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Taking the Wins Where We Can

As an avid reader of NIHC’s weekly newsletter, you’ll no doubt note that recently we included an item in the news section about the U.S. House of Representatives Subcommittee on Agriculture Appropriations draft report language on hemp.

There was much to celebrate:

  • A prohibition on the use of funds in contravention of the hemp provisions in both the 2014 Farm Bill and 2018 Farm Bill. This adds needed clarity that hemp produced under 2014 Farm Bill authorities remains fully legal under Federal law.
  • Another extension of the 2014 Pilot Program—through the end of 2022—for the approximately 75% of the hemp farming that operates under these authorities, including four of the five largest hemp producing states.
  • Direction to the USDA, HHS and the DEA to study the scientific basis of the 0.3 percent THC threshold and consider alternative levels.
  • Direction to USDA to reduce barriers to access for communities of color, specifically citing the 10-year ban on individuals convicted of drug felonies as such a barrier.
  • Clear acknowledgment that Congress intended to avoid criminalization of hemp processing, understands that in-process extract may temporarily exceed the THC limit, and directs USDA to coordinate directly with the DEA to present the industry with guidance and information on in-process extracted material
  • Eligibility of hemp to participate in all USDA-related programming. This includes the value-added producer grants program through the Office of Rural Development, crop insurance through the Risk Management Agency and as a specialty crop through the Agriculture Marketing Service (AMS).

The NIHC has been working with the House Committee on Agriculture to provide feedback on many of these roadblocks facing farmers in our industry. We have directly spoken to members of Congress and their staff on both sides of the aisle to raise awareness about all of the things that were mentioned in the Subcommittee on Agriculture Appropriations report. We are continuing to engage with members and staff of both parties on both sides of the Capitol.

This week, we sent a letter to House Agriculture appropriators thanking them for their language in this report and circulated it to those on the authorizing committees and also friends of the hemp industry.

You can read the full letter sent from NIHC Board Chair Patrick Atagi to the House Committee on Agriculture here.

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Export Market Development: U.S. Industrial Hemp’s United Front

By Kevin Latner, NIHC Vice President for Trade and Marketing 

The National Industrial Hemp Council (NIHC) is the only nationwide trade association dedicated to representing the U.S. industrial hemp industry supply chain, from farmers, to processors to brands and retailers, and end users and consumers. Since its inception in 2019, NIHC has supported industrial hemp and its products, improving the regulatory framework, and promoting the sustainable long-term growth and profitability of the industry through trade development and export promotion.

NIHC estimates that U.S. export of hemp and hemp-derivative products exceeded $1.8 billion in 2020, up from $310 million in 2019. Despite the challenges of the pandemic and regulatory uncertainty in both the U.S. and abroad, demand for hemp fibers, grain and oil continues its dramatic rise. Given the proper regulatory framework and market support, industrial hemp will provide U.S. farmers with another sustainable and profitable crop for the long-term.

NIHC has worked to build bridges within the hemp industry to work with registered member driven organizations to ensure that the entire hemp industry, and industry supply chain, is represented in international trade. A partial list of organizations NIHC has worked to build bridges with includes U.S. Hemp Growers Association, Hemp Industries Association, Hemp History Week, the Hemp Feed Coalition, the Midwest Hemp Council, the Texas Hemp Growers Association, the Southeast Hemp Association and Vote Hemp.

NIHC Chief Economist Beau Whitney reports that in 2020, licensed acreage totaled 495, down from 511,442 acres in 2019. This is nearly four times the acres licensed in 2018. Despite the decline in cultivated land in 2020, the number of growers increased significantly. In 2020, the number of licensed growers exceeded 21,000, increasing by more than 27% from 16,877 licensed growers in 2019. The increase in the number of licensed growers in 2020 is in addition to a 476% increase in licensed growers between 2018 and 2019, reflecting the accessibility of hemp to small and medium-sized farmers and business.

Trade numbers for exports of industrial hemp for fiber use (true hemp, raw or retted and processed hemp not spun, tow & yarn waste) were mixed. There were 306 metric tons of exports of industrial hemp for fiber (MT) in 2019. This was up from 255 MT in 2017. In 2020, that number declined to 148 MT.

