FORBES: Cannabis Could Be The Most Profitable Ingredient In Skincare, If The U.S. Government Allows It

Lord Jones co-founder Cindy Capobianco describes her luxury cannabis-infused product business in much the same manner as any maker of a prestige natural skincare brand: it's made in small batches, organic ingredients, medicinal value of said ingredients. With a body lotion and face products slated for release later this year, Lord Jones is trying to be a prestige natural skincare brand. One major difference: Lord Jones employs a team of lawyers to ensure they don’t have to tussle with the DEA over a moisturizer.
 

Though cannabis is more mainstream than ever with 29 states and Washington, D.C. having legalized medical and/or recreational marijuana, the fact that it's still classified by the federal government as a Schedule I drug means companies like Lord Jones are racking up the legal fees as they attempt to navigate the grey area of selling cannabis-based skincare products. Cannabis has at least 80 different cannabinoids, a group of active compounds which give the plant its medical and psychoactive properties. Tetrahydrocannabinol (THC) might be the best-known cannabinoid for creating the “high” effect, but non-psychoactive cannabidiol (CBD) tends to be the star in cannabis-based skincare.
 

Hemp-derived CBD has been touted in several medical studies as having a myriad of health benefits ranging from treating psoriasis, atopic dermatitis, and eczema to minimizing seizures, stress, and insomnia. According to research firm Brightfield Group, the rapid-growing CBD market hit $170 million in 2017 and is projected to reach $1 billion within the next three years.
 

Capobianco and her husband Robert Rosenheck originally co-founded the Los Angeles-based company as a producer of artisan cannabis edibles, and as a response to the void in the market for upscale edibles with precise dosage. “Nothing was labeled. A cookie would be packaged in a giant plastic bag stapled shut,” says Capobianco. “We saw the opportunity to normalize, to create products made from the best ingredients. We wanted to deliver a consistent experience every time.”
 

The brand has been very savvy and strategic when it’s come to collaborations. Early in 2017, the company joined forces with Icelandic group Sigur Rós to release Sigurberry High-CBD Gumdrops. The company celebrated by hosting a song bath in Los Angeles where the group performed. They have also done events with Equinox and will open a boutique in the Standard Hotel in West Hollywood, where they will offer their own products as well as a curated collection of cannabis items. It will also be the first weed-centric retail location in a hotel in this country.


When Lord Jones first got into topicals, they produced body lotion which had a combination of THC and CBD that could only be sold in medical marijuana dispensaries. Last year they launched a CBD-rich body lotion derived from industrial hemp, hailed by celebrities like Olivia Wilde and Mandy Moore and sold nationwide in specialty shops and via their website. “We were skeptical at first if a hemp-derived CBD extract would be effective without the THC,” says Capobianco. “We are the best guinea pigs we know and we found that it [CBD extract] really worked for our own injuries so we came out with our CBD-only lotion.”
 

Though marketed to ease sore muscles, Capobianco found that customers were applying the organic cream to rashes, dry patches, prior to Botox to prevent swelling and bruising, and to treat other skin ailments. “We call it grandmother research – documenting our customers’ experience to learn the various benefits.”
 

Though Capobianco pokes fun at her “grandmother” research, due to current federal regulations she doesn’t have much of a choice, and neither do the top researchers in our country. Robert Dellavalle, M.D., Ph.D., MSPH, Professor of Dermatology and Public Health at the University of Colorado School of Medicine and the Colorado School of Public Health was one of the authors of an April 2017 Journal of the American Academy Dermatology paper, a survey of all the literature on the potential for cannabinoids on humans and animals titled “The role of cannabinoids in dermatology.”

Devalle and his peers have taken a similar approach to Capobianco. “We don’t have rigorous studies so we’ve started a registry of patients to see what they are using and if they think its working.” They don’t have rigorous studies because of the intense government scrutiny. “The problem is the US federal government. We are going to see other countries like Israel and Canada take the lead if we continue to have these regulatory hurdles.”

Danny Zlatnik, an attorney at Dickenson, Peatman & Fogarty in Santa Rosa, CA, specializing in California cannabis law doesn’t see those regulatory hurdles going away anytime soon under the current administration. “Jeff Sessions is certainly not a friend of cannabis. As long as he is the Attorney General, drug warriors will have a willing commander should the Trump administration decide to take on cannabis.”

Many of the cannabis-focused brands feel held back by the current environment. “Our business would be in a different league right now if there wasn’t so much grey area,” says Steven Saxton, CEO of Green Gorilla, a Los Angeles-based company producing cannabis oils and lip balms, with face creams and muscle rubs slated for release later this year. “Our business saw 500% growth from the year before but it would have been up 10000% if it wasn’t for all the government regulation.”

So how do cannabis-based skincare companies ensure they are compliant in this uncertain environment? Though regulation varies state by state, "If the company intends to ship nationally their products must not contain any THC and must be made from the parts of the Cannabis sativa L. plant that are not considered a controlled substance under the Controlled Substance Act 'CSA'namely, the mature stalks of Cannabis plant," according to Zlatnik. One way to attempt this is by using industrial hemp, which is derived from non-psychoactive varieties of the Cannabis sativa L. plant, whose mature stalks and seed oil are not included in the CSA’s definition of marijuana.

