2018 Farm Bill FAQs

Kay Tamillow

What is happening with the Farm Bill on Capitol Hill?

A compromise bill to legalize hemp and its extracts (CBD) across the United States has been developed, and both the Senate and House have signed off on it. It awaits only the President’s signature to become a law. The President has indicated that he approves of  this bi-partisan legislation.

What does the Farm Bill say?

The full bill text is hundreds of pages long, but the hemp provision-specific language has been summed up nicely by the U.S. Hemp Roundtable here: https://hempsupporter.com/wp-content/uploads/2018/12/What-Does-the-Farm-Bill-Do-2.pdf

How will the law and regulations work in practice once hemp is legalized?

This will look nothing like cannabis, as federal interference in interstate commerce is prohibited, and the substance will be fully legal.

States will be responsible for developing their own regulatory frameworks, as overseen by the U.S. Department of Agriculture (USDA) - which must approve or reject plans within 60 days of submission. Many states have begun making progress on this front already, allowing for or restricting hemp CBD cultivation, processing and sales apart from or alongside cannabis regulations. Instead of creating their own policies on the sales of hemp CBD as a nutraceutical, food additive or cosmetic, some states have deferred the decision to the Food and Drug Administration - which has not yet made a determination on how it will approach hemp-derived CBD products beyond Epidiolex medication.

What is the FDA’s role in the Farm Bill?

The FDA will have the same role relating to CBD products as it does with any other commodity. The agency has shown a positive outlook on the medicinal benefits of CBD use and determined that CBD is not prone to abuse (in the case of Epidiolex), but its approach to hemp CBD supplements, foods and cosmetics is yet to be determined.

Some major manufacturers have already begun taking steps to conduct trials to test the safety of their CBD products. Once product is legal and human trials are permitted, this process is expected to move quickly. FDA approval of one product applies to like products, so this process will not need to be repeated by each individual manufacturer.

If the Farm Bill passes - what happens next?

Immediate implications of the Farm Bill’s passing: De-scheduling and federal-level legalization.

The policy change will lift interstate supply chain limitations, remove burdensome tax requirements, and provide the industry with its first access to formal financing, insurance and advertisement, among other things. Investor, manufacturer, retailer and consumer confidence will be heightened, bringing a flood of capital into the space.

Medium-term implications: Expanding growth

Chained retailers will be eager to stock products in thousands of brick-and-mortar locations across the country in 2019.

Consumers across the spectrum – from pet owners to chronic pain patients to glam users – will be able to learn about, understand, accept, and more easily access CBD products.

Research (including human trials) will be better financed and broader in scope.

Mainstream consumer packaged goods (CPG) companies will set themselves up to enter the space with scalable nutritional supplement lines, CBD-infused food and beverages, cosmetics, topicals, or other products. FDA approval is expected to drive much of CPG growth. Timeline: 18-24 months.

Why are your growth figures higher than those of other market research firms?

Each of the implications listed above will equate to tremendous growth in the market. But beyond product versatility, formal advertising, channel growth, and increased capital - it is important to step back and start looking at CBD growth as completely separate from that of cannabis.

Cannabis growth has been siloed and stifled by the regulatory structures in place, which make leveraging resources to scale very challenging due to restrictions on interstate commerce. This has caused growth to be incremental in the cannabis space. CBD, however, will have all the opportunities afforded to other commodities on the mainstream market - and with the lifting of this barrier, will grow exponentially.

Where will hemp be sourced from? Is it being produced already?

There will likely be a supply bottleneck as new rules are established, U.S. farmers are registered and begin establishing or ramping up their cultivation efforts in order to meet the demands of companies looking to scale up quickly. There are cultivators all over the country already hard at work growing hemp in states where authorized (e.g. CO, KY), but their numbers and volume of production will need to expand significantly before supply catches up with demand. In the meantime, international imports will help fill the gaps, as is occurring today.