CBD and hemp derived cannabinoid products continue to garner consumer interest and support. The list of mainstream brands embracing CBD is growing across every category, including Burt’s Bees and Chantecaille in beauty, Vitamin Shoppe in nutrition, Molson Coors and Ocean Spray in beverage, and Martha Stewart in pet.
 
Today’s brands and their consumers are demanding more transparency, consistency, and product sophistication. They are also asking the question, “Why would I use the same product to focus as I do to fall asleep?” For Open Book Extracts, this means CPG and pharmaceutical-level, multi-month supplier audits, as well as stringent production process and traceability requirements. This maturation, coupled with tailwinds generated by continued safety and efficacy research, global market growth, and evangelism from CEOs and government leaders, has heralded a more robust, sustainable, mainstream cannabis industry.
 
As a vertically integrated supplier and manufacturer of cannabinoid ingredients and a research-centric organization that supports many large CPGs and MSOs in market, it is our duty to illuminate important supply chain considerations in this nascent industry. This article highlights questions you can ask your supplier to ensure they can support your long-term business needs. 
 
Ingredient Technology & Innovation
The hemp-derived cannabinoid industry’s supply chain has gone through a significant maturation process since the passing of the 2018 Farm Bill. At that time, CBD isolate was the main ingredient input utilized by formulators. Most transactions were price-driven spot buys through brokers. Supplier audits and documentation requirements were light.
 
As the supply chain has developed, the portfolio of cannabinoid ingredients has also grown. Extraction scientists and chemists have developed repeatable methods to offer broad and full spectrum distillates, certified organic ingredients, water-soluble ingredients, and minor cannabinoids—such as CBG, CBN, CBC, THCV, CBDV—at scale to support growing market demand.
 
Alongside the development of more sophisticated extraction technology for hemp-derived ingredients, there is a growing market for semi-synthetic and bioidentical, or full synthetic, production methods. These ingredient classes are not only preferred by certain nutraceutical and CPG companies due to production efficiency, formulation ability, and consistency profiles, but they can also ensure regulatory compliance in emerging markets that do not allow botanical extracts.
 

Research & Development
The cannabinoid industry is evolving from a one-cannabinoid-fits-all market to personalized optimization focused on a specific need-state for a specific consumer. We have worked with both new and existing brands to develop sophisticated form factors with elegant formulations over the last year and are encouraged this is becoming a broader theme in the industry. Research will be paramount to accelerating this evolution and, eventually, guiding the path for cannabinoids to be regulated as dietary ingredients.
 
Research takes time and money. But the interconnectedness of the global research community, the scientific advancements in biochemical and mechanistic analysis, and the overwhelming anecdotal evidence coming from CBD, as well as medical and recreational cannabis markets across the globe, will accelerate this broad-scale movement.
 
Here are the research efforts that nutraceutical companies should keep their eyes on.
 
Safety Research. Safety is the foundation for this market and the driver for both consumer trust and regulatory advancement. A couple examples of great safety research being conducted is by Validcare and the European Industrial Hemp Association (EIHA).
 

• Validcare (U.S.): Validcare’s large-scale human safety study will provide the FDA with much-needed CBD safety data. The study is designed to respond to the FDA’s repeated requests, including the agency’s Mar. 5, 2020 report to Congress, for science-based data to inform regulations for hemp-derived CBD products. This study will assess how long-term full- and broad-spectrum CBD use impacts liver safety, drowsiness, and testosterone levels, with results expected later this year.

• European Industrial Hemp Association (U.K. and Europe): The EIHA Novel Food Consortium will support the safety studies for hemp foods and extracts in the U.K. and European Union member states. Together with EIHA and other consortium members, we are creating safe and ready access to cannabinoid-based products throughout the U.K. and E.U.

 
Efficacy Research. Consumers want products that work. The market is graduating from its one-size-fits-all approach to cannabinoids and is demanding function-specific therapeutics that focus on anxiety, pain, sleep, women’s health, and skin conditions. Multi-arm-in-house-user-tests and clinical trials on minor cannabinoids are two ways OBX has become involved in collecting and advancing efficacy research. This type of research is something nutraceutical companies should keep their eyes on.
 