Companies have gone so far to ensure compliance they manufacture THC and CBD products in separate states. Denver Colorado’s CBx Sciences are building an entirely new facility in a different state (the company declined to disclose the location) to manufacture the non-THC products. Both the THC-derived and non-THC-derived products from CBx Sciences include not only CBD but also other cannabis compounds such as CBN and CBG.

“When we developed the topicals for CBx Sciences we wanted to make sure we were creating synergistic products,” says Graham Sorkin, Director of Communications for the company. “We saw that some brands were throwing cannabis in whatever they wanted and still getting remarkable results. We knew we could go beyond that.”

Noel Palmer, PhD, Chief Scientist for CBx Sciences, led the development of the product line. In his work, he isolated and utilized non-regulated cannabinoids like CBD, CBN, and CBG and combined them with complementary essential oils, botanical extracts, and terpenes to create the skincare line. The company expects their non-THC line to be shipping nationwide around Q2 of this year.


While most CBD-based skincare products are currently only  sold online and in small specialty stores, that is about to change. A Sephora executive who asked to remain anonymous confirmed the beauty giant has plans to launch at least one CBD-based skincare brand this year. Sephora declined to comment for this story, “unfortunately Sephora is not in a position to comment as plans for 2018 are not yet firm,” their publicist stated via email


Credo Beauty, often referred to as the Sephora of clean beauty, partly because the company’s late founder, Shashi Batra, was a key player in bringing Sephora to the U.S. will start carrying Vertly, their first cannabis skincare brand, online and in their seven stores nationwide by the end of the month. “A new brand we are particularly excited about is Vertly,” says Annie Jackson, Chief Operating Officer of Credo. “They are formulating beautiful lip balms with hemp-derived CBD, which has tremendous anti-inflammatory and antioxidant properties, and hemp oil which is loaded with fatty acids that address sun damage. The trick is finding a brand that is able to put this powerful ingredient to work in a modern formula with beautiful packaging. As merchants, we are constantly on the lookout for brands that both formulate beautifully with hemp-derived CBD but also comply with our ingredient standard — which has been a tall order.” Vertly will be launching in all Credo stores and online by the end of January, according to Jackson.


When Vertly co-founder, Claudia Mata, a former fashion editor, moved to San Francisco from New York a year and a half ago with her co-founder husband Zander Gladish, a yogi and real estate executive, she was searching for her next career move. She always had an interest in clean beauty and wellness but her fascination with the mainstreaming of cannabis in California led her to the dispensaries. “When I looked at the topicals I didn’t see anything that physically attracted my eyes nor did any of the products cater to me in terms of texture or scent. Then I looked at the ingredient decks and saw a lot of petroleum. It was disappointing


Mata partnered with a French herbalist to help her formulate the balms. Though Vertly originally sold their THC-infused Green Cannabis Infused Lip Butter in dispensaries and delivery services, the company decided to scale back on the THC-based balm to focus on the hemp-derived CBD products. Credo will be carrying the line’s non-THC organic lip and skin balms and lotions, which include a CBD-infused lip balm and a soon-to-be-released CBD-infused post-workout body lotion


So should retailers like Sephora and Credo worry about a DEA raid if they are carrying cannabis-based products? “Could federal law enforcement authorities raid a retailer that sells CBD-containing products? In theory, yes. But in practice, it is unlikely, as long as companies are mindful of the bounds of federal law,” explains Zlatnik. “If the products do not contain any detectable THC, and the CBD is derived from industrial hemp, not from the resin of Cannabis sativa L. plants, there would be a strong defense to any enforcement action by federal authorities.”


Herb Essentls founders Robert Lund and Ulrika Karlberg, originally from Sweden, now live in New York City, though the products are manufactured in Los Angeles. The skincare brand shares a similar esthetic approach to Vertly, packaging their cannabis-infused skincare line in chic, minimalist packaging. “When we researched all the cannabis skincare brands out there, they all looked and smelled like they were designed for stoners,” Karlberg says. “We wanted to create a cannabis-infused line for everyone – instituting an affluent brand aesthetic.” Since the company's soft launch in January of 2017 the brand went from virtually unknown to being sold in 30 stores and online retailers in the U.S.  According to Karlberg, the brand's sales numbers in Q1 and Q2 of 2017 more than tripled and  interest from Europe is growing steadily. The company says they are in the later stages of developing more skincare products and evolving the formulas.


Ildi Pekar, a celebrity facialist in New York City known for getting Victoria's Secret Angels show-ready, first discovered CBD when she was researching solutions for her clients’ inflammation. “I started using CBD oil a few years ago. My first few applications were internal use, but through more research I quickly discovered the benefits of using CBD oil topically and what it can do for skin cell health,” says Pekar. Late last year Pekar released her own Tissue Repair Serum Infused with CBD Oil, currently sold through her website.


Whether looking at the research from scientific studies or customer feedback, CBD is clearly a powerful skincare ingredient that can help hydrate, heal, and treat a myriad of skin conditions. But because of the current regulatory environment, brands will have to continue jumping through hoops to get their products to the masses.
 

Dellavalle says the results of his research were “quite promising on several levels for its anti-inflammatory effects on the skin, treating eczema, psoriasis, and itch.” There was even some indication cannabinoids may stop blood vessel growth in skin cancer, according to Dellavalle. “We are at the infancy of discovering what cannabis can do for our skin but our government is really holding us back from our research. Half of dermatology stems from inflammation. If cannabis is as effective as we think it may be in treating inflammation, it might be effective in treating half of what we see as dermatologists.”

Graham Sorkin