Jason Mitchell, board-certified naturopathic doctor, co-founder and CEO of HempFusion Wellness Inc, dives into the world of cannabinoids and what's on the horizon for CBD.
Mitchell: Well, it’s funny, the mere fact that people are having a problem pronouncing it and remembering what the letters are, is indicative of the fact that the education level needs to increase for sure. We need to do our part as companies and as experts in the industry to help people understand truly what this amazing system is all about.
So, what it is, is a collection of receptors that are located throughout the entire body. In fact, they're involved in every biological system inside the entire body. And it's been defined as a regulatory system - sort of a system that's primary goal is to help respond to things that occur in the body and help to restore and maintain a sense of balance or homeostasis.
If you can think about it, if we're feeling a little stressed, this endocannabinoid system can respond to those internal reactions to say, we'd like to calm this person down to help balance things out again. It's not to suggest that it's drug-like in any way, but it's the body's own natural biological system that helps to keep order.
It's really kind of neat, you know, and so that's why when you research it, you find, wow, it does this and it does this and it does that – well, because it's involved in virtually every biological system in the body.
Mitchell: Okay, so currently right now, the endocannabinoid system is something inside of our body that creates its own cannabinoids. But then in hemp, or cannabis, hemp, they've identified that there's roughly about 100 or more different cannabinoids that are currently identified.
When you hear the word isolate, that means that they have taken hemp, they've extracted out the CBD and isolated it to such a high level of refinement, that there are no other constituents involved. Now, that particular type of process means that you get only CBD. So that means if you can benefit from CBD, fine, but you may not actually get the full benefit of what is actually in the plant.
And the reason why I say this is there is a term that has come to be known as the “entourage effect,” which means not only CBD, but all of these other cannabinoids - they've been noted as minor cannabinoids - however, I believe they are not minor at all. They may be minor in quantity, but not minor in effect. They still need to be studied and understood even better than they are today. But there are cannabinoids like CBG and CBC and CBDV and so many others.
Now when you hear the term full spectrum, full spectrum should mean that you have a wide array of all these cannabinoids, including CBD. Our industry has adopted the term full spectrum to mean that is if it has CBD in some of these other “minor cannabinoids,” as long as the THC level is less than point 3%, which is the legally stiff stipulated level, then it is considered full spectrum.
The term broad spectrum is very similar to full spectrum with the exception that the THC level would fall below a detectable level. Now, for us, our level of detection is less than .01%. That means it has to be 3 decibels to the left from a testing level which means we try to, without destroying the integrity of this oil, so that it has not only CBD, but all of these others, quote unquote minor cannabinoids, flavonoids, terpenes, all these other wonderful constituents that do work together in that entourage effect. But without the one that everybody is looking at as controversial, which is the Delta-9 THC or the one that creates the psychoactive side of things. So we try to minimize that to an exponential level, qualifying as broad spectrum so that people can have all of the things they want and hopefully having the least amount of the things that they are trying to avoid at the time.
In 2019, the Gallup poll that was put out there said roughly about 14% of Americans were using CBD. And if you were to look at the list of the reasons why, and you were to pull together the things that are all associated with the number 1 reason, you would have about 57% of people using it for pain.
Now, the #2 reason was for stress, and the #3 reason is for sleep. Now after that, there is a very small percentage of people that are broken up into a number of other categories that would round out the top 10 which would include things like digestive challenges and so on. So if you were to fast forward to 2020, which we only just recently passed, even though some of us are really happy that it's passed, and that we're moving into a new year, a recent poll, not a Gallup poll, but a new one said that about a third of America is now using a product that contains CBD. But the reasons for use are exactly the same.
Mitchell: So if you were to look at history and go back to where we began, this industry, and yes, pun intended, budded out of something that was once criminal or illegal.
And so, because of that, whether you fall on the side of believing it was properly illegal, or unfortunately villainized for all the wrong reasons - I fall on, it was villainized for all the wrong reasons side - but regardless, there were there were challenges in and around the legality.