Enhancement Research. Many of the leading companies in this industry are now investing into a toolset that can translate in vitro study success into real-world applications. This works by modifying cannabinoids at the molecular level or combining cannabinoids with other active or inactive compounds to enhance potency, bioavailability, and stability, and enabling targeted delivery and controlled release. These enhancement research studies will not only amplify the positive impact these ingredients will have on human health, but also provide massive market opportunities in the form of proprietary formulations.
 
Exploratory Research. Can cannabinoids help treat depression, Alzheimer’s, cancer, or metabolic disorders? University researchers with labs and teams focused on specific diseases are excited to find out. There is a growing group of researchers across the globe that are excited to test cannabinoids against their fields’ most challenging problems but have had trouble gaining reliable access to consistent, pure, cannabinoid inputs. Market leaders are excited to remove this blocker to unlock the exploratory and applied research that has been limited due to input scarcity and compliance concerns.
 
Product Development
From exciting newcomers to established powerhouses, we are increasingly seeing brands seeking product and formulation differentiation. We have tracked trends in the CBD and cannabinoid-infused category since the inception of the industry and many of these themes overlay broader consumer-product trends: 
 

• Need-state-focused formulations that address consumer pain points;
• Natural, organic, and clean products that align with customer values;
• Immunity products to support growing demand for preventive therapeutics;
• Complementary ingredients like collagen, functional mushrooms, caffeine, and melatonin;
• Mental health supplements that support the growing mental health epidemic.

 
These trends will help inform the cutting-edge products for the buyers of tomorrow. Additionally, the aforementioned safety, efficacy, and enhancement research will also be critical for nutraceutical companies to utilize in product
development pipelines.
 
But the most important factor that will support companies over the long term is having the right capabilities and team in-house or through a partner that will keep your brand relevant in a rapidly evolving market. It is critical to have suppliers that can ideate, iterate, and provide pilot scale runs to accelerate from early concept to market launch.
 
Questions to Ask Your Supply Chain Partner
Many of the early adopters and CBD brands in this category have struggled through inconsistencies in the supply chain and the faltering of some of the biggest processors claiming every capability under the sun. While many of the bad actors in the industry are no longer present, it is still important to vet the best supplier for your business needs as you enter the category.
 
Here are the questions you should be asking your suppliers and contract manufacturers:
 

• Can we visit your facility? It is invaluable to see the in-house capabilities supported  by your supply chain partner.
• What experience does your team bring to the table? Whether you are looking for a partner who can support agile custom development projects or who can provide you with research-backed cutting-edge ingredients, there are inevitable challenges your teams will need to solve together. A great partner will provide you with technical expertise to complement your in-house team, as well as offer expert insights and concepts to keep your company ahead of this rapid market. The right partner will also deliver on all the right intangibles: customer-centricity, communication, honesty—qualities that are essential to long term partnership success.
• What research are you conducting? The most sophisticated organizations in the industry are making product research a strategic priority. Through research studies, your partner can work with you to develop proven formulations and products that will set you apart in a
• crowded market. 
• Can you share your safety, stability data, and product certificates of analysis? This information is table-stakes for any supplier or contract manufacturer in the industry. Be sure to ask many questions about the methods for testing and the production process.
• What types of clients do you serve? In what markets do you operate? These questions will provide insight into whether they have the experience to support your business, growth, and expansion into new markets. Learn as much as possible about their current infrastructure, including financing, to confirm if they will be a good long-term partner for your business.

 
As ingredient innovation, breakthrough research, and intelligent product development efforts continue to accelerate, we see a vibrant future for the role of cannabinoids in positively transforming human health and well-being.

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About the Author: David Neundorfer is CEO of Open Book Extracts, a foremost North Carolina-based manufacturer and product development house for the industry’s most innovative and highest quality cannabinoid-enabled ingredients. For more information: www.OpenBookExtracts.com.