Normally the result of a tug-of-war pitting conservative heartland agriculture interests vs. progressive coastal urbanites, and corporate farms vs. family farms, the current version of the Farm Bill has legalized industrial hemp for the first time in decades, thanks to the pushing of Senate Majority Leader Mitch McConnell, who argued that there will be great economic benefits from legalizing the crop—and putting it under the purview of the U.S. Department of Agriculture rather than the Justice Department.
The Farm Bill
The previous Farm Bill, passed in 2014, started the trend toward legal hemp. It allowed state-regulated, university-affiliated agricultural research programs to grow hemp plants as long as they registered with the Department of Agriculture. But that bill expired in September, and its renewal was held up by disagreements over SNAP (Supplemental Nutrition Assistance Program) as well as a disagreement over forestry practices—a sore spot in the wake of the California fires.
The 2018 Farm Bill is big; it will govern the distribution of $867 billion over the next five years through a wide variety of food and agriculture programs.
To my mind—which admittedly has a bias toward free markets—hemp farmers don’t need help; they just need their product to be legalized so they can give the market what it wants.
The CBD Boom
Right now, what the market wants, is hemp to make cannabidiol, otherwise known as CBD. The oil was already produced in many states by small producers—including Mitch McConnell’s Kentucky—but they only managed it by doing an end-run around federal prohibition, which limited interstate trade and transport of hemp products.
Now that the Farm Bill has passed with hemp legalization intact, it has kicked off a boom in the CBD industry.
In fact, Bethany Gomez, the director of research for the cannabis research firm Brightfield Group, said, “We expect that market to absolutely explode, with sales hitting $22 billion by 2022, which is higher than the U.S. cannabis industry.”
Already, we’ve seen some big moves by leaders in the cannabis industry.
Canopy Growth (CGC), is the king of the fast-growing Canadian marijuana industry at the moment along with Aurora Cannabis (ACB), Cronos Group (CRON) and OrganiGram (OGI).
Charlotte’s Web (CWBHF) is the number one grower of hemp in the U.S, and Cresco Labs (CRLBF), one of the leading vertically integrated U.S. multi-state operators (MSOs).
Turning Point Brands (TPB), based in Louisville, Kentucky, is an old smokeless tobacco company that first diversified into the marijuana accessories business (rolling papers and an online platform for vaping vendors) and is now making multiple inroads into the CBD market.
In short, the hemp-based CBD industry is an increasingly powerful part of the booming cannabis industry.