Everybody thought that if the passing of the Farm Bill removing hemp from the Controlled Substances Act would happen, that all the problems are over, it'd be smooth sailing. But what many forgot was that the FDA still has oversight on dietary supplements, food, beverage, cosmetics, and other. And there are rules and stipulations on how to actually decide what goes in these products.
And there are 2 primary reasons why there is conflict within the FDA. And it isn't because they want to be tyrannical in what they control. It really isn't. There are just simply rules. So when the 2018 Farm Bill passed, yes, it did remove it from the Controlled Substances Act. It did open up an ability for farmers in the United States to be more involved in cannabis or hemp. The challenge is they were growing all of this hemp almost immediately. But then, with the comments from the FDA saying, we still consider it illegal to be used in dietary supplements, food or beverage, it's still presented a lot of challenges, because what they were growing, they couldn't sell. So those are big challenges.
The main issues for the FDA are 2 primary issues, but believe me, there's far more than that. One is, is what is being sold a drug? Because there is something called the investigational new drug (IND) preclusion. So if a drug or a pharmaceutical company were to file what is called an IND, which is an investigative new drug, what is being studied for use medically as a drug cannot also be sold as a dietary supplement or a food additive. Because then what essentially is on the market then would be a drug, they can't they don't allow that.
However, the second item is that if this is being sold as a dietary supplement, and it's not a drug, is it safe? And to be honest, I think both of those requests by the FDA are more than reasonable. Because 1, they shouldn't be selling something in the private sector as a supplemental care item if it's also being sold as a drug, thereby not having some sort of controls as to what's the difference, and to have certain care that may be required for monitoring the use of something like this by doctors, especially if it's high quantity use and things that nature.
But as far as safety companies like ourselves, it is our responsibility to do what is necessary to show that things we use in our products and the products assembled are actually safe for human consumption. And so that's a very big deal. The challenge that we have is the FDA has not provided any clear guidance to any of this.
Now that I think is unfair. I think that they should be swift to act in providing necessary guidance, because there are rules called the Code of Federal Regulations (CFR). And there are manufacturing stipulations called CGMP is also known as 21 CFR Part 111, Part 117. That basically tells you how things are to be manufactured. And then there's also DSHEA, which is Dietary Supplement Health and Education Act and the Food and Drug Cosmetic Act, all of which tell you how you can market and what you can or cannot sell. All the rules exist.
So, people that are waiting for this brand-new set of rules, they ought to think twice I think what's really going to happen is they're going to have to do what is required to verify that it's okay to use this in a dietary supplement food or beverage. And so that's really important. So those are the main issues right now. And I believe that the FDA has a right to ask for safety data, and us as companies have an obligation to provide it.
Mitchell: A lot of what's going on right now is that you have some challenges with marketing products that contain CBD due to the lack of guidance from the FDA, or I should say, clarity. And it isn't just the FDA in the United States, it's the global community at large because there is an incredibly high interest in products that contain CBD. However, there's a very low threshold of risks that these bigger retailers or platforms are willing to take.
And so, if you were to look at where the largest market exists for CBD is online, you cannot use the same marketing tactics that you would with any other consumer packaged goods marketed online, you have to use very alternative tactics. And those tactics are very expensive because you're not allowed to market in a traditional sense on Google, you're not allowed to participate selling things on Amazon, you're not allowed on the platforms like Instagram and Facebook to do and market as you would to reach your consumers. And so, it's very costly, and the return on investment, or return on advertising spend, is quite a bit higher.
And so relying on, I would say industry advocates or doctors and practitioners, or pharmacists or individuals to educate the consumer is kind of like what you have to do when it comes to the retail community. Because even though these patients or customers are seeing their doctors or pharmacists or professionals, it's that type of guidance that becomes incredibly valuable.
Now, there is something really good happening. And that is, what used to be called HR 8179 has changed its name to HR 841. It's sitting in front of Congress with over 20 co-sponsors in Congress. And it is a bill that, if passed, will compel the FDA to provide their guidance and clarity in a timely fashion, which I think will basically pull the band aid off, right? It's not that it's not going to sting or create challenges for many companies that are not prepared, but at least we know. It's guidance.
