This is the first part of a five-part series concerning the modern-day industrial hemp industry. For many years, we’ve seen much confusion, much discussion, and certainly much controversy surrounding the industrial hemp industry. There seems to be a divide between the two distinct sectors of the cannabis industry – hemp, on the one hand, and marijuana, on the other.
This series will provide facts and history, while bringing deep experience and know-how about today’s hemp industry. It’s important to note that relevant nomenclature has failed us. Labels have exacerbated the problems because the “marijuana” industry has often been referred to as the “cannabis” industry, due to a variety of prejudicial reasons. Though well-intentioned, the labels have reinforced a divide between the two cannabis sectors. Both are commercialized, legitimate, and need to be understood separately.
With the 2014 Farm Bill, Congress enacted the most sweeping cannabis reform policy in U.S. history. The federal government defined and categorized “industrial hemp” under the Federal Code for the first time. The legislation separated industrial hemp from the definition of “marihuana” (which is a Schedule I controlled substance), where it has been for over 100 years. The bill removed “….all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not…” from the Controlled Substances Act — as long as they came from industrial hemp and did not exceed the applicable Delta-9 THC threshold. The legislation led to the reinvigoration and redevelopment of a long-dormant, domestic industrial hemp industry.
In 2018, President Trump signed the most recent version of the Farm Bill, which doubled down on the legality of the industrial hemp plant and all of its derivatives. The bill removed any research-based limitations or restrictions on commercialization, manufacturing, and/or production of the industrial hemp plant. Congress chose its words very carefully, which has led to the industry we see today.
We’re all familiar now with industrial hemp fabrics, textiles, and clothing. We’ve grown used to seeing hemp seeds and nutritional hemp food oils in our grocery stores. Yet hemp’s legality remains misunderstood, along with its wide-ranging benefits and commercialization. As early as 2012, I began working with America’s first (and still largest) cannabidiol (CBD) companies. Since then, CBD has become well known for assisting with a wide variety of ailments and has numerous therapeutic uses. But hemp is more than just food, textiles, and CBD.
Recently, various sectors of our global economy have become more aware of the products derived from the hemp plant. There have been articles in Bloomberg, the Washington Post, Rolling Stone, and other mainstream media outlets to name. I’ve discussed the hemp industry in a variety of my Forbes columns over the years.
The storyline of most of this coverage reveals the apparent surprise that intoxicating (or psychotropic) compounds are derived from the hemp plant. This has been highlighted by the rise of compounds such as Delta-8 THC, Delta-10 THC, HHC, THCa, and of course, Delta-9 THC, the primary psychotropic compound contained in the cannabis plant. These compounds are subject to widespread production and are being sold in gas stations, convenience and grocery stores, online e-commerce portals, and at a variety of other locations across the country and around the world. These products are sold as oils, infused into drinks and edibles, and in the “flower state.” They are federally legal by virtue of the aforementioned Farm Bills. Much of this hemp derivative activity has become popular in so-called red states — I call it “Red State Weed.”
Red State Weed was first impressed upon me during a fall 2021 trip to Nashville, Tennessee, to attend legendary hempster, Morris Beegle’s Southern Hemp Expo. I’d traveled the world for my various roles with cannabis, but had never seen such a free and legal cannabis marketplace. From dispensary-type outlets to “dab bars,” compounds from the hemp plant were served in lawful, mainstream food and beverage around the city and state. One restaurant was called Buds and Brews.
My Nashville experience deepened my curiosity about Red State Weed so I spoke to legislators, policymakers, bureaucrats, and agency leadership. They took comfort in the fact that hemp was federally legal. The stigma attached to marijuana did not carry over to the same compounds derived from the hemp plant.
