HempRise gears up to open $80m hemp processing facility in Indiana
Clearly, the floodgates have not opened quite yet, concedes HempRise VP sales Kyle Einhorn, with the FDA still arguing that CBD is not a legal dietary ingredient as it was first investigated as a drug, leaving firms in the space to negotiate a patchwork of state regulations and look to Congress for a federal solution.
On the plus side for CBD advocates, California has just passed legislation legalizing the sale of foods, beverages, and supplements featuring hemp-derived CBD and other cannabinoids, opening up a major new market, while support is building behind HR 841, a federal bill that would make hemp-derived ingredients lawful dietary ingredients, Einhorn told FoodNavigator-USA.
“We’re just had [US Congressman] Trey Hollingsworth [R-Ind] visit the plant, and he is optimistic about HR 841; one of his tasks was to go back to Washington to educate his colleagues in regards to the economic benefits not only of hemp farming and processing in your state, but also the benefit of CBD products on the market as a whole.
"Back in July, the Consumer Brands Association wrote to the FDA to say that its stance on CBD products is not working. They [CBA members] want to get into this market, but they won’t until it’s federally legal. And Amazon still continues to not permit CBD sold on its platform.”
But he added: “I think HR 841 or similar legislation will happen long before the FDA gives a GRAS approval for hemp-derived CBD [the FDA maintains that CBD is not GRAS, and has also rejected new dietary ingredient applications from two high-profile players in the supplements arena - Charlotte's Web and Irwin Naturals - arguing that the CBD in their hemp extracts is not a legal dietary ingredient as CBD was first investigated as a drug].”
Strong interest in the beverage market
Regulatory frustrations notwithstanding, however, Einhorn insists the 100,000sq ft site in Jeffersonville – set to open later this year – is not a white elephant, and says demand for CBD-infused products continues to rise.
“There's a lot of interest in protein and energy bars as well as dietary supplements, but particularly in beverages, where we’re seeing a real increase in growth, as we’ve developed a nano emulsion that's very effective in beverages [as straight CBD oil is not water dispersible].
“From the consumer point of view, it's evident that people are looking at alternative ways to support their health and CBD is one of those areas, and when you see more tier one companies entering the market such as Molson Coors and Ocean Spray, you're going to start to see greater acceptance.”
‘Our facility is designed as a botanical extract facility’
The new HempRise facility – which will produce broad spectrum hemp extracts, CBD isolate, and water soluble CBD powder for distribution nationwide – will be able to process 8-10 million pounds of hemp a year, for use in nutraceuticals, pet products, personal care products, foods, beverages, and supplements, said Einhorn.
“We’re using 12 of the 25 acres we purchased in Indiana, and our plan is to expand later on to the additional 12 acres. The processing capability is about 8 million pounds of hemp annually, and we could go to about 15 million pounds annually.”
He added: “Our facility is designed as a botanical extract facility, and we happen to be using it for hemp extracts, but we can extract whatever we’d like to in this facility.”
‘Two years ago, CBD isolate was $5-7,000 a kilo; it’s well below $1,000 today’
Asked about pricing, he said: “On the biomass side there's still material on the market from 2020. Right now it’s prime harvest time and it’s not yet clear how the droughts affected the harvest in Oregon, so once the reports are out, we’ll have a better idea of what things looks like moving forward.
“But we're seeing hemp biomass pricing staying quite reasonable, if not going down. One of the key drivers that's pushing pricing down in the market is that there’s still no legislation governing the production of CBD, so it’s going to take either HR 841 or FDA involvement, because right now, you or I can go start up our own CBD company and go make it with ethanol and a washing machine because it's not regulated.
“Two years ago, CBD isolate was $5-7,000 a kilo; it’s well below $1,000 today.”
‘We meet the strictest requirements in the strictest states, so we don't limit the markets our customers can sell into’
While the lack of regulation at a federal level means that there are still unscrupulous players in the market, responsible companies are looking for suppliers that can deliver high-quality, consistent products that have been tested for contaminants, mold, solvents, pesticides and heavy metals, and contain what is claimed on the label, whether it’s a given amount of CBD or other cannabinoids, or the absence of detectible THC, he said.
“We look at the requirements for all the individual states that have legislation on hemp-derived CBD and meet the strictest requirements on each area, whether it’s on THC or pesticide testing or whatever, so that we have the highest purity material available and we don't limit the markets our customers can sell into. We have our own in-house lab and we use third party testing for finished products.”
As for extraction methods, he said, “We’re using a double solvent extraction process. I think the market is sometimes misled by claims people make about supercritical C02 [an alternative extraction process] as it still requires a wash [to further refine crude hemp extracts to remove waxes or chlorophyll or other unwanted components using hexane or ethanol], so there is still solvent involved. What matters is really making sure the residual solvent meets or exceeds the criteria required to sell into the market.”
Ultimately, he said, “We’re very confident that the market has the ability to grow and expand.
"But a lot of that is going to be based on getting federal legislation [to regulate CBD products] and removing the less scrupulous people in the market, and putting it into the hands of people with facilities that are designed to make CBD at a standard that is at or above the requirements for food consumption.”
According to data presented at the virtual Natural Products Expo West trade show earlier this year, sales of CBD supplements fell 6% in 2020, whereas supplement sales overall jumped 14% over the same period.
In food, SPINS data revealed a similar trend in the 52 weeks ending April 18, 2021, with an 11% drop in sales of shelf stable functional beverages with CBD, which SPINS marketing data analyst Scott Dicker noted was repeated across categories as the ingredient “recalibrates to find its new baseline” after a period of intense hype.
‘The era of CBD prohibition in the Golden State is over...’ CA governor signs hemp bill AB 45 into law
A Bill (AB 45) explicitly legalizing the sale of foods, beverages and supplements containing hemp-derived CBD in California has been signed into law by Governor Gavin Newsom.
Jonathan Eppers, founder and CEO of VYBES, which sells CBD-infused beverages and elixirs, said AB 45 represented a significant step forward for CBD brands given the size of the addressable market in California: “For the past three years, health inspectors across the state have targeted our CBD beverages and made retailers remove them from their shelves. Many retailers in California who wanted to carry VYBES decided not to, out of fear they'd get in trouble.
“We expect a lot of these retailers, some who have already reached out to us since Newsom signed AB 45 into law, to finally stock VYBES now that it's clear CBD is legal in California..."