Unveiling the Dark Side of Black Market CBD in Australia

With the global emergence of the cannabis industry, Australians are being inundated with a variety of medicinal cannabis options – legally and illegally. Unfortunately the Australian legal market has been slow off the mark and it comes as no surprise that black market cannabis products are dominating consumer choices. 

CBD is one of the most sought after cannabis products here in Australia, namely due to its suggested health benefits and its lack of ‘euphoric’ effects associated with other cannabis products. Many Australians are turning to online sellers for the procurement of CBD products, but other avenues include personal connections, select health & wellbeing stores, and even through Multi Level Marketing schemes. 

Alas, the rise of the black market comes with a number of associated risks, which directly impact the end consumer. Everything from unregulated products sold by uninformed and unscrupulous sellers, low quality imported CBD ingredients, to mislabelled product potency and outright scams, all of which ultimately undermine the growth of the Australian cannabis industry. The fact of the matter is, we are at a point where consumer choices can alter the direction of Australia’s cannabis industry – your choice matters.

In partnership with CBD Reviews Australia, we tested 62 black market CBD products in a bid to verify claims made by black market brands. Our aim is to arm you with the facts so that you can make informed choices and ensure your dollar supports your health & wellness pursuits, as well as the growth of the Australian cannabis industry.

Is There Really CBD in Your Black Market Product?

There’s a lot of hype surrounding CBD and many consumers are buying in blindly. CBD is today’s trendy product that brands and users claim can treat, solve and cure anything from cancer to foot fungus. For obvious reasons, making such claims is irresponsible and can be dangerous. To make matters worse, products are often labelled incorrectly with false claims of CBD content and potency.

CBD Reviews Australia, a Facebook Community co-founded by Steven Ng provides customer reviews and was created to help guide consumers to safer and better quality products. A primary motivation of the group is to put an end to the scamming of sick and vulnerable members of the community.

Samples of products are submitted by members, which are tested for quality and verification of product claims. The type of testing performed uses Thin Layer Chromatography (TLC). It is one of 3 methods of identifying the chemical constituents for cannabis products that are accepted by the Therapeutic Goods Administration (TGA).

There is a real issue regarding the quality of products currently on the black market.

There is a 1 in ~4 chance that what you buy is not what you think it is in terms of strength and potency. 

27% of products tested contain less CBD or cannabinoids than stated on the label. Some products make no claims regarding CBD content to avoid legal issues. You could be taking something really potent without knowing, or it may contain no cannabinoids at all. 

Even more concerning, the chart below indicates that 11% of products are rated as an outright scam, with the product containing no cannabinoids or very little (while charging a premium). Meaning you have a 1 in 9 chance of being sold a fake product containing nothing more than plain olive, coconut or hemp seed oil.

The BIG Problem of False Claims

It can be challenging navigating the murky waters of black market CBD to find a quality product for an illness for you or that of a loved one. Many of us simply cannot afford to waste precious dollars combating health issues with subpar products.

Incorrect or false labelling regarding potency of products may lead to using incorrect dosage for a particular condition, and if switching brands, if either product is mislabeled you could unwittingly end up taking a much higher or lower dose than you need. Although CBD is proven to be non-toxic, when combined with other medications that interact with CBD, taking a higher dose could have unintended consequences.

The intentional misleading of consumers for financial gain is rife. False claims touted by some CBD sellers – such as CBD cures cancer and alzheimers to name a few – may lead consumers to put off important medical care, including proper diagnosis, treatment, and supportive care. While it’s certainly true that CBD has many healing properties and may help some of these conditions, it is not a be all and end all health product.

If big bold claims are made, buyer beware!

The Importance of Lab Reports

Certificates of Analysis (COAs), also commonly known as a ‘lab report’, detail the contents of the product. This may include breakdown of total cannabinoids, microbiological levels, terpenes, and possible contaminants such as pesticides, residual solvents or heavy metals. The presence and quantity of the highest 8-12 cannabinoids are usually tested.

The majority of local black market products do not come with any lab reports as current laws make it very difficult to find a laboratory willing to test a black market product. If you do somehow find a lab willing to test, the costs are often quite high and the results returned are asked not to be shared publicly. Businesses that do provide COAs are generally imported products that have been rebottled and relabeled (and in a worst case scenario, sometimes diluted).

