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Farm Bill Effects on CBD Companies and Products

For both proponents and opponents of the 2018 federal Farm Bill, a fair characterization of the legislation could read: “This is not your father’s farm bill.” Because of specific contents–and the cultural moment in which the bill was passed–this statute goes beyond the usual programs authorized every five years–e.g. crop insurance, agricultural marketing regimes, school lunches and supplemental nutrition funding. Among its myriad 2018 provisions is the legalization of hemp production and sale in the United States. With the shackles taken off the hemp growers, a promising future awaits those in the business of creating and vending cannabinoid (CBD) products.

Is Hemp the Same as Marijuana?

Hemp has a long history of usefulness, going back to ancient China, about 10,000 BC. Excavated artifacts indicate that the Chinese employed hemp in rope, textiles, paper and bowstrings. While they tried to keep the value of hemp a secret, its utility soon caught on in other parts of Asia and beyond. Other cultures furthered hemp’s practicality, discovering its sanitizing properties for wounds and injuries. In fact, George Washington is said to have raised hemp at Mount Vernon. By the American Revolution, hemp’s versatility was well-known.

What makes hemp such an all-around, functional raw material? Scientifically dubbed Cannabis sativa, hemp consists of dense concentrations of cellulose, which combines flexibility with strength. Its industrial uses, therefore, are myriad. As noted above, hemp also retains certain healing properties. The cannabinol in hemp, CBD for short, compels scientists to further investigate this substance as a palliative for arthritis and other inflammatory conditions, as well as a possible treatment for lymphatic disorders. While hemp is closely related to marijuana (Cannabis indica), it contains nowhere near the level of tetrahydrocannabinol (THC), the agent that yields psychotropic changes. Hemp, to be clear, will not get a person high.

What Does Hemp Legalization Mean for the CBD Business?

Since the New Deal era, the federal government has–through legislation, regulation or both–prohibited the usage of all cannabis plants and their byproducts (with a few, limited exceptions). No distinctions were made among the varieties and their significantly diverging THC levels. The 2018 Farm Bill changes this universal approach, distinguishing “industrial hemp” as a safe commercial product, thereby transferring its oversight from the Drug Enforcement Administration to the U.S. Department of Agriculture. Not only can farmers grow hemp, but its CBD is now available for synthesis. The implications are multi-fold:

  • The agricultural potential is expansive. Hemp can grow as a field crop like grains. Best of all, it does not make the moisture demands that many fruits and vegetables do. Western farmers have an alternative for revenue that will not break the bank in terms of inputs.
  • Market research indicates over 800 different CBD products on the market. Leading marijuana retailers claim that over $60 million CBD items were sold in 2015 alone. With the relaxation of federal rules, that number is expected to rise sharply, an attractive signal of investment potential.
  • Looking ahead, the political side-effects could likewise prove beneficial. Removing hemp from the list of dangerous substances as articulated by the 1960s-era drug laws frees up needed resources for the prosecution of truly dangerous drugs.

Although hemp is not totally clear of legal tethers, this Farm Bill marks CBD entry into commercial markets as never before. It is likely to become a major focus of stock and commodity watchers.

2018-12-20T17:00:23+00:00

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