Export values were $0.79 million, down, however, from $8.9 million in 2017, to $2.8 million in 2018. Global trade of industrial hemp for fiber use has increased about 380% annually over the same time-period, but with significant volatility.(1) Global trade in industrial hemp and hemp-based products was over $8.1 billion in 2020 and is forecast to be more than $65 billion by 2026. NIHC estimated that U.S. exports of hemp seed, meal, oil and hemp-based processed products (including cannabidiol-based) exceeded $1.8 billion in 2020. U.S. exports of industrial hemp products are forecast over $21 billion by 2026.

Industrial hemp for seed production accounts for approximately 15 percent of acreage. Reliable yield data for industrial hemp seeds production is not yet available. Additionally, trade number for hemp seeds are not separated out at the six-digit HTS Code level and while the U.S. tariff schedule includes a 10-digit HS code for hemp seed, historical trade numbers are not available in the CENSUS database. Industry forecasts are that seed demand will continue to grow and seed production will be 65 percent of production acreage by 2030. (2)

Production acres in the U.S. will expand to meet demand. Hemp will become a major commodity in the U.S. as measured by farm-gate sales, which will triple to top $10 billion a year by 2025. (3) Because of intermediate processing and downstream production, industrial hemp is forecast to improve farm profitability and improved rural livelihoods, providing market incentives for industrial hemp production. In 2019, hemp contributed 150,000 jobs and an estimated $4 billion in income to the farm community. (4) Export opportunities for U.S. industrial hemp will grow production faster than domestic use.

Export opportunities depend on regulatory certainty and the U.S. faces regulatory challenges in this area.  One challenge is the delayed guidance from U.S. FDA on how CBD is treated in the food, supplement and nutraceutical markets; this despite NIHC’s ongoing discussions with FDA about the importance of regulatory certainty. The delay has resulted in ambiguity with respect to how these products are regulated and difficulty establishing international standards (see also Patrick Atagi’s “Developing Industry Standards and Best Practices”), even while the domestic market for these products have flourished.

Regulatory engagement and standards development has had significant impact in the international space where NIHC leads the industry in developing a coordinated response to evolving international standards. In June 2018, the WHO’s Expert Committee on Drug Dependence (ECDD) reviewed industrial hemp’s and CBD’s placement under international drug control treaties. NIHC worked with the U.S. government to develop positions consistent with deregulating hemp and minimizing treaty restrictions on cannabidiols. In June 2020, the WHO met to adopt standards consistent with NIHC and US government recommendations, providing an opening for increased harmonization and commercialization of industrial hemp.

Harmonization of international standards and certifications is a critical area for international engagement and central to NIHC’s role as the industries voice on international trade. NIHC has engaged experts to assess and monitor European and Asian markets. This has resulted in significant insights, including an assessment that there developing local trade centers that restrict international trade.

For example, in Europe trade in raw hemp and raw hemp fiber is two times the international trade. In other words, intra-European trade has exploded, while at the same time U.S. exporters find a challenging market because of ambiguous import requirements and inconsistent implementation by its member states. In China, recent regulatory changes increasingly limit U.S. export opportunities to hemp fiber.

Based on industry input, NIHC has developed both short-term and long-term responses in partnership with USDA’s Foreign Agricultural Service. In addition to engaging European and Asian trade experts, NIHC is building a communication strategy that will provide international visibility for the U.S. hemp industry. In the short-term this means ensuring that U.S. products, product availability and production standards are developed and shared.For the long-term, NIHC’s strategic vision includes expanding these efforts by partnering with USDA to understand the supply chain in target markets, identify market access constraints, develop technical solutions food, feed and supplement use along the value chain, and life cycle assessments to ensure that hemp generally, and US hemp in particular, is valued for its sustainability credentials.

