Cannabis Industry Anxiously Awaits 2018 Farm Bill Vote
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Cannabis Industry Anxiously Awaits 2018 Farm Bill Vote

The legislation, which includes language that would legalize industrial hemp, is expected to receive House and Senate votes this week.

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December 10, 2018

Congress is expected to vote on the 2018 Farm Bill this week, which includes provisions to legalize industrial hemp. [Dec. 11 update: The U.S. Senate has voted, 87-13, to approve the 2018 Farm Bill. A full U.S. House vote is expected within the week.]

Earlier this year, U.S. Sen. Mitch McConnell inserted language from his Hemp Farming Act of 2018 into H.R. 2, the Agriculture and Nutrition Act of 2018 (the Farm Bill), to legalize the cultivation and sale of the plant, which refers to cannabis that contains less than 0.3-percent THC.

This language would essentially remove industrial hemp from the Controlled Substances Act and allow states to regulate its production, commerce and research. According to the National Conference of State Legislatures, as of August 2018, 40 U.S. states allow the cultivation of hemp for commercial, research or pilot programs.

Collin Peterson, Ranking Democrat of the House Agriculture Committee, has indicated that the Farm Bill is nearly completed and that it should be filed Dec. 10, according to a WHOtv news report. The House is expected to consider the legislation Wednesday, followed by the Senate on Thursday.

“The cannabis industry is closely watching the outcome of the Farm Bill,” said Nancy Whiteman, founder and CEO of Wana Brands, a Colorado-based infused products company. “And while we are seeing a lot of startups try to move in, nobody is better suited to operate in this market than experienced licensed cannabis manufacturers. Marijuana infused producers have been perfecting precise dosing, testing and supply chains for the past decade, and these companies will lead the way in the next generation of CBD products.”

Wana Brands recently launched its Mango CBD Sour Gummies—a CBD-only product—in Oregon, and plans to launch a full CBD product line in the first quarter of 2019.

“This is great news for us as a company and an industry,” added Dylan Summers, director of government affairs and compliance for CBD supplier Lazarus Naturals. “The future is bright as hemp solidifies itself as a legitimate agricultural product at long last—liberated from the restrictions of the Controlled Substances Act.”

Other industry stakeholders, like L’eela CBD Body Care’s co-founder and co-CEO, Lisa Richards, would like to see more research and education on hemp and CBD with the passage of the Farm Bill.

“What is known about CBD is only the tip of the iceberg,” Richards said. “The whole plant extracts derived from hemp that contain CBD are an oil that not only provides excellent hydration and anti-inflammatory properties, [but also] contains significant amounts of antioxidants. Consumers are just starting to understand the benefits of CBD, and when the floodgates open, they are going to need to be educated and be their own advocates. Hemp may be federally legal with the passage of the Farm Bill. However, more importantly, where is it sourced? How is it processed? The passage of the Farm Bill is only the first chapter.”

Indeed, the passage of the Farm Bill is expected to grow the hemp-derived CBD market to $22 billion by 2022, according to a Brightfield Group report released in September.

“This is a watershed moment for CBD in the United States,” said Bethany Gomez, director of research for the Brightfield Group. “With hemp and all of its derivatives officially removed from the Controlled Substances Act, CBD moves from a legal gray area into the light. That legal gray area has kept the industry small and fragmented—this shift will allow for CBD to make its way to the shelves of larger scale, mainstream distribution channels and pave the way for the large mainstream consumer packaged goods companies in industries like drinks, beauty, pet, skin care and tobacco to develop CBD products and capitalize on this emerging industry.”

Even while operating in this legal gray area with minimal marketing and limited distribution channels, Gomez added, CBD has grown by more than 80 percent this year to reach $590 million.

“Although competition will become more sophisticated and challenges will arise as FDA navigates just how to regulate hemp products and hemp-derived cannabinoids, our endeavor will remain to pave the way for testing and quality standards throughout the industry,” Summers said.

Although the Farm Bill will be a monumental step forward for hemp and hemp-derived CBD, the FDA has ruled that CBD is not an approved food ingredient, food additive or dietary supplement, which may limit the scope of the legislation, according to Richard Huang, CEO of vape producer Cloudious 9. Officially, the U.S. FDA allows only the fiber and oil from hemp seeds to be used in food products.

In fact, the California Department of Public Health issued a new state policy in July that prohibits hemp-derived CBD in food products, aligning with the FDA’s stance.

Even so, many see the Farm Bill as a step in the right direction for the industry.

“As we have seen many times before, the process of legalization is a an arduous one and takes a series of minor and major victories to achieve,” Huang said. “This would certainly be considered a major breakthrough and opens up the door for CBD and hemp for the much-needed research and mass adaptation. This opportunity to allow consumers to understand the positive application of hemp and CBD is a huge win for this industry.”

“This is a huge step in a direction that is much needed,” added Alex Wasyl, CEO of research and development company Nexien Biopharma. “Updated legislation and regulations on hemp and its constituents—primarily CBD and other non-psychoactive, non-THC cannabinoids—will lead to many positive developments.”

One of those positive developments will be farmers embracing this new crop, according to Barry Grissom, SVP, global development and general counsel for Electrum Partners, LLC, a Nevada-based business management company.

“With the passage of the Farm Bill, farmers will now have the option of growing hemp without fear of running afoul of the federal government,” Grissom said. “By treating hemp as just another commodity, it gives farmers an opportunity to be part of a growing economy as new markets develop for hemp to be used as paper, cloth, building materials, plastic and bio-fuel. This could be a real shot in the arm for struggling farm families.”

“The Farm Bill will effectively declassify hemp-derived CBD as a controlled substance, which removes uncertainty for producers, distributors and marketers of cannabidiol throughout the U.S.,” added Frank Lane, President of CFN Media. “As the market is predicted to grow to $22 billion, businesses that had been waiting for more clarity—particularly those in the health and wellness space—will be free and emboldened to launch their products.