Unfortunately our explorations of the current market for CBD in Australia has discovered that a seller will often link to a quality producers website showing their lab reports. Unless you can confirm batch numbers and other details, there’s a possibility that the seller could be misleading you. On the other hand, if a product is produced locally, the likelihood of it being sent overseas to be tested is very low. If a local black market product claims to have lab reports, make sure you see them first before purchasing. A reputable seller will be open and transparent and not demand money before supplying it. 

Black Market sellers – A sea of unknowns

Many Australian black market sellers resell imported cannabis products and have little to no understanding of the true quality of product they are selling. They rely heavily on information given by suppliers, which often lacks transparency and fails to outline the international supply chain, including important details such as farming and extraction methods, as well as product testing. This leaves the consumers at risk of buying a poor quality product, which could do more harm than good.

In contrast, products sold through the legal market in Australia must adhere to strict production rules and undergo rigorous testing by the Office of Drug Control (ODC) and Therapeutic Goods Administration (TGA). All products obtained through a legal pathway are tested for the presence of heavy metals, pesticides, residual solvents, aflatoxins, microbial counts, active ingredients, stability data and certificates of analysis quantifying the exact amount of cannabinoids.

In some instances black market enterprises endorse their CBD products as being TGA approved or being legal to sell under the hemp classification. These statements are simply not true. Whilst individuals and businesses navigate ways to operate in the grey areas of the law, the overall landscape is pretty much black and white. Any sole traders or businesses selling products in Australia containing more than 0.00075% (75mg/kg), are not selling approved CBD products. All approved CBD products must be sold via prescription as it is considered a Schedule 4 Controlled Drug by the ODC.

Although the likelihood of being “caught” by law enforcement is slim, if you have a bottle of black market CBD oil – whether it is labeled CBD oil, hemp oil or hemp extract – in the eyes of the law you are in possession of an illegal narcotic, unless you have a prescription of course.

Beware of Multi-Level Marketing Schemes

MLM’s also known as pyramid selling, is a marketing strategy well known for its shady practices. With the rise of the CBD boom worldwide, MLM structured organisations have been cashing in on the Australian black market. Generally, MLM organisations create and sell sub-par products, which include little-to-no CBD in them. Their ethos is based around recruiting others rather than selling product quality, which leads recruited individuals to heavily market and sell unclassified products in the Australian market, leaving consumers at risk of buying into CBD hype.

Signs of an MLM product might include promoted affiliate links (links to the company website with a seller’s name or code at the end of it), private Facebook groups where only one product is discussed and pressure tactics during meetings to discuss recruitment and/or solicitation of sales from strangers online. If you purchase an MLM CBD product, you may experience long wait times for products shipping from overseas, and risk your orders being seized by customs, who might forward a product that has no therapeutic effect due to low CBD content. Also be aware of bold health and legal claims of TGA approval, these are false. These companies do not support local industry and many have shell corporations set up in tax havens to benefit the founders.

Product Origin – Imported or Local made?

Black market products consist of both imported and locally produced goods. In the legal market, however, the majority of products are currently imported, with only a handful being produced here in Australia.

There are a plethora of imported and white labelled/relabelled CBD isolate products being promoted on Instagram, Facebook and Gumtree by black market sellers. A lot of the time, these sellers prey on the lack of knowledge of the consumer and charge 2-4x as much as the going market rate. Unbelievably, there are many black market brands which are more expensive than legal options.

Many concerns have been expressed about most legal products being imported, and rightly so. Yet there are multiple reasons for this, which can be attributed to cannabis being a new and developing industry in Australia, with a system that isn’t ideal and has yet to be refined. To put things into perspective, it takes a minimum of 6 months (accelerated study) to do stability and shelf life tests for legal products. Further issues include:

• lengthy delays and convoluted process for local licensing approvals
• procurement issues of required resources
• lengthy processes for local facility design, development and certification
• Imported products are allowed to help serve patient needs before Australian production capacity ramps up

It can take Australian manufacturers years to reach the required production levels to consistently supply well developed and quality tested products to patients.

Imported products from black market online sellers do not have these burdens or requirements. Many of them have no quality testing whatsoever. The products are imported by individuals and sold for maximum profit, undermining the sprouting stages of the Australian cannabis industry.

Cost Analysis, Which is cheaper?

