Congress just quietly passed a law that could spark a boom for the $1 billion marijuana-linked CBD industry

By Erin Brodwin
Source: businessinsider.com


Shutterstock

• The US Farm Bill passed on Wednesday legalizes hemp, a plant that's roughly identical to marijuana and is a key source of highly touted wellness ingredient CBD.
• The bill defines hemp as an agricultural product for the first time and amends a major drug law that hadn't been altered in 50 years.
• Experts said the shift could spike interest in CBD, which is also the active ingredient in the first cannabis-based medicine to gain federal approval in the US.
• Despite its hazy legal status, CBD already makes up a roughly $1 billion industry.

This week, a plant that's nearly identical to marijuana is set to become legal to grow in the US.

Thanks to the US Farm Bill, which the House passed on Wednesday in a 369 to 47 vote, American farmers will be able to plant and harvest hemp, a strain of the same plant species from which marijuana originates. The bill passed the Senate Tuesday in an 87 to 13 vote, and President Donald Trump has indicated his support.

Hemp legalization has been a longtime goal of Senate Majority Leader Mitch McConnell, a Republican from Kentucky, who believes it can help replace tobacco as a key crop for his state's farmers.

The move alters the language of a major drug law that had previously remained unchanged for half a century and loosely defined hemp alongside marijuana as a controlled substance. The new bill exempts hemp from that law and defines it as an agricultural product. That means farmers and researchers of hemp now get some of the same benefits as farmers and researchers of other crops, like the ability to apply for insurance and federal grants.

"The era of hemp prohibition is over," Jonathan Miller, legal counsel for a lobbying coalition of over 60 hemp companies called the US Hemp Roundtable, told Business Insider.

That's a key change for scientists, many of whom say previous drug laws deterred them from studying hemp because it was regulated like marijuana.

The bill may also boost interest in a nascent but booming $1 billion industry based on a component of the cannabis plant called CBD, which has been touted for a variety of health and wellness claims. CBD is popping up in more and more products, from coffee and tea to supplements and beer.

But because CBD can be sourced from both marijuana and hemp plants, its legal status, set by the Drug Enforcement Administration, remains somewhat hazy. CBD from marijuana, just like marijuana as a whole, remains illegal. But now that hemp is legal, CBD from hemp may be legal, too.

"The devil is in the details, and we don't know yet how the DEA will act to implement the law," Daniele Piomelli, the director of the University of California at Irvine Center for the Study of Cannabis and a professor of neuroscience and pharmacology, told Business Insider.

The DEA, which controls the scheduling of substances, has not said how it will respond to the new bill. As it stands, so long as a CBD product is "intended for human consumption," it remains a Schedule 1 drug, DEA spokesperson Katherine Pfaff told Business Insider on Tuesday. She said she couldn't comment on how the bill might affect the DEA's approach.

The difference between hemp and marijuana comes down to one word: strain

AP Photo/Steven Senne

Marijuana and hemp come from the same plant species, called cannabis sativa. Both contain THC and CBD. But each plant is its own unique strain of cannabis.

Until recently, hemp was bred almost entirely for industrial uses like manufacturing. As a result, hemp plants today have very low amounts of THC, the psychoactive chemical responsible formarijuana's high. Instead, hemp plants are often higher in CBD, or cannabidiol, which is also found in marijuana. CBD is now thought to be responsible for several of cannabis' therapeutic effects.

For example, marijuana-derived CBD is the active ingredient inEpidiolex, a syrup that is the first cannabis-based drug to gain US government approval for medical use. The government approved the drug over the summer. The drug treats two rare forms of childhood epilepsy.

One thing that is clear from the new bill is that commerce involving hemp is now in the clear. Federally insured banks, for example, have the green light for the first time to work with industrial hemp producers.

From A to CBD: cannabis is showing up in everything

By Chloe/Leslie Kirchoff

Because CBD can come from either marijuana or hemp plants, it is unclear whether or not hemp-derived CBD products are now legal. Previously, thousands of manufacturers and entrepreneurs glommed onto the CBD wellness trend with the awareness that CBD products existed in a legal gray zone.

Read more: Heineken is betting on a brew made with marijuana instead of alcohol, and it could help give a boost to the struggling beer industry

Part of the reason for this was that there was no specific language in the DEA's main drug law, called the Controlled Substances Act, that used the word "hemp."

Thanks to that fuzziness, you could find everything from CBD lattes in New York to CBD teas at grocery stores across the country.

But now that hemp is legal, some experts expect the trend to really take off.

