Estimated reading time: 4 minutes
Hemp has always been a versatile and sustainable crop. Now that it’s becoming more available globally, let’s look at how regulations affect the industry.
Hemp was once a flourishing and even dominant agricultural crop. In the US, it was viewed as a resilient and renewable resource.
Dating back to the Neolithic age, hemp was refined and given industrial applications for use in textiles, paper-making and more. Over time, the crop was given even more uses, and there are now potentially tens of thousands of uses for it.
History of cannabis regulations
Hemp remained popular for its affordability and renewability until the 20th century. The first nail on hemp’s coffin came with 1937’s “Marihuana Tax Act.” At the time, there were fears in the US that industrial hemp was essentially the same as marijuana. Law enforcement discouraged farmers from growing the crop, though cultivation continued.
The last recorded hemp crop was grown in 1958, in Wisconsin. In 1970, the first formal ban on the crop took place, as the Controlled Substances Act made cultivation of hemp illegal.
Today’s regulatory landscape
Hemp cultivation and the sale or consumption of hemp foods are banned in many jurisdictions around the world. In some countries, hemp cultivation is legal under a licensing regimen. For example, in New Zealand, you need a license to cultivate industrial hemp. However, everyone in the supply chain requires licensing, and there are specific regulations on exact activities, including:
- Which cultivars can be grown
- The source of and amount of seeds
- Record-keeping to avoid discrepancies
As different countries ease restrictions on hemp cultivation, we now have several case studies on the effects of current regulations.
Effects of hemp and cannabis legalisation
Legalising hemp cultivation has led to wide-reaching economic impacts. Here are some of the significant results we’ve seen so far.
In the US, the legalisation of hemp has had a huge economic impact. In 2014, President Obama updated the Farm Bill to include the Hemp Pilot Program, which allowed some institutions to cultivate and study hemp. Hemp was only officially recognised federally in 2018.
In 2019, according to New Frontier Data, the hemp industry already produced $1.1bn in revenue, with $2.6bn expected by 2022. After industrial revenue, increases in employment rates are the most noticeable effect. As of 2019, legal cannabis created 211,000 full-time jobs in the US.
Unfortunately, due to federal regulations, the most trustworthy source of employment information, the Bureau of Labor Statistics, cannot provide data on job creation for cannabis plants, including hemp. However, other economic and cannabis think tanks have produced relevant studies. The most significant of these shows that the legal cannabis industry is now the biggest job creator of any industry in the US. In three years, the workforce of the industry has increased by 110 per cent.
The job increases caused by the relaxation of cannabis crop regulations are seen in a variety of positions, including those in:
- Sales and marketing
- Regulatory oversight
The European Union and UK
In Europe, the CBD market is booming, but not to the extent of the US or UK. The UK has the second-largest CBD market in the world after the US. The UK CBD market is expected to generate £690m in 2021.
While demand for CBD and hemp oils, ointments, and other products are high in the UK, a few regulatory factors are setting the industry back. As is the case in the US, regulations surrounding payments that cannabis businesses can accept limit sales potential. In the UK, the lack of options such as credit cards. Finding a credit card and POS system for a cannabis business can be difficult.
In both these cases, regulations affect the ability of consumers to purchase personal-use hemp products. By exactly how much is unsure, but we do know that it’s costing them in an age when cashless payments are a necessity for even most brick-and-mortar retailers.
Cultivation of industrial hemp in most EU countries is limited to plants with less than 0.2 per cent THC. In some countries, the limit is slightly higher. These regulations primarily affect personal-use hemp products, as well.
The bottom line
Hemp is becoming more well-known for the versatility it’s always provided. It’s also a sustainable crop that’s good for the environment when cultivated responsibly. But there are a few regulatory complications that make it a difficult industry to work in. A lot of progress has been made, but it’s up to policymakers to make it easier for the industry and hemp itself to reach its potential.
Report calls for UK Government to turbocharge cannabinoid innovation
A new report has set out recommendations for the UK to become the global leader in cannabinoid innovation.