1 Trade Data Monitor.


2 Whitney Economics Hemp Cultivation Report 2020 – Full Report. 

3 WE_The-Field-of-Dreams_October_2019-1 (2019)
https://whitneyeconomics.com/2019/11/12/the-field-of-dreams-an-economic-survey-of-the-united-states-hemp-cultivation-industry/


4 Ibid.
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Developing Industry Standards and Best Practices – “Why YOU Should Join the NIHC”

By Patrick Atagi, NIHC Board Chair

 

Last week, I wrote to you about the value-add that trade associations bring to your business, particularly the opportunities they bring with regards to networking with like-minded professionals in the industry. In case you missed my piece from last week, I shared that one of my favorite moments as NIHC Board Chair was at our inaugural 2019 meeting in Portland when the reception was humming with chatter and people were signing NDAs with each other in the hotel lobby. It was at that moment that I knew we were going to be a top-notch organization that brought people together for the betterment of the whole industry.

You will read in the article from Kevin Latner (see his blog post) about that value-add from the international market development standpoint and how engaged NIHC has been in that process.

We’ve also been extremely involved in setting standards and leading the way for consumer safety. Therefore, this week I want to talk to you about our efforts to promote industry standards and best practices.

There is a lot of information available, especially in the hemp world. The questions we face are: What should you pay attention to in the industry? How can a technical issue in a state or Congress radically restructure the industry as we know it? How do you know which industry options have value?

Associations are, in many ways, uniquely positioned to separate the valuable and meaningful information of wheat from the chaff of rumors, buzzwords, and maelstrom of press releases.

Your time is valuable, and we know it. The NIHC is driven to compile and discern industry data, and we work to provide our members fact-based information in as close to real time as it gets.

We are putting our time and energy to lead the way to establish a framework to effectively and continuously conduct research, that will ultimately result in achieving certifications and accreditations for the industry. All this work will ultimately benefit the consumers of hemp-derived products, and drive the industry forward.

  1. Conduct Research: In the effort of collecting solid industry data, NIHC leaders, key members, and industry partners are together dedicated to conducting research and explaining trends, as well as benchmarking existing practices. We must all be open, honest and transparent if our industry is going to continue to grow. We won’t take shortcuts – our data is as verifiable and accurate as is possible.
  1. Develop Certifications and Accreditations: Many associations develop and issue certifications or other credentials that reflect an understanding of the industry and the accepted strategies, processes, and practices to meet their organization’s business needs. The NIHC is no different, and is working towards standardizing product testing for potency, lab accreditation, and manufacturing processes that meet recognized and accepted international (ISO) standards.

To this end, the NIHC and its leadership is guided by the principles of its charter, further market development, assistance to members entering the industry, and education of the consumer on industrial hemp and its applications.

There are many confusing and contradicting claims and assertions. Farmers, manufacturers, retailers, financial institutions, suppliers, members of the supply chain, and consumers have the right to fact-based information. Solid research and partnerships can provide the much-needed education and clarity to consumers in a marketplace with so many choices. We all know that what is needed is a system where hemp can move through the stream of commerce with integrity. NIHC’s priority is to develop certifications and standards that will bring peace of mind to consumers, resulting in a thriving industry.

You’ll hear plenty more about our efforts in the coming weeks and we look forward to showcasing a lot of what we’ve done for our members and the industry at our Annual 2021 NIHC Hemp Business Summit, November 14-16, 2021.

We hope you’ll consider attending and look forward to seeing old faces and making new friends.

For more information on membership, please visit the NIHC website.

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NIHC Leads the Way: Rome Wasn’t Built in a Day

There has been some recent chatter in our industry about creating opportunities to export U.S. industrial hemp. This week, we’re happy to share an update from Kevin Latner, NIHC’s Senior Vice President of Trade (see his blog post).
 
We can’t emphasize this fact enough. The NIHC is participating in the USDA’s Market Access Program (MAP) which means we are sitting at the international negotiating table with U.S. trade representatives representing you and bringing opportunities to open markets abroad for U.S. grown hemp and hemp-derived products. 
 
Participation in the MAP program means that the USDA recognizes the NIHC as an official government cooperator. It is a huge responsibility and one that we don’t take lightly, which is why we often inform you of not only what’s happening here at home, but on developments happening internationally. As we seek to advocate before U.S. regulators, we also need to be aware of how U.S. policies will affect markets overseas if they’re not harmonized with European or Asian regulations. We also want to ensure that the fine print in proposed regulations or legislation will not indirectly cause a technical barrier to trade. 
 