"The passing of the farm bill will most certainly open up the marketplace for hemp products, specifically hemp extracts that are high in CBD," Josh Hendrix, the director of domestic product business development for cannabis company CV Sciences, told Business Insider.

"It will provide a higher comfort level for retailers and consumers and will lead to more investment and opportunity in the industry as it will continue to see rapid expansion."

Still, other experts — particularly scientists — have expressed concern that while the bill itself is a step in the right direction, what remains to be seen is how the DEA will respond to it. Until the DEA decides to change the status of CBD, researchers can't expect too many changes to their current work.

What CBD does — and may not do — for your health

Shutterstock

It's difficult to say what the real health benefits of CBD are right now. The drug does appear to have at least one well-vetted therapeutic benefit: staunching the symptoms of two rare forms of childhood epilepsy by way of the newly approved drug Epidiolex.

There's another pressing issue facing the CBD industry, too: The products are poorly regulated, meaning there's wide variation in their content, safety, and price.

For a 2017 study published in the Journal of the American Medical Association, researchers tested 84 CBD products purchased from 31 different online retailers. Roughly seven out of 10 items had different levels of CBD than what was written on the label. Of all of the items tested, roughly half had more CBD than was indicated; a quarter had less. And 18 of the samples tested positive for THC, despite it not being listed on the label.

"I've seen a lot of dirty CBD manufacturing facilities," Kelvin Harrylall, the CEO of a company called the CBD Palace that audits CBD companies and creates a list of vendors it deems safe for customers, told Business Insider in June.

"It's tough to know what you're getting."

The farm bill itself won't directly affect product safety. But experts believe that as these laws move toward legalization and an increased role for regulators, the companies that abide by strict manufacturing conditions will come out on top, while those who run fast and loose with rules will suffer.

"I believe if you are a CBD manufacturer and you can say that you're making a quality product ... then you have nothing to worry about," Harrylall said. "But if you aren't sure [or] if you've cut corners, those CBD manufacturers are the ones that should be worried."

THE SENATE HAS VOTED TO PASS THE FARM BILL CONFERENCE REPORT 87 TO 13

Source: votehemp.com/

This afternoon, the U.S. Senate voted to pass the Farm Bill conference report 87 to 13. The bill now goes to the House for a vote that will likely be held tomorrow or Thursday.

Congress is pushing to get the Farm Bill to the President's desk this week. Farmers are anxious for relief and the certainty that a new Farm Bill will provide. We are now one step closer to final passage. We will keep you updated.

Hemp and CBD legalization reportedly will be in Farm Bill

By Todd Runestad
Source: newhope.com



The hemp provision will remove hemp from the federal list of controlled substances.

Although the Congressional committee reconciling competing U.S. Senate and House versions of the Farm Bill are tight-lipped about the exact language that’s been agreed upon, it sounds like the bill, now expected to be signed next week, will legalize industrial hemp.

That spells good news for purveyors of hemp-derived CBD.

Senate Majority Leader Mitch McConnell (R-KY), who made sure he sat on the Congressional reconciliation committee, tweeted that CBD will continue its extraordinary trajectory.

“Thanks for your hard work, @SenPatRoberts,” tweeted McConnell, “for our farmers, rural communities and all Americans. Pleased that my provision to legalize industrial hemp is included in the Farm Bill.”

This was confirmed by two other reconciliation committee members, Rep. Mike Conaway (R-TX), Rep. Collin Peterson (D-MN), according to a Bloomberg Government reporter, also on Twitter.

The hemp provision reportedly will remove hemp from the federal list of controlled substances, and hemp farmers will be able to apply for crop insurance. Hemp must contain less than 0.3 percent THC. The bill would push hemp regulations both to the U.S. Department of Agriculture and not the Department of Justice as well as to individual states to decide whether or not they want to go forward with commercializing hemp and hemp products including CBD. States can either develop their own plans or just abide by federal regulations that are to be developed by the USDA.

Farmers in the U.S. have planted more than 77,000 acres in 2018, according to Vote Hemp, about three times the amount grown in 2017.

The farm bill removes CBD from the Controlled Substances Act, thereby removing the DEA from enforcing – mistakenly or not – CBD products. However, the farm bill does not change requirements of the Federal Food, Drug, and Cosmetic Act, which means CBD is still subject to FDA regulations. Keeping the FDA involved – outside of its role as regulator of dietary supplements – still maintains an element of risk to CBD businesses.

The FDA has proclaimed in an online Q&A that it does not believe CBD qualifies as a definition of a dietary ingredient and thus is illegal for use in supplements. That’s because a CBD isolate was approved as a pharmaceutical drug, making CBD isolates illegal as dietary supplements. Thus far, however, all the agency has done is gone after a few dozen companies making illegitimate disease claims—the type that trips up other mainstream supplement companies as well. And the conventional wisdom is that full-spectrum, industrial hemp-derived oil containing CBD is not an isolate and thus should be legal in any event.

