Earlier this week, according to a US Hemp Roundtable article, US Senate Majority Leader Mitch McConnell submitted a proposal to the US Senate Appropriations Subcommittee on Agriculture that would require the FDA to set an enforcement discretion policy for the sale of hemp CBD products within 120 days.
Challenges faced by the hemp industry
By signing the 2018 Farm Bill, President Donald Trump legalized hemp at the federal level in December 2018. Hemp contains less than 0.3% THC (tetrahydrocannabinol) and more CBD (cannabidiol). THC provides the psychoactive effects of cannabis and can be dangerous when consumed in large quantities. On the other hand, CBD is used in treating various medical conditions and as a raw material in food and other products.
However, the FDA hasn’t approved any hemp CBD products apart from Epidiolex, which treats seizures. The non-approval of CBD products by the FDA makes the interstate distribution and sale of these products illegal. In July, Curaleaf (CURA) (CURLF) received a warning letter from the FDA for promoting unapproved CBD-based products.
McConnell’s proposal to speed up CBD product legalization
According to the US Hemp Roundtable article, the prohibition of interstate commerce of CBD products has been a significant concern for the hemp CBD industry. The report added that McConnell’s new proposal requires the FDA to issue an enforcement discretion policy on hemp CBD within 120 days. The proposal wants the FDA to continue the enforcement discretion policy until it implements the final regulatory process. We expect the proposal to boost the hemp CBD business in the US. The article added that McConnell’s new proposal would allow financial institutes to do business with CBD players.
Last year, McConnell pushed for hemp legalization. However, he was against the legalization of cannabis. He said, “I do not have any plans to endorse the legalization of marijuana,” reported The Hill on May 8, 2018.
Growing hemp business in the US
Since the legalization of hemp at the federal level, there has been growth in the hemp business. BDS Analytics and Arcview Market Research expect the US CBD market to exceed $20 billion by 2024. So, many cannabis players, such as Aurora Cannabis (ACB), Canopy Growth (CGC) (WEED), and Tilray (TLRY), are looking at gaining market share in the growing CBD market in the US.
In July, Aurora Cannabis announced a partnership with the UFC to study the effects of hemp-derived CBD products on various medical conditions in its athletes. The company plans to utilize the data to develop hemp-derived CBD topicals. Last month, Aurora completed its acquisition of Hempco Food and Fiber, which manufactures and sells hemp-derived CBD products. For more on Aurora’s CBD-related initiatives in the US, read Aurora Cannabis Focuses on the US CBD Market.
On its first-quarter earnings call, Canopy Growth announced that it had developed a portfolio of hemp CBD products and planned to introduce them later this year. Further, management stated that it had been working on developing a supply chain since January and had planted thousands of acres of hemp for processing. Canopy also plans to open a Hemp Industrial Park in New York and is researching hemp and hemp derivatives at its Batavia facility in Illinois.
In August, Tilray received approval to import medical cannabidiols for clinical trials from the US government. The NYU School of Medicine will lead the trials to study the effects of CBD on patients suffering from alcohol use disorder. In February, the company acquired Manitoba Harvest, which manufactures and sells hemp products, to expand its hemp business in the US.