Can QR Codes Help Dispel Consumer Confusion and Regulatory Pressure?
CBD. The conversations of this new “super drug” (or is it a supplement or nutraceutical) are dominating wine parties, investor meetings and board rooms. The CBD (cannabinoid) market is expected to be a $20 billion market by 2024 according to Forbes (May 2019). That’s by some estimates 25% of the dietary supplement industry which has been around for, well, practically forever.
Consumers have become skeptical of pharmaceutical companies (especially with the opioid epidemic). And in the meantime, are learning about the benefits of CBD, which include pain relief, anti-seizures, sleep support, anxiety relief, neuroprotective measures and more (Healthline). So what’s the problem? Well, there are several significant challenges currently facing industry which could slow the growth and hurt the reputation of those companies "doing it right" and lead to class action lawsuits (already happening). First, there is a lack of standardisation and research on dosage amounts and health benefits. Second, there is inconsistency on labeling, or more so, inconsistency on what's in the bottle actually matching the label (see below). And finally (for time's sake), lack of transparency in the supply chain. Where was the hemp grown? How was it processed? Is it organic? Where was it manufactured? Can I see the Certificate of Authenticity? Consumers and regulators want to know. And greedy lawyers are going to come after you unless you fix it.
Recently, CBS This Morning ran a story that tested 9 different samples from various brands for CBD and THC levels, along with pesticides and heavy metals. The result? All 9 brands were within federal guidelines for pesticides and heavy metals and below the federal guidelines for THC requirement (.3%)- that’s good. However, the consistency of CBD (the active ingredient that separates us from our money to solve above mentioned ailments), was highly inconsistent. 4 were right on, 2 were only giving 60-80% of what’s advertised, 2 were 10% over, and the last was 210% more CBD than what was advertised.
There was another study conducted by the Center for Food Safety conducted deep research on 40 companies for hemp quality, testing procedures and processing, and half the the companies received a "D" or "F". Hmm, not good for these companies OR the industry.
If you are a CBD brand or manufacturer, you may be thinking, “Well, we do it right, so why do I care?”
Imagine you have a bowl full of M&M’s, and 1/3 are normal, delicious candy-coated chocolate morsels. 1/3 don’t taste like anything, and 1/3 are going to get you sick. If they all look the same, are you going to stick your hand in the bowl and take any? Probably not.
But what if the tasty M&M’s were identified (let’s say, were green) so that you knew FOR SURE which one’s were ok, would you grab them? I would, because I love M&M’s.
So, how can this be applied to CBD? First, we have to understand that the end product in the bottle is at the mercy of the full supply chain. What seed was used? How was it harvested and dried? How was it processed? What’s on the label?
Any misstep could result in millions in lost revenue , and a product that is not up to standards which damages your brand (and the industry). Having an integrated supply chain system (ideally with blockchain) not only streamlines the operational process (documentation, QA, workflows, SOP’s, supplier and buyer management), but gives your buyers (and consumers) complete confidence that the product they are putting in their bodies is safe and effective. Your buyers want to know they are getting the green M&M.
The Federal government hasn’t solidified its position on CBD (the FDA has stated that it doesn’t approve of edibles or supplements but hasn’t come out with an official position yet) and states are all over the board which only adds to the confusion.
However, many states are adding in policies relating to better labeling and using QR codes to help identify safe CBD products that are using good manufacturing practices. Here are some of the state positions with regards to QR codes (but be sure to read up, as this is changing by the day):
· States requiring QR codes on CBD packaging:
Indiana
Utah
Texas
Oregon
· Pending states requiring QR codes on CBD packaging:
New York
Florida
New Mexico
Oklahoma
The typical data that is needed in a QR code includes the Lot (or batch) number, batch date, expiration, certificate of analysis (COA), name of the manufacturer, detailed ingredients and amount (%) of THC and CBD. Considering that 7 states already require QR code packaging (or will soon), most companies are already including this on their packaging across the US.
Managing these QR codes with multiple SKU’s, batches, and expirations can quickly become a headache for the operations team, and a nuisance for the branding team that wants to make the bottle look pretty. Having a simple to use platform that can generate QR codes quickly with required information will soon be a critical component. This is why TagOne developed "Connect" which also provides social sharing and your company “stories” that include photos or videos to help separate you from the competition.
For forward thinking hemp/ CBD companies, TagOne can also tie this to your supply chain, tracking each stage from the seed, through various transactions and transformation, up until the QR code is scanned. It would be like knowing where the cocoa bean was grown and how it ended up in that green M&M. Previously, this would have been near impossible, but with blockchain technology, and integrated platform like TagOne, this is now a reality.