2018 Farm Bill to Grow CBD Industry

After nearly 50 years as a Schedule I federally controlled substance, hemp is set to become a legal crop. If passed, the 2018 omnibus farm bill (which includes the Hemp Farming Act of 2018) will allow cannabidiol (CBD) to be legally sold in all 50 states. While related as members of the Cannabis sativa family, hemp and marijuana have different biological characteristics. Most importantly for federal legislators, hemp contains negligible amounts of the psychoactive constituent tetrahydrocannabinol (THC).

The federal government’s decision to the legalized hemp is part of a longer, more comprehensive process that stretches back four years, when President Obama signed the 2014 farm bill. At Senate Majority Leader Mitch McConnell’s urging, the 2014 farm bill created a pilot research program that authorized state departments of agriculture and universities to grow and research hemp under limited circumstances. However, due to continued federal prohibition on the crop, there were many restrictions on its cultivation during the pilot period. For example, farmers seeking to participate in the program needed to obtain a waiver from the Drug Enforcement Administration, and the bill also limited the number of acres that farmers could legally plant. The pilot program was a success, with at least 19 states participating, according to a congressional report. Moreover, since 2014, at least 40 states have since passed legislation relating to hemp cultivation, addressing such issues as licensure and seed certification.

With the 2017 farm bill set to expire on September 30th, American hemp producers are looking to Congress as they prepare for the arrival of what many believe will quickly become a billion-dollar-plus industry, given hemp’s increased use in pharmaceuticals and textiles. One major component of the nascent hemp industry will be the production of CBD, the non-psychotropic cannabis extract already in widespread use.

If passed, the farm bill will fundamentally alter hemp producers’ access to financial services benefits like federal crop insurance, as well as open access to banking and traditional capital markets.

Leader McConnell, one of hemp’s biggest advocates on the farm bill’s congressional conference committee, is in a prime position to advocate for its inclusion in the joint bill, scheduled to be heard in both chambers by September 30th.

Burns & Levinson LLP – Marcus Hernandez