Marijuana Business Magazine April 2020

Marijuana Business Magazine | April 2020 14 T he ink wasn’t dry on the law that legalized hemp nationwide before entrepreneurs started making plans to go global, hoping to see their hemp products on countless store shelves. Now, some of those hemp entre- preneurs are experiencing the painful side of being legal. The police might not be coming anymore for folks growing and selling hemp, but law enforcement has been replaced by bureaucrats and red tape. The reality of being legal but highly regulated by slow-moving federal agencies is enough to make some businesses pine for the days when regulators beyond state borders had no say over hemp. False Starts The delays started right away. Back in 2018, when the U.S. Congress changed the Controlled Substances Act to make low-THC cannabis legal, federal food and drug regulators waited less than a day to remind celebrating hemp entrepreneurs that the U.S. Food and Drug Administration held sway over the use of hemp extracts in commercial products—and planned to exert its influence. Fair enough, many of them figured, anticipating that within a few months, the FDA would issue rules about how to make and sell hemp products to fill store shelves. Pent-up demand for CBD products led many of the nation’s largest retailers to barrel forward in bringing products to market, assum- ing FDA guidelines were imminent. The hemp industry responded, setting off a feverish few months of expanding production and accepting millions from investors to scale their businesses and get ready to supply a global market for hemp products. And then … nothing happened. The FDA took testimony, vowed to review the evidence and has yet to clear the way for mass-market, over- the-counter ingestible CBD. Pressure from state governments and even Congress members who wrote the hemp-legalization law hasn’t helped. That’s just one frustrating area of delay for hemp entrepreneurs. Consider: • The U.S. Department of Agriculture took 10 months—an entire growing season—to draft some rules for cultivating the newly legal commodity. • After those rules came out, the USDA said it would press the pause button on some of the regulations to give farmers more flexibility. (Hemp entrepreneurs are seeing why colleagues in other commodities cynically dub the agency the “U-S-Dee-Lay” because of how slow-moving USDA actions can be.) • Congress isn’t rushing to help, either, as other priorities take center stage in an election year in a divided branch of government. Bureaucracy and red tape are starting to lead to business casu- alties in the hemp sector. Investors who were promised big returns in just a couple of years are finding that regulatory delays mean hemp’s potential has yet to be realized. Farmers are feeling the delays, too, frustrated that they must accept exist- ing federal rules for months or years before they can hope to see regula- tions that are friendlier to businesses. Lessons for Marijuana I completely understand the frustra- tion. Hemp entrepreneurs without bottomless cash reserves are finding they can’t afford to wait out the bureaucracy. But there’s an important lesson the industry can take from hemp’s bureaucratic challenges, and that is: Don’t expect change to come quickly, even if the law changes overnight. Any frustrations that marijuana pro- ducers have with slow-moving state regulators are almost certain to get worse when the feds are in charge. So I hope everyone in cannabis is taking note of the red tape affecting hemp cultivators, processors and retailers. Change is coming, but when it does, make sure your business plans set realistic expectations for the cost of regulatory delays. We all know the federal government will eventually make it legal to grow and sell marijuana. But take it from hemp: They’re not going to make it easy. Kristen Nichols is editor of Hemp Industry Daily . Reach out at kristen. nichols@hempindustrydaily.com Hurry Up and Wait Hemp proves that national legalization brings enormous red tape and bureaucracy HempNotebook | Kristen Nichols