Drawing from expert insights, the report – From Containment to Nurturing: How the UK can become a world leader in cannabinoid innovation – was commissioned by The Centre for Medicinal Cannabis and the Association for the Cannabinoid Industry.
The report argues for the UK government to recognise the UK’s legal cannabis market, and to create a public policy and nurturing regulatory framework to foster its growth.
Highlighting that millions of Britons routinely purchase cannabis products as medicine and food supplements, it stipulates that the UK has the opportunity to harness its global strengths in life sciences to become a world leader in medicinal and nutraceutical cannabinoid innovation by adopting the report’s proposals and recommendations.
Authored by regulatory thinker Professor Christopher Hodges, the report will be launched with a speech by George Freeman MP, Minister for Science, Research & Innovation – the first ever ministerial address to the legal cannabis sector.
Included in the recommendations are calls for updates to hemp farming rules, modernisation of the Proceeds of Crime Act and the creation of a national patient registry for all cannabis based medicines prescribed in the UK.
Stewarding a new industry
The report draws on inputs from leading industry players, academics, patients, consumers and investors, and its authors state that regulations are critical issues in order to help set the UK apart as it decides the economic and political path it wants to adopt post-Brexit.
Hodges argues that the regulatory framework he sets out would achieve three important objectives:
● Global competitive advantage for the UK post-Brexit, helping the country to leverage its historic and economic strengths in a rapidly growing and unprecedented global industry
● Regulatory best practice giving early mover advantage, helping to pioneer new approaches to regulating a novel industry that other jurisdictions on a similar path can choose to emulate
● Scientific advances and innovations, with pioneering new treatments, manufacturing methods, and end user product innovations, helping the UK to reinforce its reputation as the home of world-leading inventions and discoveries that improve our environment, our health, and quality of life.
The report views the cannabinoid sector through the lens of Outcome-Based Cooperative Regulation, arguing that for regulations to be effective, they need to be based in trust and collaboration. It also urges the Government to establish a ‘stewarding’ authority to govern and guide the sector and implement the required reforms.
Professor Christopher Hodges, Emeritus Professor of Justice Systems at the Centre for Socio Legal Studies at the University of Oxford, commented: “The analysis in this report and the principles we have outlined lead us to recommend a series of policy changes to help bring about the positive and shared goals that we articulate.
“The recommendations are directed both at regulators and industry, with the understanding that both parties have an obligation to co-operate to steward this new industry and support it to develop in an innovative but also safe and responsible way.”
Key objectives of the report include:
- To build a strategic engagement with government and associated agencies – move from containment to nurturing
- To establish a footprint / landing zone for the sector within government i.e. Department for Business, Energy and Industrial Strategy (BEIS)
- To establish a new coherent regulatory framework for CBMPs and consumer cannabinoids in the UK
- To optimise the potential public funding opportunities for the sector
- To align ourselves with current government thinking with regard to future regulation
The UK has a global cannabinoid leader
With cannabinoids making up a rapidly accelerating global industry, the report highlights that the UK holds an advantage in that it can learn from the successes and failures of other comparable regimes.
It also states that Brexit has given the UK the “freedom to choose to align or differentiate itself from the markets with which it is competing” such as hemp cultivation and CBD regulation.
Addressing the country’s potential to be a sector leader, the report encourages the creation of a UK ‘Centre of Excellence’ to advance the evidence base for cannabinoids and their applications, which it says could be established with the support of major universities.
Whilst the UK has set out its Life Sciences Vision, aiming to make the country a global leader in the sector post-Brexit, the report highlights how the cannabinoid sector can help accelerate this ambition.
Ir recommends that an incubator and cannabinoid innovation fund for UK pilot studies is created in areas aligned with the government’s R&D strategy to support key areas like life sciences and new agri-tech opportunities.
“By adopting the proposals and recommendations laid out here, the UK can inaugurate a timely opportunity to harness its global strengths in life sciences to become a world leader in medicinal and nutraceutical cannabinoid innovation,” state Steve Moore and Paul Birch, co-founders of the CMC and ACI.
