Marijuana legalization could supercharge CBD at retail

There’s a world of difference between health food store retailers and marijuana dispensaries, obviously. Just as there’s sales channel differentiation between the CBD a shopper can find at a pot shop and those products found at independent retailers.

But imagine a world that has eliminated the gray areas that have been built around hemp CBD—in particular the USDA and DEA’s concerns about the presence of THC, which has a profound effect on hemp farmers and extractors fearful of growing "hot" hemp or the transient rise in THC during extraction.

The effect of this on retailers is manifest. Primarily, it will lead to a new wave in consumer interest in hemp CBD. But it could also be a blessed relief to brands on the back end, the aforementioned producers and extractors. And it could also lead to a ton more innovation as brands look to differentiate with either marijuana or hemp sources (all under the 0.3% THC threshold, mind you).

Government roadblocks could fall

The Secure and Fair Enforcement (SAFE) Act passed the Democratic-led U.S. House of Representatives in September 2019—only to go nowhere in the Republican-led U.S. Senate. And the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 passed the Democratic-held U.S. House of Representatives in December 2020, only to not be taken up in the GOP-led Senate.

Related:2020 election could raise the fortunes of hemp and CBD

So is it possible that, now that the Democrats control both legislative branches of government in Washington, D.C., including the White House, that the entire cannabis plant could be unshackled from the Controlled Substances Act list?

“I do think it will be a game changer,” said Patrick Goggin, an attorney with the Hoban Law Group, which is representing the Hemp Industries Association in its lawsuits against the Drug Enforcement Agency (DEA) for continued regulatory overreach. “I do think removing marijuana from the schedule would be the beginning of the end of these policies and this campaign.”

The policies in question include the regulatory roadblocks that continue to be erected by the big three drug warriors: the FDA, USDA and DEA.

The DEA in particular was explicitly written out of any regulatory role around hemp with the 2018 farm bill. But the agency re-insinuated itself with a proposed rule that would make hemp extractors guilty of drug crimes when they go about their business of making hemp extracts, as there includes a brief and transient rise in delta-9 THC levels above the 0.3%THC threshold in the extraction process.

End-product regulation

Legalizing marijuana entirely holds within it the provocative idea that what distinguishes hemp from marijuana cannabis products is strictly the end-product THC levels—and source would then not matter.

“End product regulation is where this should be,” said Maureen West, in-house counsel for hemp CBD brand Functional Remedies who also was the industrial hemp program manager foer the state of Colorado. “Let’s just regulate the amount of THC in products. It seems to me that’s where this should go.”

With hemp still being held to the definition of 0.3% THC or less, the THC derived from hemp would no longer be a controlled substance. That right there would mean the DEA would, finally, be removed from regulating hemp.

And it would eliminate much of the consternation farmers are feeling around the USDA interim final rule that mandates an unrealistic testing regime.

It still, however, might not mean it’s all clear sailing for hemp.

“Looking at states,” said Rend Al-Mondhiry, attorney at the Amin Talati Wasserman law firm, “if they can regulate, it might not give hemp the relief it needs if state laws are more strict than the federal government provides.”

Could all cannabis be legalized by the 117th Congress, which will conduct business in the U.S. Capitol for the next two years?

In one fell swoop Congressional hemp legislation—the MORE Act (marijuana legalization), the SAFE Act (financial security for the cannabis industry) chief among them—could be taken care of all at once.

Possible, yes. But probable? 

It’s a heavy lift, to be sure. It would require 60 votes in the Senate if the McConnell rules still abide that require 60 votes for legislation to pass. But only Idaho (and Kansas depending how you look at it) forbids any type of CBD within their borders unless they contain an absolute 0.0% THC. And all but 13 states have either adult-use or medical marijuana on the books. And cannabis went five-for-five in the November elections, including deep-red South Dakota, which passed both medical and recreational marijuana laws in the election. All this movement gives cover for federal elected officials to take the entire country to the promised land.

That’s the title of former President Barack Obama’s book, and also possibly his greatest legacy—starting to unwind the federal prohibition of cannabis when his Justice Department declared in April 2009 that the federal government would not interfere with state cannabis laws.

So where elections have consequences, money also matters. Is the spike in pot stocks a harbinger that federal cannabis legislation could happen? That would strike down much of the regulatory hand-wringing around hemp CBD and liberate the plant—not entirely, as the FDA still has its own rules around claims and pharma preference, but it would surely be one giant leap forward.