For the past eighteen months, hemp stakeholders have been begging the federal government to regulate the hemp-derived cannabidiol (“Hemp CBD”) industry. As of date, the Food and Drug Administration (the “FDA”) has received over 4,000 comments from shareholders on the safety, manufacturing, product quality, marketing, labeling, and sale of Hemp CBD products. There is no doubt that a uniform federal regulatory framework would better ensure uniform compliance, help legitimize a stigmatized industry, protect and educate consumers, and ultimately, boost the U.S. economy.
While the FDA continues to drag its feet in forging a clear path for the sale and marketing of these products, industry players, such as the U.S. Hemp Authority and Sephora, have taken the matter into their own hands and are leading the way by establishing their own regulatory standards for the manufacture, sale and marketing of Hemp CBD products.
In the past few weeks, we have observed another mechanism through which Hemp CBD companies, including Prima (one of the hottest wellness Hemp CBD companies on the market) are not only helping regulate the industry but are also helping improve its image: through the ticket of “B Corp Certification.”
What is B Corp Certification? Well, first let’s talk about what a B Corp is. A B Corp or Benefit Corporation is a business entity that is legally required to consider the impact of its decisions on its stakeholders, including its workers, customers, suppliers, community and environment. Today, roughly 3000 certified B Corporations exist across 70 countries and 150 industries.
This new business model reflects a paradigm shift that brings sustainability at the forefront of business. This model goes beyond the traditional thinking that a company is strictly mandated to maximize its shareholders’ wealth. Benefit Corporations protect their business and investors while simultaneously pursuing public benefit.
B corporations are creatures of state law. Currently, thirty-six states have passed legislation that enables for-profit entities – corporations and limited liability companies – to pursue a dual mission of profit and social purpose.
However, if B Corps wish to prove they are meeting the highest standards of verified performance, they must undergo what is know as “B Corp Certification.” B Corp Certification is the only certification that assesses a company’s entire social and environmental performance. It shows where the company excels but also helps the company set the gold standard for good business.
But being B Corp certified is more than a tool to do good in the world, it is also what many employees and consumers want.
As was shown in a 2012 study, over 66% of consumers across Brazil, China, India, Germany, the U.K. and the U.S. reported being willing to spend more for goods and services that have a positive impact. Moreover, a 2017 study conducted in the U.K. revealed that 48% of B Corps found that prospective employees were attracted to their companies because of their B Corp Certification. The same study also pointed out that 89% of millennials expressed a strong interest in actively helping their company improve sustainability practices.
Back in 2017, we looked at B Corps in the context of THC cannabis companies, and wondered if the model would stick. So far, it doesn’t appear that it has. The Hemp CBD economy may be different, however, in that the FDA has often depicted Hemp CBD businesses as dangerous and deceiving. For these businesses, B Corp certification provides a means to offer transparency and accountability, in addition to meeting customer and employee goals.