And, it’s not just the MAP funding where NIHC is participating.

The NIHC has, not one, but two representatives sitting on the USDA’s Agricultural Technical Advisory Committees (ATAC). These are important committees inside the USDA that advise both the Secretary of Agriculture and the United States Trade Representative (USTR) on technical points on hemp. Kevin Latner sits on the ATAC for Processed Foods which includes jurisdiction for things like CBD and CBD-infused products, including food. Patrick Atagi, NIHC Board Chair, sits on the ATAC for Cotton, Tobacco and Peanuts. Recently, Patrick proposed to his colleagues on the Cotton, Tobacco, and Peanuts subcommittee that they include hemp in the name – and we’re happy to report that they overwhelmingly agreed. There are a few more steps in the process, but we hope to report soon that Patrick will be sitting on the newly named Cotton, Hemp, Tobacco, and Peanuts subcommittee that will be advising the Secretary of Agriculture and the USTR. 

These are big opportunities for the industry and, specifically, NIHC members, who will learn of critical information first.

We are often asked when discussing policy with the media or other stakeholders, “What does this mean for hemp?” As an industry and as advocates, we must get out of that mindset. Hemp has been legalized since 2018 and we should start to recognize all the benefits that come with this.

Rather, the question we should all be asking is, “How does this benefit hemp and move the ball forward for our industry?” The USDA in both the Trump and now the Biden administrations recognized the benefits to the overall Ag economy by including hemp within the numerous programs at USDA. It means the world to us that we have the trust of not just our members who we advocate for, but also of the USDA, the USTR and other government regulators. 
 
In December of 2018, the Agriculture Improvement Act of 2018 was finally signed into law by President Trump. While the rest of the Ag community was plugging in and moving along, the hemp industry was just getting started.

 With the world finally opening up from the 2020 devastating effects of the once-in-a-lifetime pandemic, markets are opening back up, too. We hope our efforts and careful planning will open opportunities around the world for the job creators in the hemp industry.

The point is: We’re moving in the right direction and we’re making progress every day at NIHC both at home and abroad. Some have recently stated and written in interviews about how the hemp industry needs to have leadership in Washington to better grow the industry. As you know, we’ve been here all along. We must remember that all great American success stories took time to overcome obstacles and become the great industries that they are today. 
 
As the old adage goes, Rome wasn’t built in a day.  

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Connect to Collaborate: “Why YOU Should Join the NIHC”

By Patrick Atagi, NIHC Board Chair

It’s 2021. It is the ubiquitous age of information where data flows freely online. Why would you choose to spend your time and energy, as well as your company’s resources on membership dues, to stay involved with the National Industrial Hemp Council (NIHC)?That is a valid question – and one that we continue to answer each and every day. There is no shortage of organizations for those in the hemp industry in which to align themselves. However, we believe our reputation, our experience and our results speak for themselves. And it’s why we believe we’re the strongest voice to speak for the industry.

While NIHC membership does involve a cost, we sincerely believe the value we bring to your business is priceless. We believe in the profitable possibilities for the industry. We have vast expertise between the numbers of us who come together to collaborate under the NIHC umbrella to address challenging regulatory and congressional issues to clear a path forward.

We are also investing time, energy and resources to help build an industry where industrious hemp businesses can thrive.

At NIHC, everything we do is with you and your organization in mind to solve your informational and regulatory business challenges.

There are three overall reasons that the vast majority of successful associations hold value. They are:

  • Networking
  • Standardization
  • Personal & Professional Development

I want to evaluate each of these areas with a focus on how your participation in NIHC will not only help your business, they will further expand your personal development goals. Over the next couple of weeks, we will share the exciting opportunities that participation and membership in the NIHC can provide you and your business.

This week, I want to focus on Networking.

In Portland, Oregon in September of 2019, the NIHC held its first-everHemp Business Summit. The event sold out, and we even had to turn away people at the door. The value of meeting in-person was evident – NDA’s being signed in the lobby, the jet engine roar of the Monday evening reception, and attendees running out of business cards by the end of the meeting.

