2019 was a pretty big year for the hemp industry. For the first time in over 40 years, the domestic production and commerce of hemp products became federally legal, opening up the CBD sales to (nearly) the entire nation. The industry experienced an influx of brand new companies, followed by a rush to market and a frustrating holding period while manufacturers and retailers continued to await guidance and regulations from the FDA.
In addition to promises of regulation from the FDA and USDA, several important pieces of legislation were introduced to state and federal governments last year. So, what’s next? Contingent upon the FDA’s follow-through on issuing regulations, industry analysts expect even more accelerated growth in 2020. Here’s what’s coming down the pipeline for CBD companies this year.
Pushing the FDA to issue guidance and regulations
The year opened with great optimism about the FDA’s development of a path for the full regulation of hemp-derived CBD. The FDA held its first public hearing and comment period in preparation for forthcoming guidelines. However, the guidelines did not come, and the FDA closed out the year with a round of warning letters sent to CBD companies making unlawful disease claims alongside commentary restating its current concerns about CBD as a food additive.
These were not new concerns, however, and the additional comments made in the warning letters were not divergent from previous guidance issued by the FDA. It is also clear that the FDA realizes the significant market for products with CBD and hemp and is continuing to investigate the issues so that it can properly regulate such products and ensure the safety of consumers.
In 2020, lobbyists and activists will be working hard to encourage Congress to force the FDA to expedite its process and issue guidance as quickly as possible.
Approving the USDA’s Interim Final Rule
This past October, the USDA issued its Interim Final Rule on the establishment of a domestic hemp production program. The purpose of this rule is to establish regulations for the production of hemp in the U.S. and establish provisions for the USDA to approve state plans. In the IFR, the USDA affirmed that the 2018 Farm Bill preempts state law. So, states that wish to create their own hemp production plan must enforce regulations at least as strict as the Farm Bill and the USDA federal plan.
The USDA recently extended its comment period for the IFR through January 29. All hemp supporters have a chance to submit their ideas for improvements to the plan, and then we will wait for final approval.
Mass-market retailers getting on board with ingestible CBD products
Last year was the year of cosmetics for the hemp industry. While industry analysts initially projected CBD ingestible products to flood the mainstream market in 2019, most retailers opted to only bring on cosmetic CBD products due to murky guidance from the FDA.
This year, contingent upon FDA action, we expect the industry’s growth to rapidly accelerate. With this guidance, mass-market retailers will have the assurance they need to introduce all types of CBD products, especially ingestible products, into their stores.
Expanding state legislation
Prior to the 2018 Farm Bill, 40 states implemented hemp pilot programs compliant with the regulations set forth by the 2014 Farm Bill. Now, almost a year after the 2018 bill, 47 states have reformed their laws to permit hemp growth and/or the sale of hemp products through authorized hemp growing programs. Likewise, states such as Florida and New York have issued clear guidance for the commerce of CBD and other hemp products.
However, there are a few remaining states that have been slow to implement their own hemp production programs. The U.S. Hemp Roundtable is leading lobbying efforts in Idaho, Mississippi, and South Dakota to encourage comprehensive state legislation permitting the production and retail sales of hemp products. Likewise, the Roundtable is working to expand access to hemp products in over a dozen other states, including California, Massachusetts, and North Carolina.
Passing the SAFE Banking Act
In September 2019, the House of Representatives passed the SAFE Banking Act. This bill provides federal protections for hemp and CBD financial transactions by ensuring that banks and financial institutions would not face federal punishment. It also directs the FDIC and Federal Reserve to issue clear, formal guidance to banks, credit card companies, and other financial institutions about the legality of hemp and CBD commerce.
This bill is a huge step forward for hemp companies, as limitations on financial services have been a major roadblock since the 2014 Farm Bill. However, the battle hasn’t been won just yet. This bill now moves onto the Senate, where it will likely encounter a much more difficult battle. Industry leaders are working hard to ensure the passage of the bill in 2020.
Here’s the good news – you can use your voice to support the hemp industry’s growth in 2020 and beyond! Use the Roundtable’s online portal to contact your local representatives and share your support for comprehensive state legislation and the SAFE Banking Act. Thank you for helping us make a difference!