Nearly six months have passed since the 2018 Farm Bill was enacted on December 20, 2018, but the road to developing a successful business in the hemp industry is still filled with roadblocks.
Some of these obstacles are becoming easier to navigate, but we’re still a long way from a free and open hemp market, particularly as it relates to CBD products.
The Biggest Roadblocks Impede Sales and Business Growth
The reality of the hemp market nearly six months after the 2018 Farm Bill was enacted is there are states, government agencies, banks, and law enforcement groups that are either intentionally or unintentionally stopping hemp and hemp-related businesses from operating and growing freely.
1. Food and Drug Administration (FDA)
The 2018 Farm Bill allows the FDA to make its own rules related to hemp used in food and drug products. At this point, the FDA does not allow CBD products to be promoted using any type of health claim. In addition, the FDA says CBD products are not dietary supplements but rather, they are drugs that require approval under the U.S. Food, Drugs and Cosmetic Act (FDCA).
Bottom-line, the FDA is enforcing its hemp rules, which say any hemp/CBD products that claim to deliver therapeutic effects are drugs that must be approved by the FDA. Furthermore, the FDA says food and dietary supplements containing hemp/CBD cannot be introduced into interstate commerce.
Either way you look at it – food/dietary supplement or drug – the FDA makes it nearly impossible for CBD companies to legally sell their products today.
2. U.S. Department of Agriculture (USDA)
This month, the USDA released a legal opinion related to hemp production in order to clear up confusion about interstate transportation of hemp and who can get a hemp production license based on the 2018 Farm Bill.
The legal opinion from the USDA’s Office of the General Counsel (OGC) concluded:
- Hemp was removed from the list of Schedule 1 drugs and is no longer a controlled substance.
- The USDA is responsible for creating regulations related to hemp production.
- States and Indian tribes are not allowed to prohibit interstate transportation or shipment of hemp lawfully produced by a hemp license holder whose license was issued under the USDA plan.
- States and Indian tribes are not allowed to prohibit interstate transportation or shipment of hemp lawfully produced under the 2014 Farm Bill.
- States and Indian tribes are allowed to enact regulations and rules that are stricter than federal laws.
- The FDA and the U.S. Department of Health and Human Services (HHS) can regulate hemp under applicable FDA laws.
While the USDA has clarified its stance on some issues related to the hemp industry, it hasn’t removed all of the roadblocks, nor does it have the authority to do so. However, it does appear that the USDA is trying to make it easier for hemp companies to do business.
3. Facebook, Google and More
Facebook, Instagram (owned by Facebook), Google, other social media sites, and digital ad networks make it extremely difficult, if not impossible, for hemp and hemp-related businesses to advertise on their platforms.
Considering that Facebook, Instagram, and Google offer some of the most affordable advertising options for businesses of all sizes, these policies negatively affect the hemp industry and business growth.
Specifically, Facebook (including Instagram) prohibits the marketing and promotion of industrial hemp – a policy that Colleen Keahey Lanier, Executive Director of the Hemp Industries Association says is, “restricted to outdated policies that continue to conflate hemp with marijuana. Not all of Cannabis is considered a drug, and Facebook’s new AI technology if it continues to recognize images of Cannabis as a controlled substance generally.”
4. State Governments and Law Enforcement
Just because hemp is legal at the federal level doesn’t mean it’s legal in every state. In fact, each state can create its own regulations, which creates a fractured (and confusing) marketplace for both businesses and consumers.
That’s a lesson a 69-year old great grandmother learned the hard way in April when she was arrested for carrying CBD oil into Walt Disney World.
On the other hand, the Transportation Security Administration (TSA) changed its policy in May and now allows people to bring some hemp-derived CBD products on planes.
Despite the passing of the 2018 Farm Bill, many banks are still not willing to work with hemp businesses. In April, Senate Majority Leader Mitch McConnell (R-KY) and Sen. Ron Wyden (D-OR) sent letters to four key financial regulators asking them to clarify banking rules for hemp businesses.
The letters were sent to the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the Farm Credit Administration (FCA) asking for better access to bank accounts, loans, credit, capital, and more, so more people can start and grow their hemp businesses.
How the Hemp Industry is Fighting Back
This month, the Hemp Industries Association (in partnership with Bluebird Botanicals, Hoban Law Group, and Bish Enterprises) launched a new “Hemp is Legal” campaign nationally with a focus on changing Facebook’s advertising policy for businesses directly or indirectly involved in the hemp industry.
The Hemp Industries Association says Facebook’s policy exceeds what is required by law and is having a significant negative effect on hemp businesses that are trying to build digital footprints.
The campaign includes a digital ad in New York City’s Times Square that says “Facebook: Stop Censoring Hemp” and will run daily until August 24, 2019. The Hemp Industries Association is also asking supporters to sign a petition to stop hemp censorship.
Key Takeaways about Roadblocks in the Hemp Industry
Clearly, there are many roadblocks in the hemp industry that won’t be removed in the near future, but other obstacles could disappear if businesses, advocates, and organizations continue to put pressure on the right agencies and people.
In addition, continued scientific research that proves the benefits of CBD will help open doors. Already, research has concluded that CBD can be used to treat seizures related to pediatric epilepsy, and a more recent study found that CBD can help reduce cravings in people with opioid addictions.
However, at this point, we’re six months into the legal hemp market, and it looks like it will take another six months – and more – to remove most of the bumps that are preventing many businesses from thriving.