After the 2018 Farm Bill legalized the cultivation and sale of industrial hemp and its derivatives, an industry swiftly sprang up around the product. Hemp is an extremely versatile product with a wide range of applications ranging from textiles and construction to health and wellness. Cannabidiol (“CBD”), a hemp extract said to have diverse medical capabilities, has attracted the bulk of the attention, and it is predicted to achieve $1.8 billion worth of sales in 2022.
American companies are now looking to expand past the country’s border as more countries around the world launch hemp programs. But thanks to nearly a century of prohibition, the hemp space is still quite green, and countries are working on formulating regulations for the versatile crop.
American CBD brand Uncle Bud, which sells 70% of its product locally, has expanded to foreign markets and is currently distributing in France, the United Kingdom, Australia, Germany, China and New Zealand. According to cofounder Bruno Schiavi, the CBD brand had an “explosive launch” in China last year, and the Chinese market is currently its third-largest CBD beauty market after Australia, making up around 10% of its global sales.
However, recent legislative changes in China may put a damper on plans to expand into the market. Late March saw the country’s National Institute for Food and Drug Control (“NIFDC”) propose a bill that would ban CBD, cannabis Sativa seed oil, cannabis Sativa kernel fruit and cannabis Sativa leaf as ingredients in beauty products. Government efforts to regulate CBD were inevitable, Schiavi says, and he predicts that the result will be heavy regulation as well as stringent testing for cannabis products. Since most of the world’s hemp comes from Chinese farms and the country’s stock exchange has 75 publicly listed CBD companies, there is a minimal chance the country will impose an outright ban on cannabidiol.
Meanwhile, CBD skincare brand Saint Jane chose Hong Kong as its first international market outside of the United States. After a time-limited CBD pop-up quickly sold out after being launched in July 2020, the CBD brand added the line to its permanent lineup. Additionally, mainland China’s proposed ban on using cannabis products will not take effect in Hong Kong if it passes, says company founder and CEO Casey Georgeson. The CBD beauty subsegment has plenty of opportunity for growth, he says, but rapidly changing regulations will pose a challenge to international expansion.
Those challenges notwithstanding, companies such as Simply Sonoma Inc., which have built a solid reputation in the CBD beauty sector, are likely to expand their global footprint rapidly as the regulatory landscape evolves to allow such a drive.
NOTE TO INVESTORS: The latest news and updates relating to Simply Sonoma Inc. are available in the company’s newsroom at https://cnw.fm/Sonoma
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