After a long journey through both the Senate and agriculture committees, the 2018 Farm Bill was signed into law by President Trump on December 20, 2018. Among the broad-ranging provisions of the 2018 Farm Bill, effective January 1, 2018, it legalized both the cultivation and sale of hemp. This is not only an important advancement for the hemp industry in the United States, but also for the business of cannabidiol (CBD).
The Farm Bill was passed by both chambers of Congress in landslide margins, with the Senate approving the bill in an 87 to 13 vote and the House of Representatives by 369 to 47. A lot of thanks needs to be given to the Senate Majority Leader Mitch McConnell, a Republican senator from Kentucky. He has been a long time supporter of hemp legalization in Kentucky and believes that hemp could be an alternative to tobacco, which is the “cash crop” that is commonly grown in his home state. Since hemp is becoming increasingly significant to the textile industry and areas like biofuel production or cosmetics, he recognizes a tangible opportunity for future market growth.
While McConnell still has a hard approach against any reform in marijuana law, his understanding of the hemp market, and, of course, his position of power and respect in the Republican party, have undoubtedly been the driving force behind the effort to recognize the hemp industry. So what does it all mean? What changes are we expecting to see and how does this affect CBD? Let’s take a closer look.
What Does the 2018 Farm Bill Have to Do with CBD?
The 2018 Farm Bill amends the Agricultural Marketing Act of 1946, which has redefined the legal definition of the word “hemp” to include products that are hemp-derived, including cannabinoids like CBD.
The definition states that, in accordance with the 2018 Farm Bill, hemp has now been defined as the plant Cannabis Sativa L. along with any part of the plant – including the seeds and all derivatives, acids, cannabinoids, extracts, salts, isomers, and salts of isomers, whether growing or not, with a THC concentration of not more than 0.3% on a dry weight basis. This means that hemp extracts, including CBD, may be used in products that are federally legal for sale, as long as the concentration of THC doesn’t exceed the 0.3% limit.
The bill also amends the Controlled Substances Act of 1970 to illuminate the fact that the term “marihuana” isn’t included in this new definition of hemp. The biggest change for hemp is that hemp itself and hemp-derived products will no longer be classified as schedule 1 products. The DEA had argued in the past that all cannabis extracts, whether derived from high-THC strains or hemp, were schedule 1 substances.
But now, the Farm Bill clearly states that hemp and derivatives of hemp, like CBD, aren’t controlled substances. Ultimately, this means that the DEA can no longer claim any jurisdiction over CBD that is hemp-derived.
However, this doesn’t mean that CBD and hemp won’t be regulated. It just means that the authority to make rules about these products and crops will shift to the FDA, USDA, and the states.
Who Will Be Responsible for Regulating Hemp and Hemp-Derived CBD?
Ultimately, the USDA will have authority over hemp in terms of it being an agricultural commodity. States will be allowed to make their own rules on hemp farming, but they will have to have it approved by the agency first, meaning that the USDA will have ultimate authority in this area.
When it comes to hemp products that are produced as supplements, food additives, or medications, the FDA will be in charge, as they are for all other types of products.
However, in the matter of CBD, it’s not yet clear how the FDA will proceed. But a statement on the topic was released by FDA Commissioner Scott Gottlieb after the Farm Bill signing ceremony at the end of 2018. He basically stated that the FDA would still have authority to regulate products that contain cannabis or cannabis-derived compounds. This authority stems from the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act.
This Act allows the FDA to continue enforcing laws that protect the public and patients while also providing potential regulatory pathways for those products that contain cannabis and cannabis-derived compounds.
Here are a few of the main points that we can take from this statement:
- If the FDA believes that consumers are at risk, they will warn them and take enforcement actions.
- Before any product claiming to have therapeutic benefit can be introduced to interstate commerce, it must be FDA approved for that purpose.
- Since THC and CBD are both active ingredients in FDA-approved drugs, the FDA states that it is illegal to introduce foods or supplements that contain CBD or THC into interstate commerce
- The FDA is evaluating whether to use its authority to issue regulation that allows the use of THC and/or CBD in a food or dietary supplement.
Although the FDA is still debating on what to do about hemp-derived cannabinoids, they have already added several hemp-derived food ingredients to their “generally recognized as safe” list. These include hemp seed protein, hulled hemp seeds, and hemp seed oil.
CBD is Legal Under Specific Circumstances
One big misconception about the 2018 Farm Bill is that CBD has been legalized. While it’s true that section 12619 of the bill has removed hemp-derived products from their schedule 1 status under the Controlled Substances Act, the legislation hasn’t legalized CBD in general. As we have briefly mentioned above, hemp-derived CBD is now legal, but CBD itself (like cannabis-derived CBD) is still listed as a schedule 1 substance under federal law.
The Farm Bill has created some exceptions to the schedule 1 status – in certain situations. The bill ensures that any cannabinoid that is hemp-derived will be legal if the hemp has been produced in a way that is consistent with the Farm Bill, association state regulations, associated federal regulations, and by a licensed grower.
All other cannabinoids that are produced in any other setting remain a schedule 1 substance according to federal law and are thus illegal. At this point in time, the only exception is pharmaceutical-grade CBD products, like GW Pharmaceuticals’ Epidiolex which has been approved by the FDA.
How the 2018 Farm Bill Affects the Hemp and CBD Industries
In 2017, the retail sales of products containing hemp, including personal care products, supplements, food and beverage products, and household products, reached $820 million. Based on the current demand, forecasters project that by 2020 the hemp and CBD industry will reach $1 billion. The 2018 Farm Bill will certainly boost the production and sale of both hemp and CBD.
Federal legalization means that businesses that deal in hemp and hemp-derived products (like CBD) and hemp producers are now free to pursue business more aggressively, without the worry of investigation or prosecution by federal authorities. Following the passing of the 2018 Farm Bill, CBD producers specifically will have a much greater incentive to use hemp as the primary source of CBD, rather than marijuana.
However, it’s important to remember that businesses who are involved in the hemp industry will still need to comply with state and federal regulations with regards to legalized hemp. Furthermore, businesses that sell CBD will need to stay clear of aggressive health-related marketing which could result in unwanted attention from the FDA.
Final Thoughts on the 2018 Farm Bill
While CBD in general still remains illegal at a federal level, having hemp-derived CBD made legal is a big step in the right direction. As stated by the bill, CBD that is derived from hemp and has a THC concentration of not more than 0.3% can be legally produced, sold, and possessed, under certain circumstances.
Since the 2018 Farm Bill is still very new, there is still much confusion surrounding the whole thing. We are sure to see more developments, clearer insights, and further explanations surrounding the bill within the coming year, so keep your eyes and ears open.