Last month, I attended the Southern Association of State Departments of Agriculture (SASDA) in-person annual meeting in Little Rock, Arkansas. Just like at the first Annual NIHC Summit, we were able to secure new deals with a handshake, solidify existing industry relationships, and make new friends. It was amazing to be back with like-minded professionals.

While there, the North Carolina Department of Agriculture became a new member of NIHC, adding their membership to our existing state department of agriculture members. They saw the value of our efforts to unite the industry. It is times like this we know we are on the right path.

There really is no replacement for in-person meetings, shaking hands, hugging old friends, and having in-depth conversations in the lobby, then continuing over dinner. Business leaders have an innate desire to connect to other like-minded professionals. It is clear – that is what drives progress. And, networking is the first pillar of NIHC membership.

We invite you to come experience this for yourself in Washington, D.C. as we once again hold the Annual 2021 NIHC Hemp Business Summit, November 14-16, 2021 (see below). We’ve already lined up major farm organizations, state regulatory agencies, and national experts and research facilities to discuss the latest news  – people you need to meet and who need to meet you!

So whether you’re a farmer, processor, retailer, legal expert, or other expertise leveraging the hemp plant, there are numerous networking opportunities for you at NIHC’s annual event.

We welcome new members every week and it’s my sincere hope that you’ll consider joining the NIHC family if you’re not already yet a member. And we look forward to seeing old friends and new faces at the NIHC meeting in November.

For more information on membership, please visit the NIHC website.

REGISTER NOW!
NIHC’s 2021 Hemp Business Summit
Reserve your room in our room block for a discounted rate here.Room Block Cutoff Date: October 29, 2021
 To Guarantee Your Spot, RegisterToday!

The Congressional Research Service Produces Long-Awaited Report on Hemp

The Congressional Research Service Produces Long-Awaited Report on Hemp

The Congressional Research Service (CRS)serves as non-partisan subject matter experts on a number of things and advises Congress on the technical details on a variety of issues. From trade to foreign affairs to internet data, there is no shortage of technical expertise from CRS on industries that Congress regulates.

Working at the direction of Congress, CRS advises members and staff as they work through legislative issues. The hemp industry is no different and there are a variety of opinions on Capitol Hill and the regulatory agencies about how to solve the current and emerging issues facing our industry. Because hemp was legalized through the 2018 Farm Bill – which in terms of Congressional timelines is recent – there hasn’t been a lot of technical expertise being offered to members of Congress – the exception really being the meetings NIHC staff has conducted on Capitol Hill.

We were excited to see the report from the CRS finally come out this week on the hemp industry and offer some technical details on all of the industrial uses for the plant for lawmakers making policy decisions that have both short and long-term consequences for our members and the industry writ large.

The CRS report centered around three things, fiber, seed/grain and the flower and you can see the graphic below that summarizes the report:

(Source: CRS Report to Congress: “Production, Marketing, and Regulation of Hemp Products, June 22, 2021, https://bit.ly/3zYbRon).

The report also gives a brief update on the current legislative efforts in Congress as they pertain to hemp, many of which the NIHC has provided significant impact on.

One detail to point out about the report, it mentions that hemp seeds are used as animal feed. That’s a huge win for CRS to put that on record in their report not just for the NIHC, but for our partners at the Hemp Feed Coalition, of which NIHC is a member.

This report may seem like a small step, but it’s a big win for our industry as a whole. Largely because of the work that NIHC is doing and the technical details we’ve been offering to lawmakers and their staff is now verified by the non-partisan technical experts at the Library of Congress.

The report is publicly available, and you can read it in full here.

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Positioned for Growth, Advocate for Regulation

This Innovative Biotechnology Company is Ready for the Future

 

A new member to NIHC, Hemp Synergistics, LLC is a cutting-edge biotechnology company that is making waves with specialized hemp-based ingredients and consumer products that are revolutionizing how hemp is used.

Hemp Synergistics partners with brands and healthcare professionals to incorporate THC-free and standardized hemp products into their offerings.

“We leverage science and hold several patents on technology for the processing of hemp, including an all-natural powderized hemp oil,” says Ron Fazio, Chief Operating Officer. “It is a polysaccharide encapsulated product designed for the nutraceutical, food and beverage industries. It’s an all-natural, all-vegan product that does not use water or any artificial chemicals, yet has a much higher concentration of distillate than emulsified alternatives.”

