Industry: Cannabis & Hemp
Products: CBD products
Andy Papilion, co-founder and chief product officer, and Mark Grunder, vice president of operations, say FDA regulation of the CBD industry will catalyze growth.
When co-founders Papilion and Lincoln Sorenson noticed that the majority of products in the early CBD marketplace were vastly overpriced, they recognized an unsatisfied need. "We had started a logistics company in the cannabis and hemp space, so we already understood the supply chain," Papilion recalls. "We wanted to get CBD products into the hands of the people who needed them at a price they could afford."
Determined to provide consumers with high-quality, affordable CBD products derived from U.S.-grown hemp, the pair launched a website for CBDistillery in late 2016. Since then, the company has grown to serve over 1 million customers. Its 20,000-square-foot manufacturing and distribution center in Sheridan, Colorado, built in 2019, facilitates over 300,000 shipments annually and has the capacity to produce upwards of 30,000 tinctures a day.
"Our bestsellers by far are our tinctures," says Grunder. "Particularly the full spectrum variety. They have the widest variety of cannabinoids and are very popular with our customer base." He notes that the company's soft gels and gummies are also big sellers. Other CBD products manufactured and sold by CBDistillery include isolates, topicals, vapes, and pet-strength tinctures.
Papilion says that the company's commitment to full transparency from seed to sale is a major differentiator from other CBD product manufacturers. "We have a QR code on all of our products," he explains. "The end consumer can go onto the QR website, type in the batch code, and it will bring up full panel test results for the exact batch of product they are consuming."
Grunder adds that testing is performed by third-party labs. "All of our manufacturing for ingestible products is controlled here in the Sheridan facility," he continues. "We have incoming inspection of all product with third-party testing before it's released into production and again before it's released to distribution."
CBDistillery is ISO 9001-certified, CGMP-certified, and certified by the U.S. Hemp Authority. Papilion says he believes that these certifications are an important tool to build trust with the consumers who purchase their products directly online or from brick and mortar shops across the country. "There are a lot of larger retailers and big-box retailers out there that are also interested in plugging these products into their lineups as soon as some regulatory uncertainty has been cleared by the FDA," he adds.
Challenges: CBDistillery grew 40 percent year-over-year in 2019 despite the continued challenge presented by lack of federal regulation. "A lot of brands are out there making inaccurate claims about their products," Papilion says. "We've seen things from CBD pillows to bath bombs and all sorts of different types of products where CBD is just being used as a buzzword. We want some clarity [from the FDA] around that so [the industry] can regain trust from the end consumers."
Papilion notes that if the FDA classifies CBD as a dietary supplement, "it will open a lot more channels for us. If that occurs, we could potentially see growth up near 80 percent this year."
Opportunities: Grunder says CBDistillery's biggest opportunity is consumer education. "We'll continue to educate consumers about what effective CBD is and what it can do for them," he says. "It's about getting the real information out there and keeping the hype out. It doesn't help any of us or the industry as a whole to have people making false claims about what CBD will do."
Papilion adds that the company's research has shown that 50 to 60 percent of end consumers still don't understand the difference between hemp-derived CBD products and marijuana products. "We're out to continue that education and we hope that the FDA will step in and provide some guidance and clarity that will ultimately lead to the end consumer trying more of these products," he says.
Needs: "We need concise, clear regulation that will keep us all on an even playing field," says Grunder.