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Imagine finishing a tough workout and quenching your thirst with a drink that also may reduce inflammation. Think about hanging out with friends and enjoying a beverage that may lift you up and have you feeling good without leaving you hungover the next day. Welcome to an exciting and rapidly growing segment of the beverage market―drinks infused with CBD or THC derived from cannabis.
CBD is a chemical produced by the cannabis plant that is commonly thought to have therapeutic benefits. THC, or delta-9 tetrahydrocannabinol, is a chemical produced by cannabis that provides a psychoactive, euphoric effect. Cannabis plants containing more than 0.3% THC, known as marijuana, and CBD or THC derived from it, are federally unlawful, but may be legal in states that have legalized marijuana for medical or adult recreational use. CBD derived from cannabis plants containing less than 0.3% THC, known as hemp, and the CBD derived from it, is federally legal. However, FDA has said that CBD derived from hemp should not be marketed in beverages. Due to this complex regulatory structure, the marketing of CBD- and THC-infused beverages is currently controlled by state-specific laws and regulations.
Nevertheless, while cannabis has often been considered a play for the pharmaceutical or tobacco industries, cannabis-infused beverages have proliferated in recent years. According to a report recently published by Fortune Business Insights, the market for cannabis beverages is projected to reach over $8 billion by 2027. Beverages that contain THC are permitted in more than 10 states that have legalized marijuana for adult recreational use, including Arizona, California, Colorado, Illinois, Massachusetts and Nevada, to name a few. THC beverages readily available in those states include, among others, Cann, Nectr and Tomato Jane. Should New Jersey and New York permit THC beverages, the demand for and corresponding growth of those products will skyrocket given the size of these markets.
Similarly, hemp regulations in the vast majority of states do not explicitly prohibit the use of hemp-derived CBD in beverages. As such, CBD-infused beverages are being sold in many states, including Arizona, Florida, Pennsylvania and Tennessee. CBD beverages readily available in those states include, among others, Recess Sparkling Water, Pure Craft CBD Nano Water and Wyld CBD Sparkling Water.
Notwithstanding their recent proliferation, the ongoing federal prohibition of marijuana and FDA’s current stance that CBD is not permitted in beverages under the Federal Food, Drug and Cosmetic Act (FDCA) are slowing the emergence of cannabis-infused beverages as a major segment of the U.S. beverage market. However, changes to the federal cannabis regulatory landscape are inevitable, as new states are legalizing cannabis for adult and medical use every year—and public approval for legal cannabis is overwhelming and undeniable.
Below are a few issues stakeholders in the beverage industry are thinking about as they consider expanding their product lines to include THC and CBD as ingredients.
Given its psychoactive effect, undeniably the amount of THC in a beverage should be measurable and limited so that consumers can safely ingest these products and obtain the experience they are seeking. This means that a serving size of a beverage might have a THC limit, as well as a total container limit. Popular THC serving-size limits in edibles and similar products include 5 mg and 10 mg, and those could likely be applied to THC beverages, resulting in a total container limit based on the container size and number of servings.
Editor’s note: To continue reading this article, click the link to access the “Breakthroughs in sports nutrition RTD beverages” digital magazine, and select “Cannabis-infused beverages are going to be huge” from the TOC.
Seth Goldberg is a partner at Duane Morris LLP, and serves as team lead for the Duane Morris Cannabis Industry group.
Jessica Linse is an associate at Duane Morris LLP.
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