U.S. CBD Commerce Still Mired in Bureaucracy

U.S. CBD Commerce Still Mired in Bureaucracy

  • California Assembly votes 76 – 0 to approve new hemp commerce bill
  • Bill potentially paves the way to manufacture and retail CBD-related foods, drinks and cosmetics in the state
  • Additional obstacles remain at the federal, state, and local levels of government 
  • National hemp market estimated to reach $20 billion annually once regulatory hurdles eliminated

Investors may want to cheer a unanimous vote in California’s state Assembly to send a new hemp commerce bill to the Senate for a vote. But before anyone gets too excited, (as always) people need to ‘read the fine print’.

With the passage of the U.S. 2018 Farm Bill, a national hemp industry was established, right? Not exactly.

The legislation did remove the largest obstacle to a legal hemp industry in the United States: the (irrational) federal Prohibition against hemp cultivation. However, that’s basically all that the Farm Bill did.

While hemp can now be legally cultivated in the U.S., being allowed to manufacture and sell hemp-based products in the United States is an entirely different proposition. Here, additional archaic prohibitions and bureaucratic red-tape are still blocking most forms of hemp commerce.

As cannabis investors know, the main thrust of the new hemp industry in the U.S. is the cultivation of CBD-rich strains of hemp. Emerging science on cannabis is uncovering enormous potential in cannabinoids to alleviate medical ailments and for general health promotion.

Cannabidiol (CBD) is one of the two most common cannabinoids in the cannabis plant, along with tetrahydrocannabinol (THC). While THC possesses mild psychoactive properties, CBD is completely non-psychoactive. For this reason, CBD-related commerce faces much less political and regulatory opposition in the still marijuana-phobic United States.

The seeds alone for high-CBD (feminized) hemp retail for up to $30,000 per pound – literally worth their weight in gold.

However, while hemp can now be cultivated legally in the U.S., putting this valuable crop into products that can be sold on U.S. retail shelves is still a long way off. Remaining obstacles exist not only at the federal level but also the state (and local) level.

A case in point is California.

A recent article from 420 Intel hails a new vote in California’s state Assembly.

California just made a groundbreaking decision in the right direction. As long as the food or beverage contains CBD (Cannabidiol) that is derived from hemp and not from cannabis, it will soon be legal for retail sale and consumption in California. That also includes topicals and other cosmetics that contain CBD.

Sounds promising. But then the caveats begin to emerge.

However, the bill flies in the face of a 2018 policy adopted by the California Department of Public Health which banned CBD for use on humans or animals.

As [Democrat Cecilia] Aguiar-Curry pointed out, “The position of state regulators is severely limiting Californians’ access to a product that many consumers believe substantially improves their health and wellness,” she said. “This is disrupting manufacturers, retailers, and farmers, and is also putting the state’s agricultural industry at a disadvantage in pursuing a national market estimated to reach $20 billion annually in the next few years.”

First, this bill still needs to clear the California Senate. Then the state needs to remove or amend any other in-state policies and regulations that still stand in the way of hemp commerce in California.

Then comes attempting to implement such legislation in conjunction with national and local levels of government. Existing FDA prohibitions prevent would-be retailers of CBD hemp products from manufacturing and selling these products as either health supplements or dietary supplements.

Even when (if?) the FDA is finally brought on board, this doesn’t mean that Californians will be able to walk into local grocery stores or pharmacies to purchase CBD-infused food/health products.

As TSI has previously noted, only roughly 10% of the state’s counties have fully legalized cannabis commerce. Roughly 60% of counties still have full Prohibition policies in place with respect to legal cannabis commerce. While less opposition can be expected toward these new hemp-related products, this is still another barrier that California hemp companies need to overcome.

Everyone agrees that hemp has great potential as an emerging industry in the U.S.
Everyone agrees that archaic laws and regulations that stand in the way of this need to be removed as soon as possible.

But this is the United States. Even with the political consensus to get this done, it could still take years for legalized hemp commerce to become a reality in the U.S.

Published at Mon, 24 Jun 2019 16:10:06 +0000