Attracting investment into the UK
With the government having neglected to provide the right regulatory and grant support, the report highlights that those working in the sector feel restricted and shut out of policy engagement. It notes this has led to a situation whereby the UK’s sector is struggling to “find its feet” in the international market.
The recommendations in the report intent to provide a vision that “moves beyond a policy of control and containment to one of support and stewardship”. As well as helping to advance scientific discovery and innovation, and improve well-being, this will also help to create jobs and investment in local economies.
One recommendation that address this issue is modernising the Proceeds of Crime Act, which currently prohibits dealing with any benefit arising from criminal conduct, even when that activity occurs abroad if that same activity would be illegal if it occured in the UK.
This is a step that has already been taken on the island of Jersey, where people are permitted to do business in the cannabis sector as long as it is legal where it is taking place.
The report suggests that the UK’s Proceeds of Crime Act should be updated to create an explicit exemption for private enterprise by entities operating in legal jurisdictions – modelled on the changes already incorporated into law in Jersey.
The report states: “The seeds are there for rapid growth but it cannot happen without a clear strategy built upon co-ordinated government stewardship and the ambition to not just tolerate, but actively nurture the sector to expand and mature, so it attracts more investment, jobs and innovations, and secures political support and public recognition.”
It goes on to say: “Until such time as the POCA regime is clarified to exempt the owners and operators and those who gain (including shareholders) from the activities of legal companies in the UK, major institutional investors will be deterred from committing to the sector.”
Blair Gibbs, Senior Associate, Centre for Medicinal Cannabis/Association for the Cannabinoid Industry, commented: “Our conclusion from this research is not that the UK’s legal cannabis sector is over-regulated, or merely suffering from outdated rules, or simply needs red tape and unwarranted regulations to be stripped back.
“The regulations encompassing the cannabis sector are wide-ranging and complicated, but right now are also uncalibrated to the risks associated with each product.”
The report has also recommended that GP are enabled to prescribe medical cannabis. To find out more about this recommendation please visit our sister site: www.cannabishealthnews.co.uk.
CLIMB Act aims to give cannabis businesses access to financial capital
The new Act will allow US cannabis businesses to list on stock exchanges.
Representatives Troy Carter and Guy Reschenthaler have introduced the Capital Lending and Investment for Marijuana Businesses Act (CLIMB Act) to help improve access to services for legitimate cannabis-related businesses.
This legislation would give US cannabis companies access to lending and grant opportunities from both financial institutions and government agencies.
The US cannabis industry has been growing at a rapid rate, but due to the federal prohibition of cannabis, cannabis businesses in the US are currently struggling to access capital through traditional routes.
Federal prohibition also prevents US cannabis businesses from listing on US exchanges. However, global companies are currently permitted to list, giving them an unfair advantage over US cannabis businesses to secure critical capital.
The CLIMB Act aims to permit access to community development, small businesses, minority development and financial institution capital for investment and financing of cannabis-related businesses.
This includes business assistance, such as access to financial services, insurance/surety products, debt or equity capital, accounting services and more, as well as safe harbour for businesses to list on stock exchanges.
If passed, the bill could generate an estimated $22.7bn in tax revenue through increased investment.
Congressman Troy Carter stated: “The bipartisan CLIMB Act is a huge opportunity to bring equity and equal opportunity into our nation’s burgeoning cannabis industry.
“From my work on the Small Business Committee and by working directly with small, minority, and veteran-owned cannabis businesses, it’s clear that access to capital remains one of the biggest barriers to entry and to success in the industry.
“By bringing symmetry into the business ecosystem with the CLIMB Act, we can help communities that have long been harmed by the criminalisation of marijuana move to now be leaders in the business sphere – and that’s what the American Dream is all about.”
It has been estimated that the CLIMB Act would bring in an expected $47.3bn in investments to support the growth and stability of US cannabis operators and ancillary businesses within the first year, and it is also projected to create 600,000 jobs by giving these businesses access to capital.
