Regulatory delay, restrictions causing marketing roadblocks for CBD brands

, Regulatory delay, restrictions causing marketing roadblocks for CBD brands

CBD is currently the fastest-growing segment in the cannabis industry, with new companies jumping into the market almost daily and retailers from big-box chains to mom-and-pops eager to stock their shelves with the hot, in-demand products.

But with the U.S. Food and Drug Administration prohibiting CBD companies from making claims about their products’ wellness properties, it hasn’t been easy for brands to set themselves apart through marketing while remaining in compliance with federal authorities.

Still, some CBD brands have figured out how to promote their products and gain consumer trust without taking risks that could harm their businesses by employing three strategies:

  • Obtaining production certifications.
  • Promoting full product transparency.
  • Educating retail associates and consumers with demonstrations.


Get Certified

Hemp’s status as a federally legal crop in the United States has allowed producers to participate in government programs such as the U.S Department of Agriculture’s Certified Organic program. For sustainability-minded consumers who care about how their hemp products are produced, the label makes a big difference, according to Dan Dolgin, co-founder of JD Farms in Eaton, New York.

“You see all these symbols on different packages and wonder if they mean anything or if brands try to collect them,” Dolgin said. “But consumers are becoming more educated and looking for various (certifications).”

Dolgin’s farm, which produces 2,500 acres of certified organic pastured livestock and forage crops, pursued organic hemp certification as an extension of its brand, first starting with the Eaton Hemp line of natural hemp grain snack products in April 2019 and then extending to certified organic full-spectrum CBD tinctures and topicals in November 2019.

JD Farms also holds gluten-free, kosher and Non-GMO Project Verified certifications for its hemp snack products—labels that increase consumer confidence, Dolgin said. But certifications come with a higher cost all the way through the supply chain, which is why consumers end up paying a premium for these items.

“You’re limited in terms of co-packers and manufacturers who have all those capabilities and certifications—and they’re not cheap,” costing cultivators tens of thousands to produce, Dolgin said.

Other brands, such as hemp and CBD company HempFusion of Denver and Irvine, California-based PearlCBD, are paying for certifications from the U.S. Food and Drug Administration, which is not the same as receiving FDA approval. Rather, it’s an expensive voluntary process called the self-affirmation GRAS (generally recognized as safe) certification that brands can invest in to verify their products’ safety.

“We’ve done a complete toxicological hurdle to verify that the raw material we use in every one of our products that contains cannabinoids is safe,” said HempFusion co-founder and President Jason Mitchell. The process includes peer-review and publishing of the brand’s toxicology work, he added.

But it could be confusing for consumers, who don’t know the difference between FDA approval and certification. The FDA’s newly appointed commissioner, Stephen Hahn, said in February that addressing CBD concerns—and perhaps a broader discussion about dietary supplements that push legal boundaries by making unsubstantiated health claims—is on his priority list for 2020. One concern, he said, is consumers’ misconception that the substance is FDA approved.


CBD Purchasing Channels


Be Transparent

Bad actors selling ineffective, low-quality products—and, in some cases, products that don’t contain CBD at all—have run the risk of turning off consumers and making it more difficult for legitimate brands to gain trust.

As a result, consumers crave accountability and transparency about where and how hemp-derived CBD products were produced and how clean and sustainable they are.

PearlCBD is working on implementing a label that would enable consumers to use their mobile phones to authenticate products by looking up their certificate of analysis, or COA.

“When consumers touch their phone on the product, it tells them exactly what is inside, and it authenticates the product immediately,” said Danny Davis, CEO of PearlCBD.

With this technology, consumers can quickly receive information about product formulation, videos about the product, how it’s made and how to use or apply it, without using QR codes or having to download an app, Davis said. The company is looking to patent the process.

Louisville, Colorado-based CBD company Bluebird Botanicals, HempFusion and JD Farms allow consumers to look up COAs on their websites by entering their products’ batch or lot numbers.

“We have heard from customers that that’s one of the reasons they buy from us—because they know that when they buy our products, they are going to know exactly what’s in them and what’s not in them,” said Michael Harinen, chief brand officer for Bluebird Botanicals. “That’s really a big deal for some customers.”

JD Farms’ Dolgin said there is a limit to what consumers really care about, but it’s still helpful to provide a level of transparency that reveals everything about the production process. The company’s next step is blockchain trials.

“We sort of open our kimono to say, ‘There’s nothing here to hide—you can look at every aspect of what we do from seed to shelf,” Dolgin said. “We love to get as micro and meta as we can, and we feel good about putting all of that out there.”


Educate, Don’t Promote

In the currently unregulated CBD market, companies that put in the work to regulate themselves and educate consumers and retailers about their products often see much higher customer return rate and loyalty.

Hosting product demonstrations, sampling and consumer lectures in retail stores and other public venues have been effective ways for brands to communicate with consumers and answer questions directly, according to Mitchell of HempFusion. The company also began promoting its products in airports during the holiday season, with advertisements on airport television channels and demonstrations.

Training retail associates is among the most effective techniques for promoting consumer education because of their ability to connect and relate with consumers in person and to become a trusted resource, according to Harinen of Bluebird Botanicals.

“It gives us an opportunity to educate,” Harinen said. “And that education and being truly honest with people and not trying to hard sell our products but rather just being a good resource ends up being a really good strategy for us.” n marijuana exclusively because cannabis-focused branding firms often don’t care whether they handle accounts for your competitors. “It’s like working on a project for AT&T and T-Mobile at the same time.”

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