Understanding the Farm Bill | Selling Hemp Derived CBD from A - Z
The 2018 Farm Bill has made selling hemp-derived CBD legal across the whole of the United States. It’s a bill that will go down in history for making it truly possible to make money selling CBD oil, having given hemp and all its derivatives the commercial context needed to flourish. However, despite the changes to federal law brought about by the 2018 Farm Bill, there are still some gray areas that affect hemp businesses and CBD sales, which require special attention. For the most part, these gray areas relate to the disparities between federal and state regulations.
Learning to tread carefully in new markets is something that the Point3Farma team knows all too well. As such, we fully appreciate that learning how to become a CBD oil retailer isn’t as easy as some sources make it out to be, despite the recent changes to federal law. With this in mind, we felt it was time to take a look at hemp sales, CBD sales, and the 2018 Farm Bill in more detail.
Understanding the Farm Bill
You may find it interesting to know that in the early 1600’s, colonists used to be able to pay their taxes with stacks of hemp. This payment method was introduced in the hope that it would encourage farmers to grow hemp. In some of the colonies, it was even a requirement. Hemp was cultivated for its strong fibers and was used widely in the production of paper, clothing, rope, and sails, essential shipping materials needed to facilitate fortuitous ventures to new lands. In fact, hemp has only been missing from the U.S. crop circuit for around 100 years. In 1937 it was placed under the same umbrella as the cannabis plant and proclaimed illegal, despite the fact that it doesn’t produce any of the intoxicating effects that its cannabis cousin, marijuana, is known for.
What the 2018 Farm Bill did, was to create a hemp farming act that proposed the removal of hemp (a plant belonging to the cannabis family but containing less than 0.3% THC) from the controlled substances list. This act was passed into federal law on December 20th 2018, converting hemp into a regular agricultural commodity as a result.
The Finer Details
At state level, however, there are still some restrictions on hemp that CBD oil retailers must understand. For example, in a few states (including Kansas and Texas), local governments insist that all products manufactured using hemp must contain 0% THC, and not the federally-legalized 0.3% or less. In addition to contradictory state rulings, the FDA has the authority to regulate all hemp-derived CBD products under the Food, Drug, and Cosmetics Act. So, while hemp cultivation and the manufacturing of hemp-derived CBD products is federally legal, any business concerned about its state’s regulations on hemp or with plans to craft a CBD-infused food product, should seek legal consultation.
It’s also important to fully understand the permits needed under the new regulated system. The rules, as laid out in the 2018 Farm Bill, state that farmers who cultivate hemp must hold a license with the Department of Agriculture and run regular biomass testing of the hemp they grow to ensure that their plants do not exceed the limits of the .3% THC allowance. At Point3Farma, we have our own seed genetics program to ensure that our 1,700 acre farm, in the San Luis Valley area of Colorado, produces top-tier, high-quality, high-CBD hemp, that meets the demands of this new legislation. This means that all CBD retailers who choose to manufacture their products using our CBD oils are guaranteed 100% traceability on quality products that are fully compliant.
CBD Oil Business Opportunities
As the CBD market continues to grow, economic opportunities have grown with it. The Hemp Business Journal valued the CBD market at $390 million in 2018, and with the help of the Farm Bill, The Brightfield Group have predicted that it could reach over $20 billion by 2022. For hemp farmers and industry veterans with a passion for the land and the beauty of the plant itself, learning how to make money with CBD oil may not be a primary objective. But, the current climate is such that both big business and creative entrepreneurs are looking to establish themselves in the market sooner rather than later, with CBD oil wholesale acting as the key area of opportunity for distributors.
So, do you need a license to sell CBD oil as a CBD retailer or distributor? Unfortunately, there is no defined answer, as regulations differ from one state to the next. Irrespective of location, all CBD retailers and distributors will at least need standard business licenses. Prospective retailers are advised to check with their local Department of Health to see if they need a special CBD license on top of a business license, to sell hemp products in their state, as many states require retailer registration for the sale of hemp-derived products. In addition, even though hemp-derived CBD is no longer a federally controlled substance, the additional restrictions that apply in certain states or municipalities mean that it may be advantageous to operate in states that are highly responsive to hemp and/or are more CBD-friendly. These include: Colorado, California, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington, though new legislation across many other states is currently being proposed and reviewed for consideration.
How to Market CBD Oil
Much of the popularity that CBD has enjoyed thus far can be largely attributed to the power of word of mouth. There’s a wealth of anecdotal evidence as well as research papers available online that point to the efficacy of CBD in treating a variety of symptoms, which has aided in educating the consumer on the compound’s potential benefits. However, while the business of CBD oil promises to be a lucrative one, brands must be wary of making any statements related to CBD and its ability to cure or improve certain health issues. In particular, marketing strategies, taglines, and labeling on packaging, must define the beneficial claims of CBD with great care. But, why is this?
Other than Epidiolex, a prescription drug used to treat rare, severe forms of epilepsy, the FDA has not approved any other CBD products, and there is very limited information about CBD, and its effects on the body available. It remains illegal to market any CBD product alongside certain health claims without the FDA’s approval, which means the FDA disclaimer must be included on all product labels and company websites. This statement reads, "These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease", and must be used word for word, printed in a bold font, no smaller than one-sixteenth of an inch. The FDA must also be notified within the first 30 days of the marketing of any hemp-derived CBD products, as per its website instructions. In addition to the FDA, regulations pertaining to CBD and any health benefit claims differ from one state to the next, and recreational markets are subject to rules that don’t apply in medicinal states.
Responsible Sourcing of Hemp-Derived CBD
While the 2018 Farm Bill may have redefined hemp and hemp-derived CBD products, making them federally legal across all 50 states, it remains the responsibility of the retailer to research individual state laws surrounding hemp products, and to conform with the ever-changing legislation of each state in turn. Ensuring that your hemp CBD supplier is 100% traceable and fully compliant is also vital as not all CBD products are created equally, and you should always remember to include a disclaimer on the products you retail in order to satisfy the FDA.
At Point3Farma we operate within a vertically-integrated business model in order to provide our clients with full traceability on all products from seed-to-sale. Our hemp-derived CBD oil begins its life in our in-house seed genetics program and is then grown and extracted in our GMP and ISO certified facilities in Colorado. Our measures ensure superior quality control at all stages along the supply chain, from planting, to growing, to processing, giving our clients peace of mind. In an industry that’s forever responding to regulatory changes, we remain solid in our promise of quality, integrity, and value.