The farm bill was expected to be signed this week, but Congressional action was put on hold because of the death of President George H.W. Bush and the pomp and circumstance that has surrounded his body lying in state in the nation’s capital this week.

That leaves Congress only two weeks to continue its lame-duck business before adjourning on Friday, Dec. 21. Congress is expected to conclude the farm bill proceedings next week.

Stay tuned for our industry coverage and commentary next week of the ramifications of passage of the industrial hemp provisions, in particular on the booming hemp-derived CBD market.

At Natural Products Expo West, which will be held in Anaheim next March, there will be a full day of The Natural Products Hemp & CBD Summit on Tuesday, March 5.

Legalization of Hemp Could Be First Step for Federal Marijuana Protections

Source: gfarma.news/

ATTENTION, MARIJUANA fans: Don’t light up that celebratory doobie just yet. But a long pot-hostile Congress appears headed toward acceptance of a substance more states are deeming legal for medicinal and even recreational purposes.

The 2018 farm bill includes language allowing farmers to grow hemp, a plant that is from the same cannabis family as marijuana but with just a trace of the tetrahydrocannabinol, or THC, that provides the “high.” And pot legalization proponents are optimistic that the next Congress, with Democratic control of the House and the departure of one of the chamber’s most ardent foes of legalization, will move on marijuana as well.

“This farm bill is going to be a total game-changer,” says Stuart Titus, CEO of Medical Marijuana Inc. While hemp has important differences from marijuana, “I think this is going to be a tremendous step forward” in winning federal approval of marijuana use, he says. Michigan on Thursdaywill become the 10th state along with the District of Columbia to permit recreational marijuana use and the first in the Midwest. All the other states that have legalized the substance are on the coasts.

Marijuana possession is still a violation of federal law in all 50 states and D.C., creating a source of tension between the deferral and state governments as the movement gains steam in state legislatures and in state ballot initiatives.

Hemp has industrial applications, including in biofuels and construction materials, and is a source of both hemp oil – used as a vitamin supplement and for skin care, among other things – and cannabidiol, or CBD, an oil with more therapeutic purposes.

Marijuana is a source of CBD, but the plant also contains THC. That substance, which is intoxicating, is also used to treat pain, glaucoma, muscle spasticity and nausea.

Both hemp and marijuana are classified as controlled substances under the law. The farm bill, which is undergoing final negotiations to reconcile the House- and Senate-passed versions of the legislation, would classify hemp as an agricultural product and remove it from the list of controlled substances. Hemp can be grown now only for pre-approved “research” purposes and not as a commodity.

The farm bill offers no relief for would-be legal users of marijuana. But Titus and others believe that the agriculture bill is a first step in convincing Congress to consider marijuana not as a scary drug but as a relatively low-risk recreational intoxicant and therapeutic agent.

Public opinion – and with it, state action – is similar to the speedy move toward acceptance of same-sex marriage, says John Hudak, a Brookings Institution scholar and author of the book “Marijuana: A Short History.”

“The support for same-sex marriage actually follows a similar trend over a similar period of time,” Hudak said. “It’s a broader social awakening to issues in the United States that people just think … are victimless.”

The economic argument helped win support for hemp legalization. The provision was championed by Senate Majority Leader Mitch McConnell, a Republican whose home state of Kentucky is a source of hemp crops. Investors want to get in on the business, and marijuana legalization offers tantalizing tax opportunities for both states and the federal government, Hudak says.

Most encouraging for backers of pot legalization is the changing political environment. Not only will Democrats run the House next year, but the chamber will not have anti-marijuana Rep. Pete Session, R-Texas, who was defeated in the midterms. Sessions, as chairman of the House Rules Committee, blocked legislation that would have protected states that have legalized marijuana for medical or recreational use.

“We are very bullish on the notion that in 2019 and 2020 Congress is in fact going to take on a number of broader issues” loosening federal rules on pot, says Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, or NORML. Anti-marijuana lawmakers “have been replaced by members that are far more sympathetic,” he says. And given the importance of young voters to the success of any Democratic contender for president in 2020, it would be “political malpractice” not to campaign on legalizing marijuana, he says.

“It’s not an outlier (of an issue) anymore,” says attorney Matthew Abel of Cannabis Counsel, PLC, a Detroit law firm dedicated solely to marijuana litigation. Abel supports the recently approved Michigan referendum that as of Thursday will allow legal, private use of marijuana in the Wolverine State for adults 21 and older.