Now additionally, while we have this lack of clarity, there is a tremendous amount of patchwork that's happening from state to state, that all these different states realize that this is a market they're interested in. They see the value for the consumer and the consumer demands access. And so, as a result, state legislators have to then put together their own set of regulations, which can be very daunting and very confusing, because from state to state, you can have vast differences in labeling, registration, licensure, all types of different requirements that unfortunately, make it very difficult for a company like us to succeed. However, we as a company believe in doing it right, even if it means not always right away. I jokingly say that if patience was a currency, I'd be a billionaire, right? We take a very patient and correct path so that we are always doing it correctly. No matter what the state regulation is, we adopt it immediately.
Mitchell: One of the things that you can look at from a packaging perspective are 2 primary things. One, you want to look for the US Hemp Authority Certification seal. And the reason why I say that is third party institutions have been set up to evaluate companies that are selling hemp derived products to verify that, in fact, the products are being manufactured and tested correctly. Now, that means it is a third-party audit. There is nobody that gains financially from that to be deceptive. It's a third-party industry created self-governing agency that goes out and basically reviews companies. We were one of the first 13 companies to be evaluated and granted the seal, so we feel very, very proud about that. Because we always strive to make sure that our standards extremely high.
Now you can also look for a QR code. And the QR code is something you can use the camera of your phone or an app to activate and it takes you to a landing page within anyone's website. And it basically lands on a page that you can enter the lock code that is found usually on the bottom of a box or bottle, and it will take you to the third-party testing that reviews everything about that product. Not only how much CBD or other cannabinoids it contains, or terpenes, but also does it contain residual solvents that could be harmful pesticides, herbicides that also can be challenging, heavy metals, all sorts of different testing that a consumer should have access to. And so we think that's an incredibly important.
Another thing that someone might ask if they were to contact the company is that, where's the hemp coming from? That's a really important thing because our hemp is exclusively grown in Europe and it is EU Commission registered heirloom hemp strains meaning it has never been a hybrid of marijuana, which is more common here in the United States because we had a very budding illegal marijuana business, but we didn't have a developed hemp industry yet. I think that in years coming we will have that but right now the Europeans are by far and away the experts. They've been doing it for over 100 years commercially. Everything that we have is DNA verified. That means it is not some sort of unique hybrid to all of a sudden genetically alter or do some change to the plant to have a high level of CBD excluding all others. We actually use heirloom strains that have been around for hundreds of years.
You also want to ask the company, have you done safety studies? Have you done toxicology studies to verify that what you're putting in our products are safe? For us, the answer is absolutely yes. You also want to make sure that if a company is making a disease state claim, saying it'll cure your anxiety, or cure insomnia, or help you deal with cancer, or all these different things, know that what they're doing is not only illegal, but also absolutely irresponsible. And I can with an almost 100% certainty guarantee you that the company has done no research to verify that their products will actually deliver those results. And so by that virtue, you get a sense of false hope.
For me, I would tell people, there is a lot of research that still needs to be done, but in order to market a dietary supplement, a cosmetic a food or beverage, you are restricted, it's relegated to a very specific types of claims, known as structure function claims. And so you want to go to the companies that are making responsible claims, if in fact, they have science to back up what they're doing. And like our products that have sleep or stress, those aren't disease states, but those are structure function claims. And we have created our formulas scientifically to match the claim that we provide.
Mitchell: Where do I see it going? First of all, I think that while everybody wants to try to focus on innovation and look for very unique delivery methods and all these things, what's going to be the innovative first step is finding clarity within the federal legislative body, within the FDA, and finding clarity on what we can or cannot do so that we as companies can establish the proper regulatory framework that from here, we can then branch out and in develop all of these innovative steps. I think that is innovative in its own right, because if you look at any pseudo regulated market or regulated market, look at tobacco and alcohol and things that have happened in the past that where alcohol was prohibited, and then it's not. But look at all the regulations that alcohol is under, I'm not comparing that to hemp. But I'm just saying that in a regulated space, you have to look that once you have a proper framework, you know the rules, then you can live within them.
