Yes We Cannabis: CBD & The 2018 Farm Bill
–No longer a controlled substance: CBD is has been removed from the list of Schedule I substances banned by 1970’s Controlled Substance Act. But it is still not entirely true to say that CBD is legal—in most cases, unless it is produced in accordance with federal and state guidelines, CBD is still a Schedule I.
— New regulation enforcement: The federal government will work in partnership with state authorities to regulate production (similar to OCHO). Serious repeated violations could result in felonies akin to
— New regulations for CBD:
– Hemp cannot contain more than .03% of THC
– Industrial Hemp for CBD must be grown by a certified producer
– Convicted felons are not allowed to work in the hemp industry for 10 years post-conviction.
— State-legal CBD production is not exempt from federal compliance: CBD production must comply with federal standards even where it is state-legal to grow and distribute Cannabis products for medicinal or recreational use.
—From research to production: Hemp has been produced by a few states who have received research exemptions, and the latest farm bill allocates more funding for Cannabis research. But now farmers can become certified to grow industrial hemp as a commodity crop.
—CBD is now eligible for crop insurance: Here’s why that’s a big deal…
Why Crop Insurance Matters for CBD Farmers
-Each year, the federal government sets a standard minimum price for approved crops. Insurance companies are then subsidized in order to guarantee that the minimum amount can be disbursed to farmers even if those farmers are not able to sell their crops for that amount on the open market.
-With the guarantee of crop insurance, farmers can secure financing to purchase the equipment and infrastructure they need to expand production.
Example: If the price of hemp produced for CBD is say, $25/lb, and Farmer Joe is only able to sell his for $15/pound, then Farmer Joe will receive a check from the insurance company for the $10/pound difference; that check is subsidized by the federal government’s crop insurance program (i.e. taxpayers).
Subsidies like crop insurance are the second headline of the 2018 Farm Bill, consisting of 9% of the entire budget behind nutritional programs that SNAP. That’s a lot.
Schematic of How Farm Bill Affects CBD Production
2018 Farm Bill → Opens gateway to Federal Crop Insurance Program for industrial hemp production → Farmers have access to financing to scale up production → Increased hemp production = more CBD → Higher supply of CBD means wider availability and lower cost for consumers
So, Is the Farm Bill Good for CBD?
– Yes! The latest farm bill is welcome news for fans of CBD. While it opens the gateway to other industrial hemp production (such as seed or fiber) it is widely believed that the farm bill will have the most significant impact on CBD production. China has a stronghold on the fiber and seed market, having produced the crop for millennia. But Americans are poised to capitalize on the open CBD market. A spike in CBD production is anticipated over the next few years, moving upwards from a $1 billion industry (in 2018) to a 14% annual growth through 2022. This will potentially give the American economy a boost while also making CBD cheaper and more widely available for consumers.
— What About Weed? If you’re a fan of marijuana, many also argue that this is a step towards wider Cannabis acceptance in the mainstream, and in Washington D.C. It is predicted that it will not be long before other medicinal and recreational uses of marijuana are permitted on a federal level.