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The Future of Terpenes in Cannabis Product Development

If the past few years have taught us anything, terpenes are the best way to infuse cannabis products with flavor, aroma, and effects in the face of regulatory changes.

Between economic volatility and regulatory changes, the cannabis industry has dealt with its fair share of hurdles over the past few years. Despite this, it’s still predicted to grow to roughly $149 billion by 2031. While some mature cannabis markets declined in 2022, the year also provided several important bright spots.

Three more U.S. states legalized adult-use cannabis, the Biden administration made important reform and pardoning progress, and several regulatory changes occurred that may have a positive impact on cannabis product development in the coming years.

Legal and regulatory issues will be driving forces when it comes to cannabis product development, so navigating those changes with speed and flexibility will be essential. Read on and learn about the impact of cannabis regulation changes on product development, plus discover the important role terpenes will play.

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"Something we've seen trending in the industry is towards a wider variety of flavors in final products. We see new products like infused fruity flavored pre rolls on the market that previously weren't really that widespread. We also have seen a greater push towards more functional products with consideration made for all ingredients. Mood functional products now aren't just cannabinoids, they may also have melatonin or L-theanine for increased functionality, along with mood specific terpenes. Terpenes are even starting to get more exposure and traction in CPG products outside cannabis."

TJ Martin

Director Of Research Development at Abstrax Tech

Past Regulation Changes and the Impact on Cannabis Products

With more states passing legalization measures and increased funds from venture capital firms, the cannabis industry has seen drastic changes in recent years. But it’s not just U.S. regulations that are changing. Thailand recently removed cannabis from its narcotics list and legalized both growing and consumption in a move that has the potential to open the door for Asia’s cannabis revolution.

However, there have also been regulatory changes that have slowed or completely stalled the creation and sale of certain cannabis products. For example, California’s DCC regulation changes that went into effect late last year limited flavoring for inhaled products “to those that are naturally occurring and contribute to the flavor of cannabis.” However, the lack of grace period combined with ambiguity regarding non-compliance and enforcement left many manufacturers and retailers scrambling.

It’s important to keep in mind, however, that regulatory changes at both the state and federal levels have been known to take steps forward and backward. While the CA DCC regulation changes caused confusion and required many manufacturers to reformulate products, the Medical Marijuana and Cannabidiol Research Expansion Act, signed by the President on December 2nd, created new opportunities and eased the request process for applicants seeking to conduct cannabis research. Reuters explains that It also “promotes the development of U.S. Food and Drug Administration (FDA)-approved drugs using CBD and cannabis.”

Future Regulatory Changes and the Roll of Terpenes in Product Development

Looking ahead, several potential regulatory changes may impact cannabis product development. In October, President Biden requested a review of cannabis' Schedule I drug classification under federal law. While this review doesn’t have a timetable, rescheduling cannabis could open the door for interstate cannabis commerce.

Additionally, it’s likely that a variety of federal legalization bills will be re-introduced this year. Both the Cannabis Administration and Opportunity Act (CAOA) and the Marijuana Opportunity and Reinvestment (MORE) Act would end the federal prohibition of cannabis. Regulations, like the Secure and Fair Enforcement (SAFE) Banking Act, would offer protection to financial institutions that do business with legal cannabis businesses.

Admittedly, changes like these don’t necessarily impact product formulations. However, the potential for interstate commerce and safer banking, in combination with increased research, means that cannabis product development may have more funding and fewer hurdles.

If the recent CA DCC regulatory changes have taught us anything, however, changes can still happen quickly for better or worse. With that in mind, terpenes are still the safest option, in a legal sense, when it comes to infusing cannabis products with flavor, aroma, and effects.

Cannabis Product Development Will Focus Less on Indica/Sativa and Instead Emphasize Sensorial Experiences

As more states have legalized cannabis, consumers are becoming more educated about its features. That means learning the limitations of terms like Sativa and Indica. While these terms have been used to describe the effects of certain chemovars, that idea is outdated and inaccurate. In reality, it’s more accurate to say that these terms describe the physical features of different chemovars.

For consumers shopping for a particular effect or experience, offering a cannabis product that is “Sativa” or “Indica” won’t necessarily help, leading to poor consumer experiences. That’s why manufacturers will focus less on developing Sativa or Indica products and more on developing products with specific sensorial experiences—and that’s where terpenes come in.

The most accurate way to determine a strain’s effects is by looking at its terpene profile and cannabinoid profile. While cannabinoids like THC are the compounds that dictate how psychoactive a product will be, it’s terpenes that promote specific experiences like relaxation, mood elevation, creativity, etc. That’s why some chemovars promote “couch-lock” while others promote socializing.

Manufacturers that want to provide consumers with products that accurately meet their sensorial expectations will need to focus first on the terpene content of their products instead of whether or not they’re classified as Sativa or Indica.

The Future of Cannabis Product Development in the Wellness Industry

Even without the addition of cannabis and cannabis-related ingredients, manufacturers in the wellness industry must be meticulous about health claims to maintain FDA compliance. However, the Medical Marijuana and Cannabidiol Research Expansion Act means that much-needed research may soon shed light on the medicinal applications of cannabis. Additionally, 2023 may be the year the FDA finally provides guidance on CBD.

The FDA gained regulatory oversight over CBD almost four years ago but has yet to publish any official guidance despite repeated requests. Recent changes, however, could indicate change on the horizon. The hiring of a cannabis policy expert, Norman Birenbaum, as a senior public adviser at the Center for Drug Evaluation and Research is particularly promising. While there hasn’t been an official statement, many speculate this move indicates the development of regulations regarding cannabis products.

In an interview with The Wall Street Journal at the end of 2022, the FDA stated that they planned to reveal oversight plans within the next few months. While the details of those regulations are still unclear, 2023 could be the year that CBD enters the wellness industry in a more official capacity. If that happens, botanical terpenes will undoubtedly play a large role in the flavor, aroma, and sensorial effects of such products.

Terpenes Play a Pivotal Role in Cannabis Product Development

As we’ve seen in years past, cannabis regulations can change quickly and go into effect with little to no notice. Between economic volatility, changing consumer behaviors, and domestic and international regulatory changes, planning for product development may seem like a guessing game. That’s why Abstrax Tech always ensures our terpenes comply with state and federal regulations.

Abstrax Custom Terpene Formulations may be the perfect solution during times of changing regulations. When California made regulatory changes last year, our terpene experts ensured our products adhered to DCC regulations, and we plan to stay flexible during any future state and federal changes.

Have questions about using terpenes in your products? Want to talk about Custom Terpene Formulations? Contact us today.