The U.S. legal cannabis industry is experiencing growing pains. Since being legalized a bit over two years ago, CBD has become a legal commodity in numerous states, and regulations have struggled to keep up. From growing to processing into pharmaceuticals, every step of the way eventually gets regulated at one level or another. Some long-awaited regulations concerning the distribution of CBD-derived drug products were withdrawn by the FDA after months of waiting, which was a disappointment to many. On the production side of things, the U.S. Department of Agriculture has finally announced standardized regulations for cannabis farmers across the nation, which was welcome news. And all this happened in just the first month of 2021.
Why were the FDA regulations withdrawn, and why does it matter?
The withdrawal of these much-needed regulations was really just a matter of dumb luck. As is typical when a new president is inaugurated, all of the pending regulations that were developed during the previous administration got pulled from the approval process – and the FDA’s CBD enforcement policy was one of those regulations. Now it’s the FDA’s job to go back to the drawing board and re-draft the document (officially, the Cannabidiol Enforcement Policy Draft Guidance for Industry), so it can line up with President Biden’s overall goals.
Once the FDA has the revised document ready, it’s up to the White House Office of Management and Budget (OMB) to approve it. The OMB has the task of reviewing proposed regulations from every federal agency, and making sure that they fit the president’s ideas of how things should be run. The first draft the FDA finished was submitted to the OMB in July of 2020 and withdrawn in January of 2021, so it’s hard to say when this policy could be officially announced. At least there’s a bit of good news – once the policy gets approved by the OMB, it’ll probably only be a few weeks before it’s announced to the public.
The FDA never released any details about the proposed rules, but the CBD industry doesn’t seem to be too concerned about what they might entail. For most people, the goal is just to have regulation in the first place. Anyone involved with manufacturing or retailing CBD wants the policy to be approved so they can start officially making CBD-derived drug products; then there are people outside the industry, who are concerned about the CBD drug products that are already being sold thanks to hazy regulations. There’s concern about the lack of testing for these products, which hopefully the FDA can resolve. Since the CBD enforcement policy will be the first time this area of the industry has been regulated, it’s expected to influence a lot of CBD-related regulations in the future.
According to Premium CBD Supply, a large online CBD store, it’s not just CBD-related industries waiting on these regulations – trade associations from the supplement industry have been hoping for this to happen too. Cannabis doesn’t just have uses for over-the-counter drug products, but also for dietary supplements; once the policy is made public, plenty of people in the supplement industry will hit the ground running.
Even though this particular policy will likely take a while to be published, at least it isn’t the only CBD-related policy that the FDA has been working on. Recently they submitted another draft guidance policy for approval by the OMB, this one related to clinical research for developing cannabis, as well as cannabis-derived drug products.
CBD product manufacturers might have been set back, but cannabis farmers are celebrating
Nobody likes having to pay more money when they could pay less, and this was why so many cannabis farmers were unhappy with the interim rules that the USDA had published in 2019. The regulations covered plenty of ground, but the main point of contention was the rule that was costing farmers $200/acre.
The reason for this cost, which came on top of standard production expenses, was for the disposal of what’s known as “hot hemp” – cannabis that exceeded the limit of 0.3% THC. Since going over the THC limit meant the plants were categorized as Schedule 1 substances, the USDA required farmers to call on DEA agents or other law enforcement personnel to take the cannabis off-site and destroy it. In addition to the cost, farmers weren’t happy that they had to go through all this trouble to dispose of plant material that they could easily take care of themselves, just like they did with any other undesirable plant.
Since the USDA formulated the new rules partly based on feedback from hemp growers all over the country, one of the big changes in the new regulations was that farmers were allowed to destroy the high-THC plants themselves, as long as the method made it unusable. The approved methods are all part of traditional agriculture – burning, burying under dirt, plowing into the ground, or turning it into fertilizer by mulching or composting. With this change in the rules, farmers are only spending 7% of that $200/acre to destroy illegal hemp. Farmers already have methods in place for destroying other plants that may be below the legal limit of THC, but are unhealthy or damaged; the main difference is that their hot hemp has to be disposed of in a way that would prevent it from being stolen and sold.
Oddly enough, these disposal protocols don’t apply to farmers that have a license from the USDA. Most growers get their licenses from a state, territory, or tribal authority, but not all. USDA-licensed growers still have to get law enforcement to destroy their hot hemp.
The last few weeks have been a bit of a wild ride for the CBD industry, and with things expanding as fast as they are, it’s likely that they’ll stay this way for a while. Landmark policies are still being formulated after two years, and entire industries are waiting on the go-ahead before they jump into the mix. It may take another year or more before the FDA announces its CBD enforcement policy, but at least we know it’s in the works.