After passing the House and Senate last week, 2018 Farm Bill is signed by President Trump, legalizing hemp nationwide. What does this mean for our family of companies?
The hemp industry received an early Christmas present this year when President Trump signed the 2018 Farm Bill, officially legalizing hemp in the U.S. This news will radically alter the hemp and CBD industries in this country, which are both anticipated to experience unprecedented growth this year.
Here, we take a look at the changes to our nation’s hemp policy in the 2018 Farm Bill and what that means for Medical Marijuana, Inc. as we take advantage of the new opportunities provided in the newly passed omnibus law.
Nationwide Hemp Legalization
Hemp has been headed toward legalization ever since hemp cultivation was legalized in the last Farm Bill for research purposes. In 2014, Section 7606 of the Farm Bill — signed into law by President Obama — gave authorization to state departments of agriculture and institutions of higher learning in states with legalized hemp to grow the crop for research and pilot programs.
Nearly 40 states have created hemp pilot programs under this policy. These programs were designed to explore whether a domestic hemp industry was viable in the U.S.
Then, a provision was added to the 2018 Farm Bill that would fully legalize the hemp industry in the U.S. The bill, known as the Hemp Farming Act of 2018, was introduced by Senate Majority Leader Mitch McConnell (R-Ky.) with the goal of removing hemp from the Controlled Substances Act (CSA) and allowing it to be sold as an agricultural commodity.
This bill would eventually be folded into the 2018 Farm Bill, an omnibus set of laws that governs, among other things, agriculture in our country. The 2018 Farm Bill passed the Senate first last week, followed shortly after by the House of Representatives. The bill was then signed today by President Trump, officially making it law. It will take effect on January 1, 2019.
Potential of the CBD and Hemp Industries
This change to U.S. hemp policy is expected to have an enormous impact on the hemp and CBD industries in our country. With federal acceptance of hemp as an agricultural and commercial commodity, mainstream companies in the U.S. are expected to enter the lucrative hemp market. Once introduced widely to the U.S. market, this availability would drive demand ever higher. Newly legalized hemp is projected to be one of the 10 hottest food trends in 2019.
One important part of the hemp market are products featuring hemp’s most prominent naturally occuring cannabinoid, CBD. The CBD segment of the hemp industry could grow to $1 billion in 2019, the first full year of legalization, after hitting an estimated $600 million this year. By 2022, it is speculated to reach an astonishing $22 billion.
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What This Means for Medical Marijuana, Inc.
Medical Marijuana, Inc. and our portfolio of companies anticipate that changes to U.S. hemp policy will benefit the way we do business each day.
The 2018 Farm Bill will exclude hemp from the CSA, removing previous limits on which parts of the hemp plant were allowed to be used commercially. That means that companies in the CBD space can use the whole hemp plant for products, including the hemp plants flowers, for the first time. This could potentially allow for improvements to the manufacturing process and the introduction of new products.
Changes to hemp policy will also allow the use of U.S. grown hemp for the first time in the production of hemp products. Previous policy required hemp companies in the U.S. to use hemp imported from international sources. Now, companies using hemp, including CBD oil businesses, can source their hemp domestically. This can create a more cost effective manufacturing process and provides for more efficient supply chains. Sourcing domestic hemp also allows CBD companies to support U.S. farmers.
Although it is too early to tell for sure, it is speculated that the removal of hemp completely from the CSA will increase access to CBD products across the U.S., including in states that currently restrict access, now that hemp is fully legalized federally. However, some states have already hinted that they do not plan to alter their policies regarding CBD.
Finally, these changes to hemp policy in the U.S. could draw major companies to the U.S. hemp and CBD market. This has the potential to increase the distribution avenues for our companies, meaning Medical Marijuana, Inc. products may soon be found in major grocery and drug store chains. More businesses looking to enter the CBD industry would also increase demand for bulk CBD oil and CBD isolate for formulation into commercial products. Medical Marijuana, Inc. subsidiary HempMeds® is already a leading wholesale and bulk distributor of hemp-derived CBD.
Major Media Coverage of Farm Bill Passing
Prior to President Trump’s signing of the 2018 Farm Bill, major news networks looked at the impact it could have on the CBD industry if passed.
In a breaking news segment on Wednesday, December 12th, CNBC announced that the House of Representatives had passed the 2018 Farm Bill. In the segment, CNBC’s anchor noted that if the Farm Bill passes, it “will be a game-changing moment for the CBD industry.”
The news was also covered in an article on The Street’s Real Money, titled Farm Bill Passes, and These Hemp Companies Will Be Big Winners.
The article reads, “The impact of this legislation on the cannabis industry is enormous. Last year, hemp sales in the U.S. reached $820 million, according to the Hemp Business Journal. That’s without hemp being completely legal. These sales have been projected to reach $2.1 billion by 2020 — and that’s not taking into account the passage of the Farm Bill.”
The article also looked at the top companies in the hemp space. Medical Marijuana, Inc. was ranked third on the article’s list. According to the article, Medical Marijuana, Inc.’s family of companies account for 10 percent of the hemp-derived CBD market.
“Despite the company’s argument that its products are derived from parts of the cannabis plant excluded from the Controlled Substances Act, hemp itself has been on shaky legal ground for years,” the article reads. “Fortunately, the 2018 Farm Bill should remove this particular overhang for CBD-oil producers like Medical Marijuana. And investors are obviously thrilled with this groundbreaking development, based on the sharp reversal in the company’s share price this week.”