Cannavest has been moving forward with development of its PlusCBD Oil brand, based on cannabidiol, the non-narcotic fraction of the cannabis plant. The Food and Drug Administration has said that CBD is not a legal dietary ingredient for dietary supplements, but that has not prevented companies from moving forward with development of functional foods featuring the molecule.
Food status provides regulatory relief
One of the regulatory workarounds that Cannavest and others in the sector use is hemp’s status as a food. Industrial hemp, usually defined that plants that have less than 0.3% THC content, the narcotic component of the plant, is being grown in test plots in Kentucky with the majority of its hemp supply coming from Europe.
Cannavest, in common with a number of other development stage companies, has shown marked volatility in its earnings statements. The company reported a loss of $2 million on sales of $2.4 million in the quarter. This was a steep drop from the same quarter a year previously, but results in that quarter were skewed by a $7.9 million paper transaction involving two subsidiaries. In the current quarter, the company also reported another confounding factor, that being the settlement of a lawsuit with another cannabis company, which netted Cannavest $150,000 in the quarter and is expected to yield $750,000 over time.
“Our branded products are positioned to take advantage of the market demand for cannabidiol and CBD-based products. We continue to provide the market leadership in ‘mainstreaming’ CBD as a dietary supplement, beauty care product, and, as an ingredient for numerous other products from pet foods, vape products and specialty beverages," said Cannavest CEO Michael Mona Jr.
DEA not on board
Cannavest’s business up to now has been based on sales of bulk oil that it derived from industrial hemp that is grown mostly in Europe. Despite the company putting a brave face on the future of CBD as an ingredient, its business development has been hampered by the Drug Enforcement Administration’s seizure of imported industrial hemp seeds. The company has managed to get a research collaboration in Kentucky with Murray State University in Murray off the ground. But other projects in Kentucky and Colorado fell through because of the inability of the company to supply growers with seed. As reported earlier in NutraIngredients-USA, in Colorado hemp growers are limping along with whatever seed is available within the state.
Cannavest passed another milestone in the quarter with the announcement that it now has consumer products on the shelf in more that 120 natural products stores. The company says its model for this sales channel is to work through established broker networks with long-standing relationships at the store level. The company also announced expansion and refinancing plans with the establishment of an office in Düsseldorf, Germany and a deal to obtain $6.5 million in funds from an institutional investor.