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UK's CBD market faces reckoning

·3-min read
CBD Oil is displayed at The Cannabis World Congress & Business Exposition (CWCBExpo) trade show in New York City, New York, U.S., May 30, 2019. REUTERS/Mike Segar
The move to regulate CBD is part of a bid to crack down on mislabeling and deal with concerns about the contents of some products on the market. Photo: REUTERS/Mike Segar

The UK CBD market will be holding its breath this week as tough new rules aimed at regulating the food supplement come into force.

Consideration for products to be branded with "novel food" status must be submitted to the Food Standards Agency (FSA) by Wednesday next week.

The move to regulate the substance is part of a bid to crack down on mislabeling and deal with concerns about the contents of some products on the market.

The market has boomed over the course of the last year, seeing a 50% increase. Nearly 8 million people have bought CBD-laced products since March 2020.

It is thought to be a £450m market, however lack of information on the contents of products continues to be an issue.

READ MORE: Coronavirus: Majority of small businesses used personal money to stay afloat last year

Globally, the legal cannabis market is estimated to be worth $17.5bn but forecast to grow to $65bn by 2027.

FSA chief executive Emily Miles said that the industry is not yet compliant with the law and the products all need to go through a food safety assessment.

She said in comments reported by Sky News: "We want to bring the industry into compliance. We've had over 200 applications so we think the market is working to bring their products into compliance.

"What we've said to businesses is they need to be compliant by end of this month. After that they will go through an assessment process.

"But any business that doesn't have that application in needs to withdraw their products from sale by 31 March. It's important to the consumer that these products are safe and that they are what they say they are."

There have been some major developments in the UK's cannabis product sector this year already. In February, Kanabo (KNB.L) was the first cannabis business to IPO on the London Stock Exchange. Its shares jumped on entry and have been trading steadily ever since.

READ MORE: London could be centre of Europe's cannabis economy, says vape CEO

The UK's financial watchdog last year cleared the way for legal weed businesses to join the market.

Watch: CBD market 'not yet compliant' with the law - and tough new rules will soon come into force

The firm makes vaporised marijuana pods and inhalers for medicinal use. The Israeli company also makes CBD products for the "wellness" market.

It is the second cannabis stock to be traded in London, after Australia's MGC Pharmaceuticals dual listed its shares on the market earlier in February.

Kanabo's raised £6m ($8.3m) in the IPO but the fundraising was 300% oversubscribed due to strong demand among investors, chief executive Avihu Tamir told Yahoo Finance UK in a recent interview.