Attorney General Jeff Sessions didn’t have hemp in mind when he repealed Obama-era protections for state-legal marijuana businesses.
But his Jan. 4 announcement sent shock waves into the hemp industry, too, leaving entrepreneurs scrambling to reassure skittish investors.
It’s been a rocky couple of weeks for hemp entrepreneurs. That’s despite the fact that hemp’s legal status has nothing to do with Sessions’ announcement.
In fact, hemp producers and entrepreneurs are capitalizing on the attorney general’s decision as an opportunity to highlight hemp’s legal certainty, which now stands in even starker contrast to the status of its intoxicating cousin, marijuana.
Hemp production has been enshrined into law by Congress through the 2014 Farm Bill, meaning the Department of Justice can’t go after hemp growers or processors abiding by the terms of state hemp rules.
That didn’t keep the phones from ringing at The H. Hemp Company, a Boulder, Colorado, maker of CBD oils and topicals.
“I had investor conversations immediately, because it really spooked them,” said CEO Ashley Grace.
Hemp’s eternal association with marijuana, derived from the same plant, means that what happens to marijuana affects the public’s perception of hemp.
“The indirect negativity and antagonism of the government toward cannabis affects all of us,” Grace said.
“It’s creating confusion and anxiety in the hemp industry.”
Tougher to raise money?
On the downside, the Sessions announcement could make it harder for hemp entrepreneurs to raise money – even if hemp is not affected.
“I see the tremendous challenge businesses face trying to overcome that hesitation,” said Micah Tapman, a partner at Canopy Boulder, a Colorado business accelerator that funds ancillary businesses in the hemp and marijuana industries.
But Tapman and Grace are telling investors that hemp’s position may be stronger because of Sessions’ announcement.
That’s because hemp’s inclusion in the Farm Bill means its legal status can’t be usurped by an agency memo.
“I feel pretty protected because we have laws in place to support our (hemp) program,” said Will Tarleton, founder of Tennessee Grown, which cultivates and processes hemp products in Nashville.
The Sessions pronouncement should encourage hemp businesses to do a better job reminding consumers and investors that they’re not affected by marijuana enforcement, Tarleton said.
“Although we’re talking about the same plant, there’s obviously a big difference between hemp and marijuana, and we’ve got to keep talking about that,” he said.
“Once people understand that, people see hemp as an area that’s a little more comfy to operate in.”
Possible silver lining
In fact, some bullish hemp entrepreneurs believe the industry could even capitalize on Sessions’ antagonism to marijuana. That’s because it underscores hemp’s legal certainty.
“This is an incredible opportunity for the hemp industry, because hemp is the safe bet,” said Bruce Perlowin, CEO of Hemp Inc., which grows and processes hemp and kenaf – a fiber plant related to hemp and jute – in North Carolina.
Already there are signs that may be happening.
A Canadian CBD manufacturer, Isodiol International, recently announced a licensing agreement with Level Brands of Charlotte, North Carolina, to develop CBD-infused tinctures, beverages and body care products under the Kathy Ireland Health & Wellness label.
Grace agreed that Sessions’ marijuana antagonism could bring the hemp industry new attention from investors.
“Those investors who are interested in cannabis aren’t going to be spooked by hemp,” Grace said. “They’re going to be more intrigued by it.”
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