Reschenthaler also stated: “American cannabis companies are currently restricted from receiving traditional lending and financing, making it difficult to compete with larger, global competitors.
“The CLIMB Act will eliminate these barriers to entry, and provide state legal American cannabis companies, including small, minority, and veteran-owned businesses, with access to the financial tools necessary for success.
“This bipartisan legislation will boost the economy, create jobs, and level the playing field for American businesses.”
First vice chair of the National Cannabis Roundtable and CEO of Ilera Holistic, Dr Chanda Macias, stated: “The CLIMB Act will unleash the full potential of the American cannabis industry. This legislation will ensure that American cannabis businesses can access the lending and grant opportunities that other domestic industries currently enjoy, and it will make it easier for veteran, minority and women-owned businesses to compete by giving them access to a broad range of economic opportunities.
“I want to thank Congressmen Troy Carter and Guy Reschenthaler for introducing this important legislation.”
National Cannabis Industry Association CEO Aaron Smith, commented: “Small cannabis businesses cannot effectively compete in the highly regulated and complex cannabis industry without access to capital and lending services.
“This bill is a much-needed reform that will help level the playing field for main street cannabis businesses across the country.”
The bill could help to transform the US cannabis industry if it passes alongside the SAFE Banking Act, which has been designed to allow cannabis businesses access to traditional banking services, the HOPE Act, which aims to expunge past cannabis-related convictions, and the MORE Act, under which cannabis would be removed from the Controlled Substances Act’s list of scheduled substances and would remove criminal penalties for individuals manufacturing, distributing, or possessing the plant.
The SAFE Banking Act, however, which was last year included in the National Defense Authorization Act (NDAA) and then subsequently removed, has now been stalled in the Senate for sixth time.
Medical cannabis bill given green light in Spain
The Spanish Socialist Workers’ Party introduced a bill to regulate medical cannabis in the country in May.
To move patients away from the black market, Spain’s Subcommittee on medicinal cannabis in the Congress of Deputies has approved the bill aiming to regulate the use of cannabis for medicinal purposes.
Currently, it is illegal to sell cannabis in Spain. However, personal consumption on private residences is permitted. This means Spanish citizens that consume cannabis for medical purposes are often using the black market to access their medicine.
Although, cannabis-based medical products were not legal in the country, two cannabis medicines have been available to patients in Spain – GW Pharma’s oil products, Epidiolex and Sativex.
The new bill aims to give patients’ in Spain access to medical cannabis through hospitals and health centre pharmacies via medical specialists for a number of different conditions. Some of these conditions include multiple sclerosis-related pain, epilepsy, and symptoms related to chemotherapy and cancer pain.
According to local reports, the proposal has been supported by political parties including the socialist PSOE, United We Can, and Ciudadanos, PNV and PDECAT. The Canary reported that ERC and Bildu abstained, and the conservative PP and Vox voted against the proposals.
The non-profit organisation, The Spanish Observatory for Medical Cannabis (OECM), was established in the country in 2015 to “promote, coordinate and carry out activities and projects aimed at learning about the medicinal properties and uses of cannabis and its derivatives”.
The OECM stated: “From the OECM we are pleased with the agreement reached based on the report of conclusions of the medical cannabis subcommittee approved today by a majority thanks to UP, PSOE, Cs, PNV and PDeCAT. With the abstentions of ERC and Bildu and the votes against of PP and Vox.
“We started this journey in 2015 and after seven years we have achieved it. It has been an honour to fight for the rights of at least more than half a million patients who use medical cannabis. From the OECM we want to thank all the people who have worked to bring it forward, it is a giant first step for all of us.” [Translated from Google]
The proposed bill has been given the green light in parliament, however, it must still be voted on next week. If the bill wins the vote then the Spanish Agency of Medicines and Medical Products (AEMPS) will begin carrying out work on finalising regulations within the next six months.
The bill initially excluded cannabis flower, however, The Canary reports that the parties have included an amendment at the request of patients to use flower to develop “medicinal experimental projects” as “this way of using cannabis by inhalation provides faster effects for users than simply eating or drinking infusions”.