“Descheduling [the substance as a harmful drug] has always been the Holy Grail. And it does seem that we’re getting closer,” he says.

Video: The Benefits of Legalization

Source: thecannabisindustry.org/

WATCH THE VIDEO

---

 

In this third installment of NCIA’s animated educational video series, we explore the benefits of legalizing cannabis nationwide and beyond. Learn how ending federal prohibition can improve public safety and add economic opportunities to our communities, and how you can help.

Watch our other two animated videos to learn more about the cannabis industry banking crisis and the burdens of Section 280E of the IRS Tax Code.

 

Michigan to be first Midwest state to allow recreational pot

By Ed White
Source: abcnews.go.com


FILE - In this April 12, 2018 file photo, nugs of marijuana await packaging at the Hollingsworth Cannabis Company near Shelton, Wash.

Michigan clears a threshold this week as the first state in the Midwest to allow marijuana for more than just medical purposes. In the Nov. 6 election, voters by a wide margin endorsed recreational use by adults who are at least 21. The move comes 10 years after voters approved marijuana to alleviate the effects of certain illnesses. Many supporters believe that decadelong experience, as well as similar legalization efforts in other states, led to victory at the ballot box.

"It's certainly going to smell like freedom," starting Thursday, said Detroit lawyer Matt Abel, who specializes in marijuana law and whose office sign says, "cannabis counsel."

Eleven states and the District of Columbia have legalized recreational marijuana. Of course, there are many caveats in Michigan and already some tension.

HOW MUCH?

Michigan residents who are 21 or older can possess or transport up to 2.5 ounces (70.8 grams) of marijuana. They can grow up to 12 plants, although not in public view. They also can give 2.5 ounces (70.8 grams) to another person, but not for payment.

BUZZ ZONES

Marijuana can be consumed only at homes or other private property, although landlords and employers can prohibit it. It can't be smoked at bars or restaurants or any other place that is accessible to the public. That means getting high while walking the dog or hustling between college classes could lead to trouble. Michigan colleges and universities have repeatedly stated that campus anti-drug policies won't change. Employers will still be able to fire people for drug use.

POT SHOPS

The doors are not open yet. The new law creates a system of growing and selling marijuana, with millions of dollars to be collected in taxes, but those shops still are months away and must involve state regulators. So people who want marijuana now will need to grow it or obtain it by other, perhaps illegal, means. Michigan is just beginning to license medical-marijuana dispensaries. Abel hopes Gov.-elect Gretchen Whitmer considers allowing them to sell marijuana for recreational use to meet demand. "The sooner they license retail stores, the sooner the state will be collecting revenue," he says.

LOCAL RESISTANCE

Depending on where people live, buying marijuana won't be as easy as buying bread. Elected officials in some communities already have voted to ban pot businesses, long before rules are in place. A local veto is available under the law. Local governments also can revisit their policy later. Communities that block marijuana businesses lose an opportunity to capture a portion of a 10 percent tax. But St. Joseph Mayor Mike Garey predicts: "It's not going to be the pot of gold at the end of the rainbow." St. Joseph is out for now.

POLICE AND PROSECUTORS

After the election, some prosecutors said they would dismiss any pending misdemeanor cases involving small amounts of marijuana that now will be legal. "The people have spoken," Kent County prosecutor Chris Becker says. Expungement of past convictions is also being considered in some counties. Marijuana still is illegal under federal law, although Michigan's federal prosecutors say they typically pursue major drug traffickers, not "low-level offenders." State police spokesman Lt. Mike Shaw says it remains illegal to drive while under the influence of marijuana. "This law isn't going to change that," he says.

 

The 11th State to Legalize Recreational Marijuana Is New Jersey

By Sean Williams
Source: fool.com

This state could see $850 million in annual cannabis sales by 2022 if recreational weed is legalized.

This has been a big year for the North American cannabis industry. Without question, the highlight was the legalization of recreational marijuana in Canada on Oct. 17. Prime Minister Justin Trudeau had spoken for years about legalization and was finally able to see his vision realized with the passage of the Cannabis Act. A few years from now, when capacity-expansion projects are complete, the Canadian legal weed industry could be generating upward of $5 billion in added annual sales.

It's also been a banner year for the U.S. market. During midterm elections in November, voters in two new states approved medical marijuana initiatives, bringing the number of states to have legalized pot in some capacity to 32. Residents of Michigan also voted to green-light adult-use cannabis, becoming the 10th state to do so.

Now cannabis enthusiasts and investors have turned their attention to which state(s) could be next to legalize. Thankfully, not much guesswork may be needed.

