Regulation in 2021 could be defined as much by what doesn’t happen as by the progress made.
Multiple jurisdictions are planning significant legislation on both CBD and hemp-related matters as well as cannabis liberalisation – for example Mexico’s long-awaited legalisation of recreational cannabis. But CBD-Intel believes the events of 2020 make it exceedingly unlikely that 2021 will see a successful novel food authorisation in the EU or comprehensive implemented guidelines from the Food and Drug Administration (FDA) in the US.
These two factors alone – given the size and importance of the mainland European and US markets – could define 2021 as another year of treading the grey waters of legal ambiguity with no guidance to direct investment and corporate strategy.
Overall, across Europe the implications of the welcomed and industry-changing decision by the Court of Justice of the European Union (CJEU) in the Kanavape case will still ripple forth across 2021. Immediate impacts will follow, such as the EC resuming its process to verify the validity of novel food applications.
However, given the recent comments made to CBD-Intel by the European Commission (EC) on the current state of the information provided with most applications, it seems unlikely there will be a full authorisation during the coming year.
UK in the driving seat
This puts the UK in the driving seat, with some authorisations likely – though again CBD-Intel’s conversations with the UK Food Standards Agency (FSA) suggest that overall quality of information provided could charitably be described as mixed at best.
And with devolved powers gripping the UK – Northern Ireland and Scotland appear to be taking separate approaches to CBD products and there are a host of regional issues looming from Brexit that will likely occupy regulators’ time regardless of opinion on CBD – some could question the value of a successful application. This is especially so – despite the UK looking likely to remain the second most valuable CBD market in the world – since the EC has confirmed that British decisions will have no material impact on its own decision-making process.
It also remains to be seen whether the UK will address rules on extracting from flowers that hold it back as a legal producer of CBD extracts. The UK authorities currently maintain that is not on the books, but coming changes such as the implementation of export-only production and extraction rules on the Isle of Man could force that to change.
Similarly, the EU may revisit the exclusion of CBD derived from hemp flower from its catalogue of approved cosmetics ingredients (CosIng).
Such a change could have a positive impact on the market and CBD-Intel believes the current position excluding it is no longer so easily sustainable in the light of the Kanavape ruling.
Relaxing in the US
Elsewhere in Europe, a number of other national decisions could have an impact. For example, we expect Italy to continue proposing new laws to solve its grey area around the legality of CBD isolates, flowers and finished products.
In Eastern Europe, Poland, Lithuania and Ukraine are all expected to look at passing favourable laws on aspects of hemp and cannabis.
Meanwhile, official stances on cannabis continue to relax in the US, where support for legalisation has never been higher. CBD-Intel expects a raft of further states to join the legal cannabis column, with New Mexico, New York, Rhode Island, and Virginia likely to legalise recreational cannabis in 2021 and the conservative states of South Carolina and Kentucky to move to legalise medical cannabis.
Movement at the federal level is likely to be significantly slower, despite the groundswell of support and the nominally more supportive Democratic party assuming the presidency, holding onto the House of Representatives and at the very least narrowing Republican control of the Senate.
There is clear support in the House for decriminalisation, with a number of bills already having been debated, despite damage to the Democratic majority. However, resistance in the Senate will be more entrenched and run-off elections in Georgia will decide whether the Republican Party maintains its control of the chamber.
A reforming administration
No matter the result, achieving significant cannabis reform in that chamber will likely remain a difficult challenge for the Democratic Party as members representing more conservative areas – or with more conservative principles – may not be so willing to stake re-election success on cannabis reform.
Nevertheless, CBD-Intel does expect significant reform under the Biden administration, such as loosening restrictions on medical cannabis research and possibly rescheduling cannabis to a lower schedule.
From an administrative perspective, the US Department of Agriculture (USDA) will likely implement its final rule on hemp production in the first half of 2021, which should have significant revisions from the interim final rule, particularly in the areas of testing procedures and interstate transportation.
However, the FDA will have its hands full with implementing COVID-19 vaccinations nationwide, so we do not expect significant moves such as permitting the use of CBD as a dietary supplement until at least the end of 2021. And this alone may outweigh many of the other potential positives seen in the 2021 regulatory outlook for the US.
Action around the world
Elsewhere in the world significant action is expected in most regions, with South America leading the way and perhaps becoming a significant consumption market to rival Europe and North America (where the Canadian market too will likely grow following a predicted change to allow “cannabis health products” for over-the-counter sales in 2021) as a major consumer CBD market.
The ongoing saga of Mexican recreational legalisation must come to an end in 2021. The Supreme Court has issued then revised a “final” deadline for legislation there so many times that the word has lost all meaning. However, a new deadline of 30th April 2021 to pass a law should be met, assuming truth in statements that the major issues have been agreed and it is only minor details left to be worked through.
Further south, adoption of Brazil’s ongoing proposal could result in the legalisation of hemp and cannabis cultivation in 2021 and enable extraction of CBD and its use in edibles, cosmetics, and pet products.
And following its legalisation of non-psychoactive cannabis or hemp in June 2020, the government of Ecuador is about to start awarding cultivation and production licences. We anticipate additional technical regulation to give the newly created industry a legal footing in 2021.
Meanwhile, neighbouring Colombia has approved a bill to regulate the production, sale and use of recreational cannabis among adults.
Opening up China
In Asia and Oceania, CBD-Intel expects significant in-roads to be made in opening up the Chinese market. In October 2020, the National Institutes for Food and Drug Control solicited suggestions for revision of the Inventory of Existing Cosmetic Ingredients, which could open up legal avenues for CBD cosmetics, both for domestic products and imports.
However, growth will be hampered by restrictions on the current inventory, which only allows Cannabis sativa leaf extract to be used in cosmetic products and not hemp flower extracts or CBD. Product labels will list the ingredient of “leaf extract” rather than CBD, even though the leaf extract contains CBD.
As legal frameworks are clarified for CBD cosmetics, this should also influence other finished products and CBD isolates. It is likely that the Chinese government will further open the market to CBD products, albeit with restrictions, while posing stricter policies on hemp cultivation and processing at the national level.
Thailand too is expected to further advance its regulatory framework, the government even having planned to develop the medical cannabis tourism industry.
Petition to decriminalise cannabis
Further liberalisation of the existing regime in Australia is expected to continue. A petition for a referendum on the decriminalisation of cannabis has also been launched in New Zealand. Comments are expected before February 2021.
In the Middle East, Israel has descheduled CBD from its list of psychotropic substances, which means it can be used in any food or cosmetic products produced in Israel. Additionally, the country’s Ministry of Justice has published a legal memorandum on the legalisation of recreational cannabis which, if approved, will abolish the ban on use and possession for personal use by over-21s in their own homes.
Lebanon is also likely to continue to work on its own legal cannabinoid industry framework, though its impact on the wider international market is yet to be determined.
It is a similar situation in Africa, where South Africa, Lesotho, Zimbabwe and Malawi will continue to push forward with their plans for legalisation. At least two other African countries are working on similar plans.
What This Means: Overall it looks as if 2021 is more likely to be defined by its will-nots than its wills. But 2020 also looked fairly bleak until the very end of the year, when the CJEU Kanavape decision and the UN vote on rescheduling both went largely the way of the industry.
As the year progresses, it will become clearer how much change and clarity can realistically be expected. For now it looks like the continued wait for EU authorisations and FDA rules will outweigh the positives.
– CBD-Intel staff and contributors