Companies were big on CBD. Not anymore.

Just below the rows of energy drinks and kombucha at Westside Market, a deli in Manhattan’s Chelsea neighborhood, sit some glass bottles of Vybes. The drink, which comes in flavors like strawberry, lavender and blood orange, is made with cannabidiol, more commonly known as CBD.

But a lack of federal rules and a hodgepodge of state regulations have made it impossible for a national retailer, like Target or Walmart, to distribute Vybes. That has hampered the drink’s potential growth, said Jonathan Eppers, who left the tech industry to create Vybes in 2018.

“For the first two years, we were on a rocket,” Eppers said. “But the patchwork of laws and regulations around the space has made it difficult to grow our business.”

A little more than six years ago, CBD, the non-intoxicating component derived from cannabis or hemp, was on the verge of being the next big ingredient, part of a wave of drinks and foods that were touted as having health benefits or providing benefits. relaxation. Startups flooded the market with products, many of which promised to calm stressed and anxious consumers.

At its peak around 2018, CBD was everywhere, showing up in water, chocolate bars, tinctures, gummies, and skin serums. Consumers could purchase activewear infused with CBD oil and feed their nervous pups CBD chews and snacks. Even large corporations intervened. Molson Coors partnered with a Canadian cannabis company to create a line of CBD-infused beverages. constellation marksthe maker of Modelo beer, made a $4 billion investment in a publicly traded cannabis company. Ben & Jerry’s began researching the possibility of creating CBD-infused ice cream.

However, in recent years the industry has stagnated. Molson Coors ended their joint ventureand Constellation has amortized more than a billion dollars of their cannabis investments. Big companies have shelved their plans for CBD products, and hundreds of startups have closed, switched to other ingredients, or simply tempered their growth projections.

Hopes for market resuscitation through industry efforts to put Federal regulation of CBD in a new farm bill faded away when Congress passed an extension of the 2018 version of the bill in the fall.

Also contributing to the industry’s precipitous decline is the simple fact that many people are baffled about what CBD is, whether it is legal, and whether it will get them high.

The compound comes from the cannabis plant. Cannabis plants that contain high levels of tetrahydrocannabinol, or THC, are marijuana and can get users high. Cannabis plants with lower levels of THC are known as hemp.

Five years ago, Congress legalized hemp-based CBD, although CBD made with higher levels of THC remained illegal at the federal level. But the Food and Drug Administration has refused to create rules allowing CBD to be used in dietary supplements or conventional foods. The agency said that a new regulatory pathway CBD must be created and there was not enough evidence to determine how much could be consumed and for how long. (The FDA has approved a medication that contains CBD and is used to treat some epileptic seizures.)

Like marijuana, which remains illegal at the federal level, CBD has been legalized in many states, creating a tangle of regulations and varying problems for manufacturers.

“I saw the evidence in late 2019 and 2020. It was going to take a lot longer for federal regulations around CBD to be put in place,” said Ben Witte, who founded Recess in 2018 as a line of sparkling water containing CBD. Today, those drinks represent less than 10 percent of its revenue. Instead, it focuses on mocktails and Recess Mood, a line of CBD-free relaxing drinks.

Even before hemp-based CBD was legalized, stores and online retailers were flooded with products containing it. But none of them had been approved by the FDA, and some touted outrageous and unsubstantiated claims that infused products could do everything from treating Alzheimer’s disease to curing cancer.

The FDA began issuing warning letters to manufacturers and retailers for selling unapproved CBD products or making unsubstantiated claims about the products. In 2020, the FDA found in a sample of products that 18 percent contained significantly less CBD than indicated on the package, while 37 percent had significantly more.

“I think the most important question here is why is it necessary to include it in foods?” said Dr. Peter Lurie, president and CEO of the watchdog group Center for Science in the Public Interest. “What is the purpose? What does this ingredient really do for you?”

He added: “These companies have managed to create the belief that society needs these products when there is no evidence to say that CBD treats anything other than the rare epilepsy syndrome for which it has been approved.”

As questions about the compound grew, state regulators began removing CBD products from store shelves and confiscating them. Companies also ran into obstacles selling or advertising online.

“My Meta account is forever banned from advertising after I posted once on our company page about our CBD products and was flagged,” said Clarice Coppolino, head of brand and product development at Vital Leaf, which makes CBD chocolate, skin products. care and tinctures.

The Covid-19 pandemic also took its toll on the industry. While sales in the early weeks and months of the pandemic soared as nervous consumers sought relief through CBD products, interest among large companies and investors waned.

“Covid clearly moved consumer packaged goods companies away from the CBD space and what was possible there to simply focus on meeting food demand,” said Carmen Brace, a consultant who has worked with companies selling consumer goods. packaged.

Amid heavy industry lobbying, some states began legalizing hemp in various products. In 2021, for example, California passed legislation which allowed hemp-derived CBD in any food, drink and dietary supplement sold in the state. Other states legalized CBD with restrictions on the types of products it could be used in, the quantities, and where the hemp had to be grown.

Eppers founded Vybes after trying CBD oil to relieve the stress and anxiety he felt while working in the tech industry. The product attracted a following in its first two years, but around 2020 California regulators began pulling the drinks from shelves. So Eppers joined other CBD manufacturers in pushing for laws to allow the product in the state.

But the confusing hodgepodge of rules has hampered Vybes’ growth. “We make a drink that a lot of consumers want, but the big chains won’t touch it,” Eppers said.

For now, Vybes, made with 25 milligrams of CBD from hemp, has found a home in smaller regional and independent grocery stores across the country, Eppers said.

“When I entered this category in 2018, the sky was the limit,” he said. “No one starts a business to reach a low ceiling.”