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Wine And Spirits Wholesalers Eye CBD Beverages, But Await TTB Guidance

June 25, 2019

With the CBD market exploding in the U.S., wine and spirits wholesalers are seeing interest from their customers around CBD-infused beverages. But while some major players—namely Southern Glazer’s and Breakthru Beverage—are already active in the cannabis category in Canada, they say they need further guidance from the Alcohol and Tobacco Tax and Trade Bureau (TTB) before moving forward with CBD drinks in the U.S.

Dawson Hobbs, SVP of government affairs at the Wine & Spirits Wholesalers of America (WSWA), says distributors have been receiving inquiries about CBD drinks from retailers eager to capitalize on the boom. “Many of our members have been asked by their customers about carrying them, but until there’s TTB guidance that clarifies that their permit won’t be at risk, it’s very difficult for them to get into it,” said Hobbs, speaking at the recent Bar Convent event in Brooklyn.

Indeed, the murky legal status of CBD-infused ingestible products has become one of the more significant growing pains for the cannabis and hemp industry. “We’re in a big gray moment in time,” noted Smoke Wallin, chairman of producer and distributor Vertical Cos. “As a producer, we have brands we want to roll out, and we want to have clear rules and a regulatory scheme that we can all follow. But that’s missing right now.”

It’s not only the TTB that has yet to give a green light to CBD beverages. While the 2018 Farm Bill legalized commercial production of hemp, resulting in a torrent of new CBD products, CBD isn’t permitted to be sold as a dietary supplement under FDA rules, nor are CBD-infused ingestibles allowed to be sold across state lines. The FDA recently held a public hearing on that issue, convening industry participants, scientists, and others to discuss possible next steps as it looks to evaluate and regulate a category that holds vast growth potential moving forward.

Hobbs sees a federal legalization push as the moment to intensify the debate about modeling the cannabis and CBD markets along the lines of beverage alcohol, although he doubts a broad legalization bill will pass in the next two years. “No state has a true three-tier system right now,” he said. “But once you get to interstate commerce, you need a safe, reliable, traceable distribution tier. When you think about how the government regulates alcohol, suppliers and wholesalers are licensed federally and retailers are licensed at the state level. You can foresee a similar situation for cannabis, where you have cultivation in large plots for mass-produced cannabis products that need to be distributed.”—Daniel Marsteller

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