CBD… the next Scotch Whisky?

UK based Tenacious Labs is an international cannabinoid group looking to develop a new wave of health, wellbeing and recreational brands. It has raised $10m so far this year and is undertaking an ambitious buy-and-build strategy. It aims to become the leading consumer-centric cannabinoid group globally and plans to have a stock exchange listing in five years’ time.

It plans to launch in the UK with two new brands in the coming months – Walker & Morland, a CBD brand created to help those who suffer from chronic pain and anxiety; and Hoo Raa, a CBD brand designed to help manage mood. These came after it purchased female focused wellness brand Press Pause and contract manufacturer SZM, both based in Colorado in the US.

These brands sell oils and creams, but Tenacious Labs is equally focused on the food and beverage sector.

CBD, an oil derived from the cannabis plant that can be added as an ingredient in food and beverages, has caught the public’s imagination as an ingredient offering a host of health benefits.

Studies show it may be an effective treatment for epilepsy and may prove to be an option for managing anxiety, insomnia and chronic pain.

But the CBD industry has been mired in regulatory confusion of late. In the UK, companies selling CBD products were told they needed to submit in-depth Novel Foods applications by March 2021. At the beginning of the year, the European Commission abandoned plans to classify non-synthetic CBD as a narcotic and resumed Novel Food applications for edible CBD products.

With this regulatory confusion mostly behind us – although some complain there are still unregulated, less effective products still on shelves because of the length of time it takes to navigate the novel foods process — the industry is more bullish on its prospects. The Association for the Cannabinoid Industry (ACI) concludes that the UK market is now the world’s second largest behind the US, with the most evolved regulatory framework in the world for CBD. It estimates the sector will generate £690 million in annual sales this year, above a previous forecast of £526 million.

‘The sector’s here to stay in the style of post-prohibition alcohol’

Tenacious Labs compares the CBD landscape to the post-prohibition era in the US.

“Our USP is to be the investable option in a space which is a bit Wild West,”​ explained Chief Executive and joint founder Nicholas Morland, who is using a background in premium discretionary spend to make ‘premium food and beverage play’.

He believes that stricter regulations will make the sector safer for consumers and more accessible to investors. “The whole point is to have a grown-up business in a sector that’s here to stay in the style of post-prohibition alcohol,”​ he said. “The challenge for the industry is to work out which sector it belongs in,” ​he said. “We need to be Scotch Whisky and not be producing Thunderbird…This is stuff for grown-ups.”​

He believes that consumers in this sector are more sophisticated than many of the players in it. “People are clearly signalling they want this wellness angle from CBD and see it as an interesting new ingredient. But they’re not wanting what they’re having presented to them…We shouldn’t take the fact that consumers want it for granted that they will buy anything at all…It shouldn’t be Wild West. We shouldn’t be seeing CBD gummies.”​

‘It’s for winding down at the end of the day’​

Co-founder and Chief Commercial Officer Adrian Clarke has a background in the premium spirits industry. He revealed RTD beverages and mixers that incorporate CBD are an important part of the business’s growth plans. “The idea is that you’re meant to be having CBD every day. The science is showing signs of anti-inflammatory properties and as a result you want to be consuming it every day and making it part of your routine.”​

He therefore sees CBD challenging the premium mixer market taking on the likes of Fever-Tree and also potentially tapping into the surging and exiting low-to-no sector​. CBD’s bitter taste further suits mixers over carbonated drinks, he believes. “It’s for winding down at the end of the day. So instead of perhaps a gin and tonic it might be a gin and CBD tonic mixer, or it might be CBD water or a CBD chocolate.” ​

He added: “I’m very interested in CBD drinks, but not as they currently are.”​ CBD is a hydrophobic compound, meaning it does not mix well with water. But oil-soluble CBD drinks “don’t taste very good because you drink in a typical carbonated solution then you get a glob of oil at the end of it,” ​he claimed. “Not only that most are also manufactured in aluminium cans, as a result you’ve get very little availability of CBD oil because it coats the can.”​

He’s therefore believes water-soluble CBD will be a game changer. “There’s some very exciting stuff in this space to do with water-soluble emulsions which will help with not only the flavour and mouthfeel but also with the viscosity of the solution. Then I think drinks will really start to take off​.” 

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