cbd
Companies large and small reap rewards of hemp reclassification and new cannabinoid discoveries
By: Stephanie Ramirez
“I would say that our company had a massive part in bringing about the federal legislation in 2018 that changed the Farm Bill.” Blake Schroeder, CEO, Kannaway
“We make it easy to customize your core nutrition, and CBD has just been one of those things that has been a great fit.” Ryan Montgomery, CEO, Reliv
According to a recent Direct Selling Association (DSA) consumer trends study, the health and wellness marketplace is changing rapidly. Direct sellers must continuously raise their own bar with a consistent flow of new products and communications to meet consumer demand for the latest natural compounds and plant derivatives. The rising implementation of new product lines mirrors the latest technological advancements in agriculture and chemistry.
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Important rulings and votes affecting the channel draw near
In this month’s issue, we continue our commitment to keeping you up to date on the maneuverings of regulatory agencies that set the boundaries, standards and rules by which our channel must abide.
With the assistance of the most experienced legal minds in the direct selling sector, it is my objective to break down important legislative and regulatory news into concise and informative updates so that you can stay ahead of the curve on these complex matters.
PEOPLE ON THE MOVE – March
Ryan Napierski, Nu Skin
Nu Skin Enterprises has named Ryan Napierski as president and CEO. Napierski, who currently serves as the company’s president, will succeed Ritch Wood upon his retirement Sept. 1. Napierski also will presumably replace Wood on the board of directors later this year. Napierski has spent his 25-year career with Nu Skin.
The USDA’s Agricultural Marketing Service (AMS) has released the “final rule for the domestic production of hemp,” as mandated by the 2018 Farm Bill legalizing the crop. Effective March 22, the new rule will make it easier for growers to produce the commodity without running afoul of federal regulations. Previously banned from growing hemp, Native American farmers will now be able to grow the crop on reservations. Furthermore, the “negligence threshold” for THC content is raised from 0.5 percent to 1.0 percent, and the testing window has been increased from 15 days to 30 days. Hemp farmers and CBD advocates are hailing these new rules as a victory.
Change is the one thing we can always count on
“The only constant is change,” said Greek philosopher Heraclitus about 2,470 years ago. Wise words that capture the reality of our times.
For the upcoming year, there are many changes we are wondering about in our channel: Will the new administration encourage more regulation of direct selling companies via the Federal Trade Commission or other regulatory bodies?
How will the pandemic influence in-person gatherings and person-to-person selling in the coming months?
Will the vaccine allow us to “get back to normal?” What is normal?
2020 to see issues stay at forefront; comp plan changes most urgent
By Teresa Craighead
What’s on the horizon for direct sellers at the beginning of 2020? Three issues that appear to stand above the rest are the growing regulations around the exploding CBD market, the direction and manner of Federal Trade Commission (FTC) scrutiny and where it will next focus, and the most problematic elements of complicated compensation plans.
CBD Regulations
The Federal Drug Administration (FDA) is struggling to develop regulations and guidance amdist the exploding demand for products containing cannabidiol (CBD).
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Continuing to address treatment claims made by CBD companies, the FTC has announced it sent warning letters to three companies. Regulators have not revealed the identities of the CBD companies that received the warnings, though the agency has revealed the substance of the warning letters which include an explanation that it is illegal to advertise a product that can prevent or cure a disease without reliable scientific evidence to back up the claims. The agency reported that the claims made by the companies included such terms as “works like magic” and that the products relieved pain better than prescription opioid painkillers. One of the companies had made claims that its product was clinically proven to treat diseases such as Alzheimers and schizophrenia. The FTC has asked the companies to notify the agency of the actions they have taken to remedy these concerns.
Are you paying enough attention to Gen Z? You should.
The exploding CBD market, in many ways, has created great energy in the direct selling space with a number of companies enjoying explosive growth.
The health and wellness sector of direct selling has been the largest category worldwide for a number years and it appears the addition of CBD products will help keep it there.
The market demand for CBD products, both inside and outside direct selling, has outstripped anything in recent memory, and estimates have it pegged for a 40 times increase in just a few years.
That high market demand, however, has regulators and some health care officials concerned about safety issues as well as unsubstantiated claims. Not to mention it’s still actually federally illegal to add CBD to food products.
That illegality certainly isn’t stopping much of anybody from doing just that however; CBD-infused food and beverages are popping up literally everywhere. Even CVS and Walgreens have announced plans to start carrying some CBD products.
Our cover story addresses these issues: Though concerned, both Congress and the FDA seem to be willing to work out the legal issues surrounding CBD-infused food and drink in a manner that both protects the public and gives rein to this growing industry.
As the research progresses and more becomes known about ingestible CBD, regulation will be sure to follow.
It’s a sure bet the emerging Gen Z, with their substantial $44 billion in buying power, will be interested in the CBD market. Our Special Report this month takes a look into their interests, keen desire for authenticity, and their buying habits.
Gen Zers are tagged as those born between the mid-1990’s and the early 2000’s (often cited as 1995 through 2012) which makes them currently between 7 and 24. They represent roughly 40 percent of American consumers.
If it feels to you that you still have plenty of time to focus your technology and marketing strategies on this group without falling behind, consider that many companies are just now figuring out how to market to millennials, and the oldest people in that group are now nearly 40. In other words, it’s too late.
Our exclusive infographic—The Optics, page 16—provides you with a handy summary of this generation’s attributes, styles, work preferences and motivations. Take a look and start honing your Gen Z strategy today.