The 2018 federal farm bill legalized hemp. Hemp products can be sent through the mail under certain guidelines. But Linda Main can’t find a credit card company willing to process transactions at her store in Fort Morgan, where she sells CBD merchandise.
“There are one or two out there that do, but there’s a waiting list that is out of this world,” said Main. She and her husband, George Henning, own G&L CBD Oils.
For now, the store takes local checks and cash. Main figures she loses hundreds of dollars in potential sales when she tells would-be customers where they can find ATMs and they don’t return.
“Imagine going into a Safeway and getting groceries and they say, ‘Oh no, we can’t take your card,’ ” Main said.
Main’s situation reflects some of the growing pains of an emerging industry that has hit the ground running before learning to walk steadily. The demand that already exists for hemp-derived CBD — cannabidiol — drove the market’s worth to about $627 million in 2018, according to the Brightfield Group, an analytics and market research firm for the legal CBD and cannabis industries.
Brightfield projects the U.S. market for CBD will surge 143 percent by 2022, hitting nearly $22 billion. Large chains, including Walgreens, CVS Pharmacy and Kroger, are jumping on the hemp bandwagon with plans to sell CBD creams, salves and other topical products.
“Now that the 2018 farm bill passed, it’s the clearest legal landscape that we’ve been dealing with to date,” said Michael Harinen, chief marketing officer for Louisville-based Bluebird Botanicals, which produces CBD from hemp.
However, the legal landscape for Bluebird Botanicals and similar companies is still tricky. Companies report having problems finding banks or credit companies willing to do business with them because hemp is a cannabis plant. Facebook and Google won’t advertise CBD products.
Hemp has negligible amounts of THC, the high-inducing chemical in marijuana, but some companies apparently don’t want to risk it, Harinen said.
While the 2018 farm bill legalized hemp, it maintained the Food and Drug Administration’s authority over hemp and the agency says it’s still illegal to market CBD in food or as a dietary supplement. However, industry officials consider that guidance rather than law because formal regulations haven’t been issued.
The FDA is gathering information about hemp and the manufacturing and marketing of cannabis-related products and will eventually write regulations. The agency is taking public comments until July 16.
The farm bill caps the amount of THC allowed in industrial hemp to 0.3 percent.
“The farm bill, by completely removing hemp and hemp-derived CBD from the Controlled Substances Act, should have solved this. From a legal perspective, it did solve it on the federal level,” said Jonathan Miller, general counsel for the U.S. Hemp Roundtable, a coalition of hemp companies.
At the state level, the industry is grappling with patchwork of rules. Forty-six states have passed laws to lay the groundwork to develop the hemp industry, Miller said. So far, Ohio, Mississippi, Idaho and South Dakota have not.
Meanwhile, other industries are trying to figure out how, or if, to get involved with hemp companies. Miller, speaking at the Outdoor Retailer June 19 in Denver, said companies he meets with say although they understand hemp is legal, they don’t want to risk breaking the law. Senate Majority Leader Mitch McConnell of Kentucky and Sen. Ron Wyden of Oregon wrote a letter in April to ask the Office of the Comptroller of the Currency in the U.S. Treasury Department to offer guidance to any banks with concerns about providing services to legal hemp businesses.
“Legal hemp businesses should be treated just like any other businesses and should not be discriminated against,” the senators wrote.
Along with Colorado, Oregon and Kentucky have been at the forefront of the hemp industry. Colorado is one of the leading producers of hemp and is a leader in the CBD industry.
As of May 29, 2,300 farmers in Colorado were registered to grow hemp and 80,000 acres outdoors and 9 million square feet of indoor space — greenhouses — were licensed for hemp production, according to figures compiled by Hemp Industry Daily.
It’s not just individual companies running into problems with credit-card companies and other financial institutions. The U.S. Hemp Authority, which has developed standards and a certification process for the industry, was notified in early June that Stripe, which processes payments for internet businesses, is dropping it as a client.
“We had been working with them since January or February of this year,” said Marielle Weintraub, president of the authority. “They said they would no longer be working with us because we’re a cannabis-related business, putting us in a high-risk category.”
But the Hemp Authority only processes fees for licensing hemp business that are certified by a third-party auditor, Weintraub said. “We don’t sell a product, manufacture a product. We’re not shipping a product.”
A June 7 email from Stripe to the Hemp Authority said “it does seem that your business is in violation of the Stripe Services Agreement, section A.7.b (Restricted Businesses and Activities).”
Stripe didn’t answer requests for comment.
Weintraub said other services charge considerably more. She added that she’s more worried about hemp business owners or farmers who might run into trouble with their banks.
“It may or may not put the rest of their banking in jeopardy,” Weintraub said.
Jesse Stanley, who along with his brothers started Colorado-based Charlotte’s Web, a leader in the CBD industry, said at the Outdoor Retailer that in the beginning, banks would do business with the company for a while and then back out.
“It was kind of like relief pitchers: We’d bring in the next one until we’d exhausted them,” Stanley said.
Colorado Rep. Ed Perlmutter is sponsoring a bill to open banking and financial services to marijuana businesses in states that have legalized marijuana. The bipartisan bill got its first-ever hearing by a U.S. House committee earlier this year.
“I have heard from constituents and businesses about many of the problems facing both the marijuana and hemp industry,” Perlmutter said in an email. “As the SAFE Banking Act continues to move through Congress, I am working with my colleagues to ensure all legal and legitimate businesses are able to access full banking service.”
Another hurdle for the quickly growing industry is the inability to advertise places where everyone else does — on Facebook and other social media platforms. Forbes reported that Cannaramic Media Inc. is suing Facebook for rejecting a series of ads.
“It’s really been a big impediment to the industry because the way that market and advertising works these days, those are some of the most powerful tools for companies to get their names out there,” said Harinen of Bluebird Botanicals.
Bluebird and the Denver-based Hoban Law Group joined the Hemp Industries Association in a campaign called “Hemp is Legal.” They put up a digital billboard in New York’s Times Square that reads: “Facebook: Stop Censoring Hemp.”
Content and advertisements promoting the sale of cannabis or cannabis-related products, including CBD, violate Facebook’s policies, the company said in an email. Ads of hemp products that aren’t ingested and don’t contain CBD are allowed, said Facebook, adding that the company continues to review its policies.
Advertisements for CBD products violate Google’s policy on health care and medicine because it’s an unapproved pharmaceutical and supplement, according to an email from the company. Google doesn’t have a specific policy against advertising hemp products.
In Colorado, state agencies are leading an initiative to help manage and promote the hemp industry from cultivation through production and manufacturing to marketing. Helping businesses navigate the twists and turns of working with banks and other financial service providers will be part of the work by the Colorado Hemp Advancement and Management Plan, said Hollis Glenn, the project’s co-director.
State banking officials as well as other experts and industry representatives are among the roughly 180 participants, said Glenn, director of the Inspection and Consumer Services Division at the Colorado Department of Agriculture.
At the federal level, Miller said the Hemp Roundtable is working with members of Congress to encourage the FDA to finalize regulations over the next year.
Already, the U.S. Postal Service has released guidelines for shipping hemp and CBD products. The shipper has to comply with all federal, state and local hemp laws and must keep all documentation for at least two years after the shipment.
Previously, the Postal Service guidelines were varied, depending on the post office or postmaster, Harinen said. A couple of Bluebird Botanicals’ shipments were seized and later released.
“It’s great to see that we’re getting offered the same access that other legal companies are being offered. We think it’s a big deal because this is a government agency we’re talking about,” Harinen said. “And we’re hoping that sends a message to the companies that are still really hesitant to work hemp and CBD companies.”
Source link Google News