Image source: Getty Images

On Monday, Nov. 26, two panels in New Jersey voted overwhelmingly to approve three new cannabis bills -- one of which aims to legalize adult-use marijuana.

These panels, from the state's Senate and Assembly, voted 7 to 4, with two abstentions in the Senate, and 7 to 3, with one abstention in the Assembly, in favor of the bill that would legalize recreational marijuana within the state. The additional two bills that also passed cover an expansion of the state's existing medical cannabis program and the creation of a system that would speed up criminal expungements of low-level cannabis offenses. Now all three bills move on for an official vote from the full Senate and Assembly. Assuming passage, a recreational marijuana bill could find its way to Gov. Phil Murphy's (D-N.J.) desk within a few weeks.

What might recreational legalization look like in the Garden State? As with other legalized states, it would allow adults aged 21 and up to purchase up to 1 ounce of cannabis. There would be an attached tax rate of 12%, which would be considerably lower than the aggregate tax rates that some folks might pay in Washington state or California of up to 37% and 45%, respectively. For what it's worth, Gov. Murphy has suggested that a 12% tax rate is too low. Instead, Murphy has called for an excise tax of 25% on legal weed sales for what could be an $850 million industry within the state by 2022. 

IMAGE SOURCE: GETTY IMAGES.

Beyond the basics, the broad-based legalization bill also includes a section on the expedited expungement of low-level marijuana offenses. Though a separate bill is being worked on that would tackle this faster and more efficiently, the mere existence of this clause is worth noting. It's also worth pointing out that North Dakota voters turned down a recreational legalization initiative in the recent midterms that had an expungement clause, suggesting that it's no given to attract support.

Finally, the bill would allow for marijuana delivery services within the state, as well as give permission for dispensaries to create "consumption areas." Essentially, New Jersey would permit pot shops within dispensaries where consumers could enjoy their product outside of their homes. 

Needless to say, it's an ambitious bill with a lot more going on than a simple cut-and-dried legalization of recreational pot.

IMAGE SOURCE: GETTY IMAGES.

Marijuana stocks and investors are paying close attention

Though Gov. Murphy has taken exception to the proposed tax rate, he's been very clear in the past about his support for legalizing recreational marijuana as both a revenue driver within the state and a means to reduce cannabis enforcement costs. This, presumably, gives New Jersey a very good chance of becoming the 11th state to legalize recreational pot. Should this happen, a number of pot stocks could be all smiles, and none more so than Curaleaf Holdings(NASDAQOTH:LDVTF).

Curaleaf, which IPO'd in late October with more than a $4 billion valuation, making it the largest IPO in marijuana history, currently has 28 dispensaries, 12 cultivation facilities, and nine processing sites throughout select legalized U.S. states. As a reminder, since the federal government has stood firm on its Schedule I classification for cannabis (i.e., wholly illegal), interstate transport of marijuana isn't permissible. Therefore, the only way to vertically control supply and costs as a U.S. dispensary is to also grow and process cannabis within a state, which is what Curaleaf is doing.

As noted by analyst Robert Fagan of GMP Securities, courtesy of Investor's Business Daily, the broad-based legalization bill would allow existing dispensaries in the state (which includes Curaleaf's) to immediately begin recreational sales, assuming approval, without the need to apply for any new licensing.

Furthermore, Curaleaf is working on a 435,000-square-foot greenhouse facility in New Jersey. The first phase of that production should come online next year, allowing it to become a key producer and retailer within the Garden State. 

IMAGE SOURCE: GETTY IMAGES.

By a similar token, the also-newly public Acreage Holdings (NASDAQOTH:ACRZF) would likely benefit from a New Jersey legalization. Back in March, the vertically integrated Acreage made the decision to enter the New Jersey market by partnering with the Compassionate Care Foundation (CCF) in the state. CCF is one of only six licensed alternative treatment center operators in New Jersey, with Acreage providing the financial resources to help meet patient demand. Presumably, with Acreage having assets up and down the cannabis supply chain, it could broaden its horizons if the New Jersey legalization bill passes. 

Last, and per the norm, don't sleep on KushCo Holdings (NASDAQOTH:KSHB). Pretty much anytime a new country or state legalizes in some capacity, KushCo is there chomping at the bit to get its piece of the packaging-and-branding-solutions pie. As a provider of tamper- and child-resistant packaging, KushCo ensures that medical and recreational growers remain compliant with local, state, and federal laws. Also, because packaging requirements tend to be so strict, KushCo takes on the task of helping growers and their products stand out. It's an indispensable behind-the-scenes pot stock that could benefit if the Garden State goes green.