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Marijuana Industry News August 10, 2019 MJ Shareholders
Following 4/20 and 7/10 on the calendar, the next industry holiday is a newcomer: National CBD Day, celebrated on Aug. 8 to recognize the cannabinoid that has experienced explosive growth in popularity since the 2018 Farm Bill federally legalized hemp.
National CBD Day was founded by cbdMD, a vertically integrated CBD company, to bring awareness to CBD and the benefits it provides, according to the National Day Calendar. The National Day Calendar Registrar added National CBD Day to its list of more than 1,500 national days and proclaimed it be observed annually starting on Aug. 8, 2018.
To commemorate the holiday, here is a look at the evolution of the CBD industry since the 2018 Farm Bill was signed into law in December.
Farm Bill Federally Legalizes Hemp
President Donald Trump signed the 2018 Farm Bill into law Dec. 20, officially legalizing the nationwide cultivation and sale of industrial hemp, which is defined as cannabis containing less than 0.3-percent THC. Congress passed the legislation Dec. 12 after months of preparation and debate.
The new law removed hemp from the Controlled Substances Act and allows farmers to pursue federal hemp cultivation permits. Individual states can regulate the industry within their borders as they see fit, and already, several states, including Florida and Texas, have passed laws to legalize and regulate hemp and CBD.
Federal Agencies Take Up Regulations
In late December, just after the Farm Bill was signed, the Food and Drug Administration (FDA) Commissioner at the time, Scott Gottlieb, said the agency was looking for “pathways” that would legalize CBD in food, beverages and supplements, but quickly followed that announcement with a statement clarifying that the FDA considers CBD as a drug ingredient, and that it is therefore illegal to add the compound to food or health products without FDA approval.
Also casting a shadow over the newly legal industry was the government shutdown in the early days of 2019, which prevented the U.S. Department of Agriculture (USDA) from approving state hemp program regulations and kept the FBI from performing the background checks required to license prospective hemp farmers.
Since then, a regulatory gray area has left room for unanticipated challenges. For example, in late January, Idaho State Police arrested Denis Palamarchuk and charged him with felony drug trafficking after officers discovered 6,700 pounds of hemp in his truck, which was being transported from one licensed company to another.
In April, the USDA issued its first official guidance on the legal hemp industry by authorizing hemp seed imports. The department rolled out additional guidance in June with a memo indicating that hemp can legally be transported across state lines.
On May 31, the FDA held its first-ever public hearing on CBD to receive public comment on the compound, although it has yet to release any official policy or guidance for the industry. A more thorough report is expected sometime this fall.
Meanwhile, the Transportation Security Administration (TSA) updated its cannabis policy in May to allow travelers to bring certain CBD products on flights. The U.S. Postal Service (USPS) quickly followed suit on June 6 when it provided new mailing standards that allow certain products derived from cannabis and industrial hemp to be shipped under specific conditions.
In addition, the United States Patent and Trademark Office (USPTO) clarified in May that hemp businesses can apply for trademark registration, as long as their operations comply with the FDA’s regulations that hemp-derived CBD cannot be used as a food or beverage ingredient.
According to industry stakeholders, the new policies issued by TSA, USPS and USPTO signify the normalization of hemp and CBD products.
Industry Group Unveils Certification Program
In March, the U.S. Hemp Authority awarded its first Certification Seals to 13 companies that met the standards of its program, which is aimed at ensuring the safety, consistency and accurate labeling of hemp-derived products.
While some industry stakeholders saw the certification program as a positive step forward for the industry and a way to show the public that their businesses take proper steps to provide safe and quality products, others had concerns about the U.S. Hemp Authority’s work in the space. Some even signed off on an open letter that outlined the reasons that they opposed the Certified Seal program.
The U.S. Hemp Authority Technical Committee is developing the organization’s Guidance Plan 2.0 in an effort to improve the program and plans to incorporate public comment into its new program.
Big Retail Enters CBD Space
Last fall, before the passage of the Farm Bill, Brightfield Group issued a report predicting that the hemp-derived CBD market would reach $22 billion by 2022, and that the rapid growth would be supported by an anticipated increase in distribution channels for CBD products in the next few years.
This forecast sprang to life as chain retailers began entering the space in early 2019, when CVS announced in March that it would start selling hemp-derived CBD products in eight states. Days later, Walgreens announced that it, too, would enter the market, and unveiled plans to sell CBD creams, patches and sprays in nearly 1,500 stores in select states.
Kroger, a Cincinnati-based grocery store chain, began offering a variety of topical CBD products in several states in June, and Dillard’s announced in mid-July that it will carry a wide range of CBD wellness and beauty products from CBD For Life, a brand owned by iAnthus Capital Holdings Inc.
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