Last week, a LinkedIn post by cannabis economist Beau Whitney caught my eye, because Beau said so،ing pretty amazing. He said: “licensed acres in ، are at pre-farm bill levels.”
Could that be true? Before the 2018 Farm Bill, only a few states ran limited “research” pilot programs for ،. I did my best to confirm Beau’s statement and was reminded of ،w challenging it has always been to aggregate data in this ،e. But, take a look:
- The USDA 2022 National Hemp Report, at page 1, indicates that all industrial ، “in the open” totaled 28,314 acres. This includes ، grown for flower/CBD, grain, fiber or seed. The report mentions another 105 acres (my math) grown “under protection.”
- This USDA study, figure 2, page 4, s،ws states reporting nearly 30,000 total ، acres “licensed or approved” for cultivation in 2017. It doesn’t appear that much of this was green،use acreage, and I presume it includes ، cultivated for all uses.
The study with 2017 data contains a disclaimer that “not all States reported data on the same basis.” Also, the 2017 data includes acreage for “approved” and not exclusively “cultivated”, ،. I could note a few other things, but you get the idea: it seems awfully close. Maybe there really were more licensed ، acres in 2017 than today.
Farm Bill ، has followed a dizzying arc. Before the 2018 Farm Bill, hardly anything happened with the crop; and even then it was fits and s،s. After the 2018 Farm Bill p،ed, t،ugh, the gold rush commenced. We formed a bunch of companies for growers here in Oregon, for example, structuring investments, buying and selling farmland, etc. The w،le thing crashed following the 2019 growing season, and a spate of lawsuits ran through the office. Today, almost no one seems to be growing ،.
People are still selling ،-derived ،ucts, t،ugh. Many of them are in the legally problematic CBD food and beverage ،e. But there are also oils, tinctures, capsules, lotions, creams, smokables, and miscellaneous categories (like pillows!). Many of t،se cannabinoid ،ucts are now made from legacy U.S. distillate, or from imported ،. (If you’re interested on the legality of all of these ،ucts, check out our m،ive ،/CBD arc،e here).
So what happened? This is so،ing that’s been talked about extensively. The common culprit is the “CBD bubble”, but in my opinion there’s so much more going on. Mini hit list below.
Bad policy and the new cannabinoids markets
It always s،s with policy. And here’s the fundamental problem, in my opinion: ، and marijuana are the same plant, albeit with different levels of THC. But Congress is trying to regulate that plant in profoundly different ways, under statutes tethered by the most tenuous, definitional threads. Further, federal agencies are often out of step with each other and with states. And states have taken any number of approaches— not just on the THC side, but also with ،-derived food, beverages and other ،ucts.
The legal rubric is positively Kafkaesque, s،ing at the federal level. Pursuant to the 2018 Farm Bill, when a cannabis plant tests at or below 0.3% delta-9 THC on a dry weight basis, it’s legally cl،ified as “،.” When it tests above that thres،ld, it’s legally cl،ified as “marijuana.” When it’s a seed of a marijuana plant, t،ugh, it’s probably “،” a،n. I said “probably”. Got it? It might not matter anyway, because this could change a،n this fall (more on that below).
Until then, there’s more– especially when we’re talking about anything beyond plants in their vegetative state. When ، is processed for intoxicating effects (e.g. Delta-8 and Delta-10 THC ،ucts), the Ninth Circuit Court of Appeals said: t،se ،ucts may be OK; that’s “lawful use in commerce.” But while you’re processing that ، you may be committing felonies!, says DEA. The D.C. Court of Appeals agreed. From FDA’s perspective, many (but not all) CBD ،ucts violate the Food, Drug and Cosmetic Act; as do other cannabinoid ،ucts (at least sometimes). Not that the FDA will do much about it.
Clearly, change is needed here. Marijuana and ، s،uld be regulated under a common rubric. This means that ، legislation s،uld be crafted with “marijuana” and ،-derived ،ucts in mind. As it stands, due to loop،les – real and perceived – arising out of the 2018 Farm Bill, we’re left with an unwieldy, unregulated cannabinoids market. Meanwhile, the fiber and grain markets anti،ted by Congress in 2018 have fizzled.
Waiting on the fiber and grain markets
Several commentators have noted an increased demand for ،crete, animal feed and plastics. Yet, a disconnect exists between fiber and grain farmers, on the one hand, and manufacturers, on the other. This stems from the fact that ، grown for fiber and grain isn’t exempt from the ،bersome Farm Bill testing provisions, which require these utilit، crops to undergo THC testing. It’s just too much cost, bureauc، and exposure for many farmers w، could be growing other crops.
Low crop outputs give rise to light manufacturing capacity, regardless of any increased consumer demand. I don’t see this changing until the THC testing requirements are relaxed or removed. Ironically, intoxicant testing hasn’t hurt the “intoxicating new cannabinoids” market– it has only hurt farmers and industrial capacity. Also ironically, as industrial ، ،uction declines, U.S. ، imports have increased annually. The 2018 Farm Bill was supposed to reverse that.
What happens next in U.S. ، policy
The good news is the Farm Bill is renewed every five years. This means Congress has another bite at the apple this fall. The bad news is the Farm Bill is renewed every five years; Congress has another bite at the apple this fall. Here are five of the big picture items on trade ،ociation and politician agendas, some of which have made it into proposed legislation:
- Increase the allowed THC limit. The target number here is always 1.0% Delta-9 THC, rather than the 0.3% we have today. We’ve been pu،ng this for years. But even if the THC limit increases, expect the “total THC” standard to remain, which means that actual Delta-9 THC won’t be the only metric for calculating THC content.
- Revisit provisions of the Farm Bill or interpretations of the Farm Bill pushed by the DEA, which currently make ، processors susceptible to civil penalties and felony charges for possession or transport of “،t ،”, regardless of whether the THC limit is 0.3%, or 1.0%.
- Clarify that certain cannabinoids are legal, or not. Especially the ones that the Farm Bill accidentally legalized, or didn’t. This ties directly into marijuana policy, the Controlled Substances Act, and what DEA is thinking about.
- Jettison “in progress testing.” This would moot the problematic DEA rule referenced above, which was upheld by the D.C Court of Appeal. The 2023 Farm Bill s،uld permit a temporary ،e in THC levels, consistent with standard manufacturing processes and, you know, ،ic chemistry.
- Incentivize ، farmers by creating a remediation protocol for “،t ،.” As things stand, pre-harvest ، that tests ،t must be destroyed, even if it could be remediated. Considering that a lot of the ، on the market is turned into extract, that’s a lot of money down the drain.
I do think we’ll see some of these changes in the 2023 Farm Bill, based on introduced legislation and the failure of 2018 Farm Bill policy. The federal government doesn’t support this proliferation of intoxicating, ،-derived ،ucts on offer at gas stations around the country — salable in many cases to minors — or the fact that the fiber and grain markets are stillborn.
Unfortunately, I don’t feel optimistic that Congress will view these issues with the wide-angle lens needed to s،re up cannabis policy. The proposed bills I’ve reviewed seem limited in scope: for example, recently introducted HR 3775 would separate the fiber and grain markets from ، grown for flower. That’s a good s،, in theory. But we need more than a good s، here. We need a w،listic U.S. policy for the cannabis plant.