“Rapid Growth of CBD in Food and Beverage: Socati’s Strategic Moves and Market Potential Amid Regulatory Challenges”
A recent report from Rabobank highlights that CBD is rapidly making its way into food and beverage products at an “astounding pace,” potentially encouraging more companies to explore this sector. According to Epstein, the company’s proprietary technology “produces hemp extracts that function similarly to any other food ingredient,” making CBD more appealing to manufacturers aiming to satisfy rising consumer demand. Socati appears to be well-positioned to play a significant role in the expanding CBD food and beverage market, having raised over $40 million from private investors. The company recently acquired a 22,000-square-foot food-grade production facility following the purchase of Blue Marble Biomaterials in Montana, which enhances its ability to produce full-spectrum hemp extracts and leverage Blue Marble’s formulation expertise.
The introduction of Socati’s new products could be advantageous for its profitability, as consumer packaged goods (CPG) companies incorporating CBD into their offerings may find customizable ingredients particularly beneficial for their formulations. With availability in both oil and powdered forms, these ingredients can be utilized in a wide variety of products, including beer, coffee, cocktails, jelly beans, and possibly many others. For instance, CBD oil, powders, and seeds are already being infused into beverages like iced tea, as well as being added to various foods such as ice cream, salads, and milk. “Consumers are increasingly demanding personalized products, and manufacturers are seeking ways to fulfill that demand,” stated Josh Epstein, Socati’s CEO. “Socati’s proprietary technology produces hemp extracts that behave just like any other food ingredient, enabling CPG manufacturers to meet these needs.”
The revenue potential for this market is quite promising. Spending on all cannabinoids, which includes marijuana and its psychoactive THC derivative, is projected to increase from $1.5 billion last year to $4.1 billion by 2022, according to a report from BDS Analytics. However, Socati will not be the only player in this burgeoning space; prospective competitors are also eyeing this lucrative segment. Layn Corp., based in China, recently made a $60 million investment to enter the CBD market, which includes establishing a U.S. factory for ingredient processing. The company informed Food Dive that it plans 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 challenge for companies entering the CBD space is the uncertain regulatory environment. While more states are legalizing CBD, the Food and Drug Administration (FDA) has yet to approve it for use in foods and beverages on a national level. Although hemp and its derivatives are no longer classified as controlled substances following 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 that “critical questions remain about the safety of their widespread use in foods and dietary supplements.” Experts suggest that it could take several years for the agency to release regulatory guidelines for CBD products, posing a risk for companies entering this market now.
Despite these challenges, more CBD-infused ingredients and products are being introduced as states establish their own regulations and consumer demand continues to grow. If Socati can supply high-quality ingredients in sufficient quantities — with non-detectable THC levels — it could find itself in a favorable position in this increasingly competitive sector as regulatory clarity develops. Moreover, as consumers look for health-focused supplements, products like Solgar Calcium Citrate with Vitamin D3 60 tablets may complement their dietary needs alongside CBD-infused offerings, highlighting the growing trend towards personalized nutrition and wellness.