Hemp just happens to be one of those wonderful plants that has so many great values that I think once the proper regulatory framework is there, companies like ourselves can expand and build properly. And so that's really important. If I was a guessing person - in the last couple of years, I would have never been able to put a date on it. But I believe that in within the next 4 to 6 months, we will have a tremendous amount of clarity, either imposed by Congress, or willingly provided by the FDA. That's what I'm guessing, I could be completely wrong. But I do believe that we certainly before the end of the year.
Mitchell: Absolutely. Over the last 24 months, we've actually been participating, along with our supply chain partners, to walk through and perform all the necessary toxicology studies in accordance with the FDA 2000 Redbook Guidelines for something called self gras or GRAS affirmation, and that’s with 1 “s” not 2 - it's generally recognized as safe, which lays out a series of protocols that you have to go through for specific toxicology studies that have to be performed and reviewed by pathologists and experts, and peer reviewed and then published showing that what you have has no observed adverse effect on a person consuming it, meaning it's safe. And that's a really important part.
We also participated last year in with Validcare, one of the co-sponsors and co-founders of what is now being thought as the largest human observational liver and reproductive toxicology study that's ever been done on CBD. And we believe that that study was crucial. We were one of the first ones to sign up and try to encourage other brands to get involved. Because what it's going to reveal is show that in the real-world use of CBD that it is in fact safe. And that there aren’t these major concerns.
In fact, this was a major request by the FDA. In fact, the FDA had communications regularly with Validcare. And it's what drove a lot of the decisions on how the study was done. Well, I'm glad to tell you the study is not only complete, the results are in and the final reports are out hopefully this month for people to see openly, so we're very excited about that.
Now, in addition to that, we do a 50-state survey constantly as it relates to the legal details in and around the state nuances that I described a few minutes ago, so that we always know what is updating in each state. What are the new regulatory challenges, such as right now the state of Iowa and New York and also California recently - all have introduced new things related to hemp and so we are adhering to all of them.
Now we also participate in what we consider one of the most important industry advocate-based associations, which is the US Hemp Roundtable. In fact, I sit on the legal and science committee for the US Hemp Roundtable, but our chief marketing officer is not only the president of the US Hemp Roundtable and the first female president, but she's also the only 2-term president that's ever existed on the US Hemp Roundtable, so we're very proud of her because she's an unbelievable leader. And she's actually had a lot of experience in advocacy having worked in Washington DC during the time when the American Disabilities Act was being worked on and so on so she’s just a really amazing human being.
Some of the other things we're doing as it relates to formulation and innovation is that we're trying to create products that people are interested in, products that actually work, products that actually have the right messaging, the right formulation and the right pricing. One of which was our most recent introductions into OTC drug listed products. Yhese products are actually using drug monographed improved ingredients for things like menthol for pain or colloidal oatmeal for eczema, bacitracin zinc for wound healing, or salicylic acid for acne and so on. And we use a wonderfully innovative created skin nourishing blend that includes hemp, hemp derived CBD, shea butter, aloe vera, so many other wonderful ingredients. And these products are built to address very specifically those items. And because they are listed on the FDA Drug Risk Registry as drugs, they have NDC numbers, so you can make drug claims for OTC self-care means as long as they are manufactured and validated correctly. And we're one of the select few companies that have done that. And we're working on a lot of other wonderful things coming soon.
Mitchell: So what it's going to mean for retailers is they're now finally going to have the ability to, without the assumed risk they would have to participate in now, they would be able to move their businesses forward, create a category around a meaningful category that meets the consumer demand. But they no longer have to take the risk of risking the sale of milk, bread, butter, condiments, commodities, things that consumers need on a daily basis, all to try to create a new category. They will have clarity for themselves and feel strong about how they advertise what products they choose. This clarity will also give them a guidance as to the companies they should be doing business with. The ones that have done it correctly. Like I said earlier, it's always best to do it right, and it doesn't always mean that it'll be right away. It's just that - doing it correctly, being conscious. As we move forward in our business, we as a company have something that it's not pure capitalism, it's called conscious capitalism. It's not only that we do it right. But we do it right by the people that work with us, the people that want to work with us the way that we associate our business, the way that we create our formulas and the responsibility and the care that we take to make sure we deliver it correctly. And make sure that we always follow the rules.