The world’s largest supplier of cannabinoids, MC Nutraceuticals, has capitalized on the concept of Red State Weed. MC’s pioneering Founder/CEO, Bret Worley, says that “when you study consumer behaviors, patterns, and the data, it is not all about the Red States. Consumers want safe, consistent, reasonably priced alternatives to overtaxed, overregulated, and stigmatized marijuana markets across the country. This is common in all states, not just Red States.”
My hope with this series is partly to reinforce that we have been here before — with CBD. The marijuana industry at first tried to shut down the CBD industry (as derived from industrial hemp), but quickly figured out that it could participate on both sides of the cannabis industry — the hemp side and the marijuana side. Companies would launch products with common branding on both sides — such as Mary’s Nutritionals, on the hemp side, and Mary’s Medicinals on the marijuana side. Numerous other smart and innovative businesses followed suit.
There’s evidence of large marijuana operators spending substantial sums of money lobbying against hemp derivatives being sold in the general marketplace, but this does not stand to reason. Marijuana businesses are merely retailers at the end of the day. So why would a retailer spend money to sell less products in the marketplace? This sounds like a recipe for disaster that could lead to shareholder derivative suits (or the like) against the marijuana companies for spending hard earned dollars in a very tough economic environment. They could be capitalizing on the federal legality of hemp and sell more products to improve their top/bottom lines.
All of this suggests that the marijuana sector still refuses to connect with its customers. On my longstanding podcast, The Hoban Minute, numerous guests have said that the marijuana industry’s biggest problem is its refusal (and seeming disregard) for consumer wants, desires, and behaviors. They desire access to these products, but the operators continue to ignore what their consumers want — and what their investors want: additional revenue.
As this series will detail, law and public policy have changed quite rapidly to provide safe, consumer-friendly, and regulated environments for these products. Industry leaders like Worley have dedicated large portions of their revenues toward educating policy makers and lobbying for consumer safeguards in numerous states.
“Ignoring this federally legal market by attempting to ban products is not addressing the issue,” Worley has said. “This is one of the primary reasons that the marijuana industry has become state-legalized…we cannot pretend that these products will simply go away by refusing to acknowledge the fact that consumers choose these products. This requires the industry to be proactive and seek reasonable consumer regulation. As a result, a large part of my job as CEO is to fund and drive relevant public policy, not just running the company.”
The bottom line is that both sectors can and will exist at the same time. The marijuana sector is not strong enough from a lobbying and public policy perspective to eliminate Red State Weed. As we will examine in Part 3, it does not have the revenues to sustain such a fight. The marijuana sector must understand this and participate in a tactful way so it can deliver what its consumers and investors want. To be anti-hemp at this moment demonstrates a lack of foresight, a detachment from reality, and is purely prohibitionist.
Marijuana industry operators and hemp industry operators need to recognize that they are in the same industry — the cannabis industry. They need to stop imposing activist-driven values which were imparted before the marijuana “movement” became an actual commercialized “industry.”
Morris Beegle says that “[w]e are into the industrial applications of hemp, but we are also into the nutritional side of both hemp and cannabis. The industry can be as multifaceted as the plant itself, and we are more than happy to expound on all it brings to the table for the greater good.”
Please note that as an attorney, consultant, and an interim C-Suite executive, I have served, and continue to serve, the marijuana sector, as roughly 55% of my clientele operate in that space. I have historically represented numerous marijuana industry titans, so this is not a marijuana “hit piece.” It is reality – for better or worse.
Now that I have incited feelings of disagreement, if not rage and possible confusion, please come along with me on this journey me as I dive into the remaining four parts:
- Part 2: A Brief (and Recent) History of Hemp – Ashes Ashes, All Fall Down (November 26, 2023)
- Part 3: This Ain’t No Loophole – Hemp Economics and The Market (December 6, 2023)
- Part 4: The Law Come to Get You If You Don’t Walk Right – Hemp Policy and the Courts (December 9, 2023)
- Part 5: I Can Tell Your Future, Whoa Just Look What’s in Your Hand – The Future Merger of Systems (December 16, 2023)