'s (California) brownie bites, churro cookies and pretzels; Sweet Grass Kitchen's (Colorado) chocolate chip cookies; Manzanita Naturals' (California) craft sodas; Tarukino's (Washington state) "champagne"; and Dixie Elixir's (Colorado) lemon- and lime-ades and fruit punch. The list goes on and on.

What's the deal with genetic and nutrition labeling in 2020 and how does cannabis fit into formulations? Listen to Food Processing's Dave Fusaro and Keller & Heckman's Evangelia Pelonis talk about these topics and more. Listen to the On-Demand webinar

The manufacturing world

"Creating water-soluble cannabinoid products that have consumer-friendly ingredients, clean taste and predictable functionality is more challenging than many people expect," says Woelfel. "CBD and THC are oil-based. Since oil and water do not mix, much of our innovations and challenges center around creating stable cannabinoid oil-in-water emulsions with a functional food lens."

More specific challenges, he says, include accuracy in cannabinoid measurements, cannabinoid supply chain inconsistencies, emulsion stability over time and cold water dissolution rates.

"The cannabinoid supply chain is rapidly evolving in both its technologies and scale, with many suppliers still developing their products and technologies," Woelfel continues. "With standards of identity lacking, sourcing consistent cannabinoid-based raw materials is an area of high focus for us. Critical factors are cannabinoid potency, composition, flavor, testing requirements (e.g., potency, heavy metals, residual solvents, microbiological and pesticides), testing methodologies (Limits of Quantification) and, of course, supply availability."

MicroThermics, which specializes in small-scale pasteurizers and aseptic systems, created a new division, MTI BioSciences, to focus on "non-food and non-traditional food applications" -- pharmaceuticals, biotech and, of course, cannabis.

Every processor has some difficulty scaling up from lab- and bench-size batches to those for full production, but "a lot of the companies in this [cannabis] business are in their infancy," says David Miles, executive vice president of MicroThermics. "They have very little food industry experience. They were hot-filling bottles by hand but now they need to scale up with a higher level of food safety.

"And because they can only manufacture within the state they're selling in, they do work in smaller batches, which is ideal for us."

They're also working with an ingredient that is grown in nature and a supply chain as immature as they are.

Will you attend Process Expo Oct. 8-11 in Chicago? Expect to see some equipment dedicated to CBD manufacture, but no dedicated pavilion – at least not yet. The Food Processing Suppliers Assn., which stages the food equipment trade show, has been running ads promoting the show with a "Grow it, Dry it, Process it" theme clearly directed at the cannabis market.

"Two years ago, this market was not even on our radar screens," says Andy Drennan, FPSA senior vice president. "That all changed at Process Expo 2017 after hearing that an attendee had walked into the booth of one of our exhibitors and purchased two pieces of equipment to the tune of $2 million and paid cash. The equipment was for a legal cannabis entrepreneur who was looking to raise the standards of his production. This made all of us stand up and take notice.

"We realized this market was truly taking off. New states were legalizing cannabis. The edible cannabis segment was growing even faster," says Drennan.

"Additionally, these products cannot cross state lines, so that entrepreneur in Washington state, for example, who wants to sell in Oregon must also set up production in Oregon. As far as FPSA members are concerned, that means twice as much equipment that needs to be purchased by that same entrepreneur."

And the manufacturing duplication is not just state-to-state. "Due to regulations, THC cannot be manufactured on CBD equipment and vice versa," says Woelfel of Stillwater. "This means duplicate assets are required to produce products that share the same technology and equipment, even when manufacturing in the same geographic market."

Drennan adds, "At FPSA meetings, we are hearing more members talk about it. In our most recent annual conference, we had a speaker from a cannabis-infused beverage manufacturing company. It turned out to be one of our most popular breakout sessions of the conference."

We've come a long way from "Reefer Madness," but all the legal pieces are not yet in place. With each passing day, it looks more like a question of when not if.