AFTER cumulatively spending tens of millions of pounds on Novel Food compliance many UK CBD companies may be left feeling frustrated come the end of March deadline.
On April 1. the much-touted and controversial Novel Food rules come into place for businesses in the CBD supply chain.
The majority of the 750 UK CBD brands currently in the marketplace are understood to be in the process of securing compliance.
But, the big issue for the industry now is whether regulators – the Food Standards Agency (FSA) and Trading Standards – have the capacity to sanction those who haven’t.
‘CBD Is Not A Novel Food‘
One Northern England ‘cottage’ CBD company with thousands of followers and customers through its social media channels demonstrates the nature of the problem regulators face.
Approached by BusinessCann, it said it had no intention of applying for Novel Food Authorisation.
It says its two-year-old, whole plant, ethanol extraction facility is compliant after securing a Five-Star rating under the country’s ‘score on the doors’ food-hygiene rating scheme.
And, that whole plant extracts are not novel as they were used before 1997 – the regulators cut-off date for a Novel Food. (A challenge on this point is imminent in The European Union).
Peter Reynolds, of cannabis trade group CannaPro, likewise contends that whole plant extracts pre-date Novel Food rules and has suggested businesses should sell their CBD products as whole-plant hemp extracts to circumvent the new rules.
‘We’ll Push Back Hard’
He told BusinessCann: “I expect that come April 1 there will be some suppliers who are unfortunate enough to get picked on.
“If they are CannaPro certified we are on standby to step-in and push back hard with lawyer back-up if necessary. We’ve already had a few who have jumped the gun but they have backed down quite easily once we started to quote law and consequences at them.”
A recent survey of members of the Cannabis Trades Association reported reluctance amongst some members to comply with the Novel Food pathway.
The Association for the Cannabinoid Industry (ACI) is taking forward a Novel Food application on behalf of almost 20 of its members.
Steve Moore, of the ACI, says it will be lobbying for strict enforcement against any recalcitrants.
He said: “We are all over this in every regard. There are business in the UK who say they do not intend to invest in food standards and data but instead intend to continue to sell their product after March 31, 2021.
‘We Will Not Be Passive’
“As far was we are concerned we will do everything we can to represent the interest of the companies we represent; the ones that have invested in food safety.
“We will not be passive on this; we will engage constant dialogue with the FSA, trading standards, the retail community and make sure that consumers are aware of the regulations.
“One of our roles is to act as a conduit for companies to become compliant, something that would be uncontroversial in any other food safety context.”
Policing the market from April onwards is the responsibility of the FSA and the Trading Standards departments of over 350-plus Local authorities in England and Wales.
An FSA spokesperson told BusinessCann: “Local authorities are responsible for the day to day enforcement of food law. The FSA issues guidance to provide support and direction, but ultimately it is for local authorities to make specific enforcement decisions based on the facts of individual cases and circumstances.
“Local authorities already have the powers to enforce novel food regulations, including for CBD.”
The FSA says it will publish a list validated applications in April, as a source material for enforcement.
‘Not Enough Enforcement Bandwidth’
BusinessCann has approached the Trading Standards Institute on a number of occasions for comments on this but has yet to secure a response.
But, it is no secret that cash-strapped local authorities will struggle to find the bodies to deliver any concerted enforcement action.
Clifton Flack, of UK CBD company CiiTECH, believes there is not the bandwidth within local authorities to enforce the Novel Food across the independent High Street retail space.
He added: “However, the main High Street retailers such as Boots will closely adhere to the Novel Food standards and are already taking steps to do so.”
With Covid-19 forcing the closure of many High street CBD retailers he believes Trading Standards teams will find it more effective to clampdown on the on-line retailers.
Although this could also prove difficult to enforce as once a website is forced to close there is nothing to prevent it from re-starting under a different guise, leading to an ongoing game of Whac-A-Mole for regulators.
‘Industry Will Police Itself’
Gavin Ogilvie is Founder and MD of Manchester wholesale CBD business Always Pure Organics, which has spent almost £450,000 on its Novel Food applications. He believes the industry will need to police itself.
He said: “Under Covid restrictions I cannot see Trading Standards sending out enforcement teams, come April. They also haven’t the money or time, and the government is too busy with Brexit and Covid to exert any pressure from above.
“Companies, such as ourselves, will follow the regulated path and the pressure will mount on others to comply. There will come a time when it is no longer commercially viable to be naughty, any more.”
However, he foresees ways of circumventing the rules for importers of wholesale CBD for the food supplement market by declaring these products as being destined for the cosmetics market which is not subject to Novel Food.
He believes one way of delivering a complaint industry will be through payment providers such as Visa and MasterCard.
Payment And Insurance Companies May Step Up
This was also highlighted by Matt Lawson of The Canna Consultants who believes this will also apply to business insurance.
“The insurance underwriters are already aware of the looming Novel Food changes and may withhold public liability insurance from non-compliant companies which could have serious implications for such businesses,” he said.
One of the leading payment providers in the UK CBD industry is Worldnet.
To secure access to its payment services then a CBD company must provide a Certificate of Analysis for its products which demonstrate levels of THC below 0.2%.
A spokesperson told BusinessCann that ‘it would not be requiring evidence of Novel Food validation come April 1, but it was monitoring the situation on an on-going basis’.
The need for business to secure Novel Food authorisation became necessary following an FSA announcement in February last year.
Justify The New Rules
It said it expected CBD companies who want to remain on the market to register for Novel Food Authorisation and to have their applications validated by April 1.
Mr Moore is adamant that come April 1 those businesses who have not secured Novel Food authorisation must be held to account.
He added: “Those who have not chosen to invest in food safety will have to be answerable after March 31 as to why they are selling and breaching food safety standards.”
Steve Oilver, of The Canna Consultants, said: “There will have to be enforcement to justify this whole Novel Food deadline. The FSA has powers itself to prosecute – they are not toothless.
“At one end of the scale you have companies touting medical claims for CBD products they have made in their garage and at the other end, many professional businesses who have spent tens of thousands of pounds; they will have a good right to think the former will be the first port of call for enforcement.”
What Does Enforcement Look Like?
The FSA has a set of enforcement guidelines to assist Trading Standards in taking action against businesses which fall foul of the Novel Food regulations.
This will normally start with advice and guidance, escalating to a written warning and then on to improvement and stop notices, possible stock seizures and eventually prosecution.