The Federal declassification of marijuana may only be months away and will drastically reshape the current legalized cannabis industry as we know it. However, what most people overlook (or don’t know), is that industrial hemp was federally declassified and legalized years ago.
The 2014 Farm Bill made significant changes regarding the cultivation of industrial hemp, a variety of the Cannabis sativa plant, which is related to marijuana but contains very low levels of THC (tetrahydrocannabinol), the psychoactive compound in marijuana. And four years later, the 2018 Farm Bill took hemp legalization one step further:
The bill removed hemp from the list of controlled substances under the Controlled Substances Act (CSA). This effectively legalized the cultivation, processing, and sale of hemp and hemp-derived products at the federal level, provided they contain no more than 0.3% THC (tetrahydrocannabinol) on a dry weight basis.
Hemp was redefined as an agricultural commodity, which distinguished it from marijuana, allowing it to be treated more like other crops.
The bill ensured that hemp and hemp products could be transported across state lines, even if the states in question had different laws regarding hemp. This provision was crucial for the development of a national market for hemp products.
The long and short of it is this: the 2014 and 2018 Farm Bills created a loophole around the sale and distribution of hemp-derived products across the United States, so even in states where marijuana adult use is illegal, consumers still have access to, and can legally purchase, products if they contain no more than 0.3% of THC.
So, what does this mean for you? It means your prospect pool is likely larger than you think, and it may be worth expanding your focus to states where adult use hasn’t yet been passed.
Expansion of Hemp Cultivation: Even in states where adult-use marijuana is illegal, farmers and businesses have taken advantage of the opportunity to grow and sell hemp. The agricultural sector in these states has benefited from the introduction of a new, legal crop, providing an alternative revenue stream.
Rise of CBD Products: The demand for CBD products has surged nationwide, including in states where marijuana is illegal. Retailers in these states have capitalized on the legality of hemp-derived CBD, selling products such as oils, edibles, topicals, and supplements. This has created a booming market that operates separately from the illegal marijuana market.
Increased Consumer Access: In states where adult-use marijuana is illegal, the availability of hemp-derived products has provided consumers with legal access to cannabis-related products, particularly those aimed at wellness and health, without violating state laws. This has allowed consumers to explore the benefits of cannabis, albeit in a limited form.
Job Creation and Revenue: The hemp industry has created jobs in farming, processing, retail, and marketing, contributing to economic growth even in states that do not allow recreational marijuana. This economic impact is especially significant in rural areas where hemp farming has become an important part of the local economy.
Revenue from Licensing and Regulation: States that allow hemp production and sales have generated revenue through licensing fees, taxes, and regulation. This has provided a new source of income for state governments, which could be used to fund various public services.
Of course, this gray area isn’t without its challenges and has, not surprisingly, created confusion and conversation in states where adult use remains illegal:
Education and Misconceptions: The influx of hemp products has necessitated greater public education on the differences between hemp and marijuana. Despite this, there is still widespread confusion among consumers about what is legal and what is not, especially when it comes to the THC content in products.
State-Specific Regulations: States where marijuana remains illegal often have stricter regulations on hemp-derived products, particularly CBD. Some states have imposed bans or heavy restrictions on the sale of certain CBD products, especially edibles and beverages, due to concerns about their safety and the lack of FDA approval.
Ongoing Legal Debate: In states where marijuana is illegal, the rise of hemp and CBD has sparked ongoing debates about the legal status of these products. Some lawmakers have pushed for tighter regulations or bans, while others advocate for more freedom in the hemp market, sometimes even as a precursor to broader marijuana legalization.
The legalization of hemp through the 2018 Farm Bill has had a considerable impact on states where adult-use marijuana remains illegal.
Why should you care? States like this could very likely hold opportunities for an organization like yours! Bottom line: expand your reach—you may find a few layups by putting some effort into this ‘under the radar’ market!
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