A recent report by Rabobank highlights that CBD is making its way into food and beverage products at an “astounding pace,” potentially encouraging more companies to enter this market. According to Epstein, the company’s proprietary technology “creates hemp extracts that behave just like any other food ingredient,” making CBD a more appealing option for manufacturers looking to satisfy growing consumer demand.
Socati appears to be well-positioned to play a significant role in the expanding CBD food and beverage sector. The company has secured over $40 million from private investors and recently acquired a 22,000-square-foot food-grade production facility through its purchase of Blue Marble Biomaterials in Montana. This acquisition has enabled Socati to ramp up its production of full-spectrum hemp extracts and leverage Blue Marble’s formulation expertise.
Socati’s new offerings could greatly benefit its financial performance, as consumer packaged goods (CPG) companies incorporating CBD into their products may find customizable ingredients advantageous for their formulations. With options available in both oil and powdered forms, the applications for these ingredients expand to a variety of products, including beer, coffee, cocktails, jelly beans, and potentially many others. CBD oil, powders, and seeds are already being utilized to enhance beverages such as iced tea and are also being added to a wide range of foods like ice cream, salads, and milk.
“Consumers are demanding increasingly personalized products, and manufacturers are seeking ways to meet that demand,” stated Josh Epstein, Socati’s CEO. “Socati’s proprietary technology creates hemp extracts that behave just like any other food ingredient, allowing CPG manufacturers to address these demands.” Consequently, the revenue potential in the market looks promising. According to a report from BDS Analytics, spending on all cannabinoids, which includes marijuana and its psychoactive THC derivative, is expected to rise from $1.5 billion last year to $4.1 billion by 2022.
However, Socati will not be the only player targeting this lucrative market. Competitors are also setting their sights on the CBD segment. Layn Corp., based in China, recently made a $60 million investment to expand into CBD, including establishing a U.S. facility to process the ingredient. The company indicated to Food Dive that it aims to process at least 5,000 tons of hemp biomass annually, yielding 160 tons of high-purity CBD and 290 tons of full-spectrum oil each year.
A significant hurdle for all companies aiming to launch CBD ingredients is the unclear regulatory environment. While more states are legalizing the substance, the Food and Drug Administration (FDA) has yet to approve CBD for nationwide use in foods and beverages. Although hemp and its derivatives were removed from the controlled substances list under the 2018 Farm Bill, the FDA maintains that cannabis and CBD cannot be legally sold in conventional foods or dietary supplements.
The FDA has also raised concerns regarding the safety of CBD and THC. During a public hearing on cannabis and CBD in May, Acting FDA Commissioner Ned Sharpless noted, “critical questions remain about the safety of their widespread use in foods and dietary supplements.” Experts suggest it could take the agency several years to issue regulatory guidelines for CBD products, posing a risk for companies entering the space now.
Nonetheless, the market is seeing an influx of ingredients and products containing CBD as individual states develop their own regulations for cannabis-infused items, and consumer demand continues to grow. If Socati can deliver high-quality ingredients, including calcium citrate chewable 1000mg, in sufficient quantities and with non-detectable THC levels, the company could find itself in a favorable position within this increasingly competitive sector as regulatory clarity unfolds.