Since the legalisation of medicinal cannabis in Australia in 2016, the industry has faced its fair share of obstacles in regards to cost, hence driving consumers to seek black market options. Since the beginning of 2020, we have seen legal product prices begin to stabilize due to market competition and product availability continuing to increase. Currently, CBD products make up one third of the products available through the legal system. To understand the true breakdown of costs, we must look further into the value of milligrams offered by both legal and black markets. 

There is a common misconception amongst consumers that the larger the bottle the more value you are getting, however, it’s actually the potency that counts.

A key aspect of purchasing CBD is the concentration and amount of active ingredients (CBD and other cannabinoids). The amount of CBD in mg/milligrams is the part of a label that you should be focused on. This is what tells you how much CBD is actually in the bottle. From there, you can calculate (if not already labelled), the concentration of CBD per 1ml.

For the purposes of this illustration we will not take into account whether a product is full spectrum, broad spectrum or isolate and focus purely on CBD content.

The black market product  in the example above contains 2000mg of CBD in 30mls,which is a concentration of 66.6mg of CBD per 1ml (2000mg / 30mls = 66.6mg/ml). 

The legal product has 2400mg of CBD in 10mls, with the concentration per ml already listed on the label, at 240mg/ml of CBD per 1ml (2400mg / 10mls = 240mg/ml). That’s 3.6x more concentrated, even though the bottle is one third of the size.

We worked out the price per mg of CBD and we found that legal products are the winner in relation to cost per mg of CBD. See table below:

*Note that higher concentration of CBD per ml does not necessarily equate to greater therapeutic effect. There are many factors that contribute to its efficacy, such as your overall health, lifestyle and particularly your endocannabinoid system. There are also other factors to consider, for eg. higher concentrated products may have a stronger taste than more diluted products. It stands, however, that milligrams do matter when buying CBD.

Problems with the Legal route

Aside from the manufacturing issues facing the industry, the only way to access cannabis products – including CBD – legally in Australia is through the Special Access Scheme. In 2019, the TGA granted more than 25,000 applications from doctors to prescribe cannabis to patients, most of which were in the form of an oil. While this number is consistently growing, the legal system has faced push backs due to some downsides, including consulting fee costs, high product prices and extended wait periods, diverting many to the black market.

In addition, health care professionals wishing to prescribe cannabis must either become an authorised prescriber for a class of patients or apply for access per patient through the TGA’s Special Access Scheme B (SAS-B).

Fueled by the lack of training and education offered to health professionals, many GP’s remain hesitant in prescribing cannabis to patients. This issue has been compounded by the increase of CBD products on the black market in Australia, as industry leaders have had to prioritise educating the consumer first, overlooking the fundamental step of educating the educators. Clinical evidence supporting the medicinal uses of cannabis is also limited, and GPs are torn between the science and anecdotal information supplied by the medical industry (there’s also the well-known secret of the alliance between GPs and the pharmaceutical industry, which does no favours for the cannabis industry).

Product wait times remain an issue in the current framework as legislation in Australia prohibits pharmacies and wholesalers of cannabis products holding stock on-site. In order to place an order they first need to be presented with an approved prescription from the patient. Due to permits and freight times, chronically ill patients face delays receiving their medical cannabis.

However, change is on the horizon with an increasing number of cannabis clinics across Australia, the stabilization of product pricing, and the Australian government working towards quicker and more reliable access to patients, access to legal products is improving.

The Long-term benefits of supporting legal

By opting for legal CBD products in Australia, you are actively participating in supporting and growing the Australian cannabis industry. By purchasing legal products we have more data on the efficacy and proliferation of cannabis treatments for a host of health issues. This in turn helps to bolster the reputation of cannabis as a bonafide treatment to even the most reluctant health professionals.

On a broader spectrum, the cannabis plant (including our beloved hemp variety) is incredibly versatile, having a multitude of uses across industries from medical to textile to food, and more. A vital piece of ensuring the growth of the Australian cannabis industry is to spend your dollars on businesses who are, in turn, investing in desperately needed infrastructure here in Australia.

Our best advice, if you are actively considering the use of CBD for a medical condition, there is more good to be done by going down the legal route. Consult with your GP or specialist to ensure your health is not at risk, and you have access to quality products. This way you’ll be supporting the growth of the Australian cannabis industry, helping the black market transition, leaving consumers better protected and increasing the safety and quality of CBD and cannabis products alike.