The first line of cannabis cosmetics have hit Colombia’s shelves and could provide an overlooked but serious revenue stream for the cannabis sector. But will Colombian consumers be receptive to its unique beauty benefits?
By: Luke Taylor
Following Khiron Life Sciences’ May announcement that it had become the first Colombian cannabis company to list on an international stock exchange, the business achieved another industry first in October, becoming the first company to legally produce and sell cosmetics containing cannabis in Colombia.
While most eyes have been on the potential of local and export medicinal cannabis markets, legislative and financial barriers are slowing their realization. Cosmetic products utilizing CBD could offer cannabis producers a faster revenue stream.
The flashy launch party for the Kuida Skin Care range, with its abundance of neon lights, fashion models and the latest virtual reality headsets, was emblematic of the outlook for CBD cosmetics and the legal cannabis industry as a whole. Excitement was generated, great potential was established, but many important questions were left unanswered.
The Colombian cosmetics revenues in 2016 were $4.3bn, and across Latin America, $58.6bn – according to the firm. That regional market will go untapped for now, as exports are not possible due to an unclear or lack of regulation on exports, customs, taxes, transportation and security.
The National Business Association of Colombia (ANDI) has a slightly lower estimate for Colombia’s cosmetics market, putting it at $3.28bn. This still makes it the fifth largest market in Latin America. Skin care products account for 14% of the market or $445.6m. These values have dropped consistently in recent years, but this is due to currency devaluation facing the dollar, according to ANDI, who point out that it grew once again in 2016–17 by 8.6%.
Colombian cosmetics revenues in 2016 were $4.3bn, and across Latin America, $58.6bn
But as Juan Carlos Castro, ANDI’s Executive Director for the Chamber of Cosmetics, Personal Care and Home Care Products, points out, the market is limited by Colombia’s economic demographics. Its small middle class (around 30%) and low GDP means that while many regularly purchase cosmetic products, these products are usually on the lower end of the pricing scale.
Per capita, Colombia’s cosmetics spend is ninth in Latin America, less than half of that in Brazil or Mexico.
“The Colombian consumer buys in small quantities and is always conscious of promotions,” Castro explains. In short, luxury CBD cosmetics lines will be unaffordable for most.
It is also unknown how receptive Colombians will be to using the demonized drug in their moisturizers and anti-wrinkle creams. In Europe, cannabis cosmetics have long gathered traction. While some brands’ marketing have played down the presence of cannabis in their products, positioning themselves firmly in the growing wellness sector, others have embraced the buzz around “stoner culture”, forging alliances with edgy celebrities and indie rock bands.
Khiron’s approach: minimalistic packaging with subtle nods to the plant suggests the market is conservative. However, playing down the plant’s presence in products makes it harder to distinguish them from the many existing products produced by popular brands who already have a firm grip on the market.
If cosmetic cannabis brands are able to successfully market the product’s unique properties without scaring off consumers, however, they could mount a serious challenge to even the biggest cosmetic names. Despite limited research (more extensive studies are ongoing), CBD- based cosmetics are reported to have a number of promising skincare effects, from reducing redness and irritation to slowing signs of aging and even curing acne or eczema.
But companies must walk a fine line when marketing such potential benefits. INVI- MA, the body responsible for regulating Colombia’s food and medical market, have potentially opened the door to an entirely new wave of cosmetic products. However, these products must be “cos- metic”. Any language suggesting any kind of cure will likely be unauthorized. Here legal consultation will be vital to en- suring products are marketed effective- ly, while also avoiding language which could prevent them from making it to mar- ket.
Those interested in the cannabis cosmet- ics market would also be wise to closely monitor regulation – particularly at an international level. The decision by IN- VIMA to allow products containing CBD (psychoactive/THC strains are currently not permitted) is essentially the product of indecisiveness and lack of clarity from relevant international bodies.
In respect to the US, the FBI and FDA have failed to take a clear stance on the use of CBD in cosmetics. The European Commission database for information on cosmetic substances (CosIng), howev- er, allows up to 0.2% THC concentration in cosmetic products. INVIMA has stated if there is doubt between the two stan- dards, the list allowing a specific ingredi- ent will be accepted, the latter in this case.
It will now be interesting to see the reaction from the Andean community, the customs union for Bolivia, Colombia, Ecuador, and Peru. At present, it has not prohibited its production, but Andean Resolution 1953/2017 prevents the use of cannabis in cosmetic products. It may not take kindly to INVIMA’s initiative, leaving investors hopeful and not wishing to generate any legal friction on the issue.