Unregulated hemp sales escalating as danger to established cannabis commercial enterprises
Tackling the Turf War: The Uproar Over Hemp-Derived Cannabis in a More Regulated Marijuana Market
Navigating the competition in the cannabis industry is a familiar battle cry for businesses dealing with a rival operating under less regulatory scrutiny. This longitudinal debate, however, unfolds in an unexpected sector: hemp-derived cannabis products versus traditional cannabis.
Hemp, containing less than 0.3% delta-9 THC, is legally under the 2018 Farm Bill, also known as the Agriculture Improvement Act of 2018. This expansive U.S. legislation, governing agriculture and food policy, removed hemp from the Controlled Substances Act. It allowed hemp cultivation, production, and interstate transport, giving regulatory oversight to the USDA and facilitating the development of state and tribal hemp programs.
In stark contrast, regular cannabis, commonly referred to as marijuana, remains a Schedule I narcotic and is federally illegal despite being legalized in numerous states. These state-run cannabis programs are subjected to rigorous regulations, limiting their ability to engage in large-scale multi-state operations and accessing fewer tax deductions.
The relaxation of hemp's legal status has given rise to a thriving market for hemp-derived cannabinoids, including CBD, delta-8 THC, and delta-9 THC products, now branded as intoxicating hemp. Despite its booming business, hemp-derived cannabis products are contentious and operate within a murky legal grey area, as many products bear striking resemblance to marijuana-based cannabis overseen by stringent regulations. This ambiguity has resulted in dangerous incidents across the nation and created an uneven playing field for compliant businesses.
Expert Analysis: Navigating Compliance
Enduring the competitive headwinds posed by hemp-derived cannabis, tax professional and CPA Mike Goral asserts, "Products like [hemp-based] delta-9 have become a real challenge." Established cannabis companies have weathered all the red tape, licensing requirements, and taxes, followed by regulations. Meanwhile, hemp-based enterprises produce delta-9 THC products from hemp under the Farm Bill, exempt from the regulatory oversight.
Undeterred by this challenge, large Multi-State Operators (MSOs) have begun launching their own hemp-derived lines rather than engage in a costly, grueling fight against these producers, according to Goral. However, he predicts that long-term, hemp-based products will face tighter regulations, potentially nullifying the hemp workaround.
Regional Perspectives: The Missouri and Texas Market Tussles
In Missouri, the lack of legal oversight has led to a public relations disaster for regulated cannabis businesses, says Brenda Bader, owner of Gold Leaf Accounting. She presents numerous examples of unregulated products causing uncertainty and disarray among consumers, leading to an image crisis for cannabis in traditional areas.
In neighboring Texas, things are heating up, with Lieutenant Governor Dan Patrick pushing to eliminate the entire multi-billion-dollar hemp-derived cannabis industry. This potential ban, affirming its high priority, keeps the cannabis community on alert. It's shaping up to be a focal point during the legislative session, as states like California, Nebraska, Florida, and South Dakota debate regulations or bans of their own.
Moving Forward: Regulatory Harmonization
Experts agree on the importance of enacting more harmonized regulations across states and at the federal level to promote market efficiencies and consumer safety. Alongside that, potential political action includes implementing excise taxes on hemp-derived consumable products and enforcing strict labeling and testing requirements.
In this rapidly evolving landscape, staying informed and navigating the thicket of regulations will be key to success in the cannabis industry.
- The USDA, as a result of the 2018 Farm Bill, now oversees the regulations for hemp cultivation, production, and interstate transport.
- Even though it is legalized in numerous states, regular cannabis, or marijuana, remains a Schedule I narcotic and is federally illegal.
- Hemp-derived cannabis products, like intoxicating hemp, operate within a murky legal grey area due to their similarity to marijuana-based cannabis.
- Tax professional and CPA Mike Goral finds hemp-based products, such as delta-9 THC, a real challenge for established cannabis companies.
- Multi-State Operators (MSOs) are launching hemp-derived lines instead of engaging in a costly fight against hemp-based producers, according to Goral.
- Brenda Bader, owner of Gold Leaf Accounting, notes that the lack of legal oversight in Missouri has led to a PR disaster for regulated cannabis businesses.
- In Texas, Lieutenant Governor Dan Patrick is pushing to eliminate the entire multi-billion-dollar hemp-derived cannabis industry.
- Experts suggest that harmonized regulations across states and at the federal level are necessary to promote market efficiencies and consumer safety in the cannabis industry.
- Implementing excise taxes on hemp-derived consumable products and enforcing strict labeling and testing requirements are potential political actions to address this issue.
- In the rapidly evolving cannabis industry, staying informed and navigating the thicket of regulations will be crucial for success in business and personal finance.
- This complex landscape, encompassing finance, lifestyle, investing, business, and education-and-self-development, also intersects with technology, entertainment, general news, and even casino-and-gambling sectors.
