2018 Farm Bill Creates Entrepreneurial Opportunities in Hemp-derived Products

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The 2018 Farm Bill, thanks to an amendment championed by Sen. Mitch McConnell (R-Ky), separated hemp from marijuana from a legal perspective. Cannabis is still considered a schedule I drug, but the new law now separates hemp – which contains only trace amounts of THC – from the definition, making it legal to grow, and more importantly, it makes it legal to manufacture products from industrial hemp, including cannabidiol (CBD) oil.

Hemp, a non-psychoactive cousin to cannabis, has long offered practical use, including being ground into flour, creation of diesel fuel, and use in textiles and clothing. During the Second World War, it was widely cultivated for use in production of military uniforms and cordage. Most recently, it has gained popularity in CBD oil form, which delivers the medical benefits of cannabis without the THC-driven high.

The Farm Bill, designed to provide aid to farmers who have been hurt by the ongoing trade war between the US and China, will now allow farmers to grow hemp – especially important in the tobacco states (including Sen. McConnell’s home state of Kentucky), where tobacco farmers have been struggling due to decreased demand. In neighboring Tennessee, also a traditional tobacco state, many farmers are abandoning tobacco for hemp, which is far more profitable than tobacco, and in much higher demand.

Outside of farming, legitimizing hemp once and for all has placed the crop and its derivative products on firm legal footing. Products such as clothing items made from hemp have always occupied a fringe corner of the industry, but the broader availability of domestically-produced hemp may well give rise to a brand new entrepreneurial boom in processing hemp fibers and transforming them into everyday items, ranging from food, clothing, paper products and even building materials which are environmentally better than wood and petroleum-based products.

But the product that has generated the greatest interest is CBD oil, which leverages the pain-relief properties of cannabidiol as a natural and safer alternative to opioids when used to treat pain symptoms. To clarify, CBD oil derived from cannabis, or the marijuana plant, is still illegal (in most states), but with the passage of the 2018 Farm Bill, CBD oil derived from hemp is now legal.

Already the wheels are turning in the entrepreneurial world, with distilleries gearing up to produce the oil, distribution networks building supply chains, and retailers stocking their shelves. Some existing online retailers like Nug Republic, which got an early start as one of the first online shops offering high-quality vaping devices for concentrates, oils and dry herb, are also gearing up to offer the oils.

For entrepreneurs, this is the time to invest in this new industry. The legalization of hemp products and hemp-derived CBD oil has been clarified with the 2018 Farm Bill, demand is high and the barrier to entry is low. The industry growth is also aided by the recent burst in the popularity of vaping, which is seen as a safer and healthier alternative to smoking combustible cigarettes. CBD oil can be taken in a number of different ways, from simply placing drops under the tongue, consuming CBD-infused foods, to taking it with a vape device, which is the most efficient method of CBD delivery.

That said, entrepreneurs are already incorporating legal CBD oil into everything from coffee, beer, soda, candy and a variety of gourmet foods.

One word of advice for buyers and entrepreneurs alike is to be aware of product quality. Testing labs can and do test these products to measure CBD content, and also to ensure that the THC level is below the government mandated limits, and while it is not yet a regulatory requirement, it may well be in the future – and ensuring that products you sell are tested at an independent laboratory will be a strong selling point, as well as preparing you for an easy transition to future regulations.

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