The Farm Bill And The FDA: What Does Legal Even Mean?
Cannabidiol (CBD)—the chemical constituent derived from cannabis sativa—was thrust into the spotlight with the December passing of the Farm Bill (also known as the Agriculture Improvement Act of 2018). While the bill did include legislation that impacts traditional U.S. farmers—it called for raising marketing loan rates for most commodity crops like soybeans, corn, and grain sorghum—the portion of the bill that stands to have the most impact is the part that focuses on hemp.
According to the Farm Bill, hemp and hemp-derived products will no longer be Schedule I controlled substances. Naturally, reactions to the updated guidance were interpreted and misinterpreted throughout the hemp industry, so the US Department of Agriculture (USDA) and the FDA decided to set the record straight.
Keep It Regulated
Noted in New Frontier Data's The Global State of Hemp: 2019 Industry Outlook, the USDA will regulate the growing of hemp, and the FDA will oversee any products containing hemp or CBD that are sold as food additives, topicals, drugs or dietary supplements. Interstate commerce of hemp and hemp products can now legally take place, but individual states have the power to refuse to allow sales in their state.
Almost immediately after the signing of the Farm Bill, FDA Commissioner Scott Gottlieb published an update on hemp and CBD regulations, mainly restating existing policies. He reminded the public that the Farm Bill did not necessarily change the FDA’s authority to regulate products with cannabis and its derivatives, but pointed to the idea that with the increased public interest in cannabis, the FDA needs to clarify its regulations.
So while hemp remains subject to the FDA framework that’s already in place, the regulatory body is working on providing potential pathways for products that contain cannabis compounds. The FDA also announced that public inputs would be considered at a later time and local and state governments are interpreting the FDA’s rules in their own way. The FDA will also continue to closely monitor products that claim to have therapeutic benefits, as is the norm for any product that makes a similar claim.
Even though the Farm Bill de-scheduled CBD as a controlled substance, it didn’t necessarily give free reign to companies like Medicine Man Technologies Inc and Aurora Cannabis Inc (NYSE: ACB) to add CBD to products. That’s because many states still have bans in place.
Take Maine, North Carolina, Ohio, and New York City, for example. All have all imposed bans on CBD, citing the FDA’s ambiguous rules. However, the hemp industry has increasingly been working outside of federal regulations and must now work with the agency to ensure hemp and CBD products meet the predefined categories set by the FDA and are legal for interstate commerce.
The Potential Economic Impact
Prior to the passing of the 2014 version of the Farm Bill, the U.S. relied solely on imported hemp. But those days appear long gone, as the new legislation is expected to create a huge influx of capital into the U.S. hemp market.
The passing of the Farm Bill is also expected to provide a nice shot in the arm for the American economy. Removing restrictions on hemp farming means that American manufacturers can get their hemp direct from local farmers before passing off to local consumers, all culminating in a $22 billion market by 2022.
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