If the CBD market is any indication of how other sectors will be affected by the United Kingdom’s divorce from the European Union, buckle your seatbelts.
Supply-chain slowdowns and lockdowns due to the Covid-19 pandemic have already made doing business in the UK a challenge.
Now, with the confusion surrounding the final Brexit trade deal, shipping, customs, tariffs and novel food regulations are a lot more complicated – not just for UK CBD makers, but also suppliers in the United States and mainland Europe and anyone hoping to sell to UK customers.
When the UK was part of the European Union, it enjoyed the free movement of goods with other EU member states. This helped foster a growing CBD market in Britain despite domestic legislation that bans hemp growers from using the plant’s flowering tops.
At least 700 CBD companies are currently active on the UK market, but pinning down the market’s value is more of a challenge. A recent survey by the UK CBD marketplace Alphagreen suggested that 15% of Brits had used CBD in the first four months of 2020, and that CBD consumer spending during that period exceeded £150 million ($205 million).
The outlook for CBD is less cheery in the post-Brexit reality, though, as UK businesses and their international partners have to navigate new customs declarations, forms, shipping delays and three different novel food authorization schemes.
For some companies, these new points of friction are straining supply chain relationships and creating extra costs that will need to be passed on to the consumer.
Borders and shipping
CBD companies worry that “products coming in from Europe will be held up unnecessarily or jammed in the system in some way,” Kyle Esplin, chair of the Scottish Hemp Association, told Hemp Industry Daily.
Shipping companies and border authorities have long had an inconsistent approach to CBD products, he said, “and Brexit is only likely to compound that issue.”
That’s been the experience of ThreeDots, a London-based company that sells sparkling CBD beverages in 250 stores in the UK but manufactures them in Austria.
Brexit-related snags in the company’s supply chain have hit both CBD and non-CBD ingredients, co-founder Sean McLintock told Hemp Industry Daily.
A shipment of basil extract, for example, was held at customs in Austria for roughly three weeks without explanation from authorities, McLintock said.
“We found out yesterday there was a new form that was requested after we shipped but before it arrived at customs that we didn’t know about.”
The company subsequently missed the manufacturing dates for its top-selling grapefruit-basil beverage, “and that obviously incurs all sorts of fees for us on the manufacturing side.”
Robert Jappie, partner at the INCE law firm in London, said customs declarations will be the major source of headaches under the current…