Cannabis to Face Big Policy Issues in 2021

Thom Thompson

Thom Thompson

Editor

February was a quiet news month for industrial hemp, giving us a little time to think about some of the structural issues facing the industry. Per usual, PanXchange’s monthly Benchmarks & Analysis report provided a good launching pad.  

FDA (in)action

In its recent practice, the Food and Drug Administration mostly ignores the flouting of its rules against including a drug in foodstuffs or the medical claims made by certain CBD merchandisers. CBD qualifies for regulation by the FDA because CBD’s first use was in CBD-based Epidiolex, a treatment for certain rare seizure disorders. The FDA approved Epidiolex in June 2018 and has approved no other uses of CBD. 

There was widespread disappointment with a report authored by FDA Commissioner Stephen Hahn and published in January titled Use and Safety Profile of Cannabidiol (CBD) Products. After noting how much interest there is in CBD and how prevalent its use has become, the Commissioner admitted, “We still don’t have clear answers to important questions such as what adverse reactions may be associated with CBD products and what risks are associated with the long-term use of CBD products.” 

Speaking in Washington last week to representatives of state agriculture departments, Commissioner Hahn again complained about the lack of data but then also said, “We’re not going to be able to say you can’t use these products. It’s a fool’s game to try to even approach that.”

Last year the agency sent a draft of its CBD enforcement policy to the Trump administration’s Office of Management and Budget for review and approval. The proposed policy, which was not published at the time, was withdrawn by the agency when the Biden administration took office. There is no known timeline for it to be reviewed. 

The FDA’s slow motion on regulating CBD has got to be frustrating for PanXchange’s traders and customers as well as the rest of the industrial hemp industry. In a PanXchange survey in October 2020, seventy-one percent of survey respondents said that FDA approval of CBD as a safe food ingredient would have the greatest impact on market growth for industrial hemp. The other survey choices were enhanced certainty and better conditions for interstate trading, more clarity about the status of synthetic cannabinoids or traction in hemp’s use in sequestering carbon initiatives.

 National legalization

In early February, the tobacco giant Altria told Cannabis Wire that it had registered to lobby the Virginia state government on allowing marijuana sales in the state. The company had earlier lobbied the federal government regarding industrial hemp as part of the 2018 Farm Act. It also told Cannabis Wire, “Altria supports the federal legalization of cannabis under an appropriate regulatory framework.” With its $1.8 billion purchase of a 45% stake in Cronos, a major Canadian producer and distributor of cannabis, and its roots in recreational tobacco use, the $80-plus billion company looks to become a big force in marijuana. 

While national legalization of marijuana might create a single U.S.-wide market for marijuana, it is more likely to lead to state-regulated market places for growing, processing, and selling cannabis with 0.3%  and more THC. THC is the cannabinoid that makes people feel “high.”

On the other hand, a national law could emerge that focuses strictly on the 0.3% threshold. Ignoring industrial hemp as distinct from marijuana would disrupt the nascent CBD economy if it were to permit CBD from marijuana sources to trade commercially alongside industrial hemp-derived CBD. The already saturated CBD-hemp market hardly needs a supply boost in the form of by-products from THC producers. 

A potential upside of national legalization for CBD hemp is that the Congressional action that leads to national legalization might at least catalyze, if not specifically authorize and fund, research into THC and CBD and some or all of the other cannabinoids. There are more than 100 of them.

Miscellaneous

This month’s newsletter also reports on a gut-kick to an industry that is already down. On February 9 the Humboldt County, California Board of Supervisors unanimously voted permanently to ban the outdoor production of industrial hemp in order to protect the thriving marijuana industry. 

Producers there are concerned about wind-borne pollen from low-THC plants contaminating the plantings of high-THC farms. Humboldt County has “the highest density of cannabis farms in North America and perhaps the world,” according to the Humboldt County Growers Alliance. 

Other jurisdictions in California have enacted temporary prohibitions on producers of low-THC varieties of cannabis, namely industrial hemp. Humboldt County is the first locality known to make the ban permanent. 

According to PanXchange’s February 2021 data, prices for all sorts of hemp remain low as the industry continues to work through last year’s crop on top of 2019’s huge surplus. 

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