Fazio (pictured) found his way into industrial hemp through a career in law enforcement. Like many others in the industry, he saw opportunity and had the ingenuity to pursue it.

He is a former board-certified forensic scientist with over 20 years of controlled substance experience. Fazio has managed numerous accredited forensic labs, multi-discipline labs, and multi-site crime labs for over twenty years. Through public-private partnerships, he has overseen the installation of 5 new crime labs in law enforcement facilities, bringing fast and local controlled substance testing to sites who needed to solve backlog and turn-around time issues.

Fazio developed and launched Integrated Forensic Laboratories, the nation’s first full-service, accredited, and private crime lab. He helped grow operations to 3 locations before coordinating the sale of the company. As Laboratory Director, he introduced and implemented lean production scheduling and processing methods for each lab section, which resulted in a 3 day or less timeline for 90% of submitted cases.

In addition to his significant multi-site operational leadership experience, Fazio is well-versed in controlled substance diversion control and physical security. He held multiple state and federal DEA permits for purchasing, handling, storing, and transporting controlled substances.

Hemp Synergistics realized there was a need for an all-natural dry powder hemp product. “For supplements and food product companies, a big problem is hemp extract oil is difficult to work with and tastes bad. Traditional emulsified products are expensive to create, contain unpleasant ingredients and typically have low concentrations of cannabinoids. These problems keep producers from incorporating cannabinoids in their products. We spent a lot of time and money on research and development for an emulsified powder that solves the problem. Our core product provides a tasteless, odorless, compact powder that can be easily incorporated in a wide variety of foods, beverages and nutraceutical products.”

In addition to this groundbreaking product, the company also sells its own line of CBD gummies, capsules, tinctures, and salves, and is delivering a product called TRU, a low-cost, disposable, road-side test that semi-quantitates delta-9 THC. Developed in partnership with Purdue University Northwest, TRU could provide law enforcement with an easy-to-use tool to distinguish hemp from marijuana in less than five minutes.

Building a Business without Rules

In terms on nutritional food space, the industry will continue languish until FDA releases its rules. “We are not going to see large scale acceptance until that happens. The general population will not find credibility in cannabinoid supplements until they see them on the shelves in large retailers like Walmart, Walgreens, and CVS. These companies will not jeopardize their brands and reputation without clear federal direction. Once federal regulation is passed, these companies will demand rigorous quality testing of what goes on their shelf,” says Fazio. “Their onboarding process is strenuous. They look at background of company executives, labeling, science, supply chain, capacity and more. They don’t mess around.”

In the meantime, Fazio believes the industry needs to self-regulate and develop better marketing for products. “We need more professional descriptions of products. Labels must be FDA-compliant, medical claims must be avoided, dosing needs to be accurate, and producers need to secure cGMP and/or 21CFR111 accreditation. We owe it to the industry and the consumers of our products,” he says.

NIHC Advances Initiatives

As for membership in the NIHC, Fazio and Hemp Synergistics believes the organization has the right amount of influence to guide federal guidelines surrounding hemp products, and rules are what this industry needs for the next level of business.

“While we can all agree or disagree on the levels of THC and other details,” says Fazio, “the industry is not going to advance without rules. What people in business today do not consider is that these regulations will bring complexities to their business model. There will be strict standards that will require testing, certifications and more, and all that brings an expense with it. Companies need to prepare for this now, or they won’t make it to the next level.” At Hemp Synergistics, they are ready.

Visit their website athempsynergistics.com

NIHC On The Road Again

Seeing Old Friends and New Members!

By Patrick Atagi, NIHC Board Chair

 

United States Senator John Boozman (R-AR) with NIHC Board Chair Patrick Atagi.

This week, I attended the in-person Southern Association of State Departments of Agriculture (SASDA) annual meeting in Little Rock, Arkansas. It was valuable for NIHC to re-connect and get facetime with the heads of the 16 Southern State Departments of Agriculture from Kentucky, to Florida, to Texas. There really is nothing like shaking hands and talking to colleagues one-on-one. On a personal note, it was great to reconnect with so many old friends from my days working in the National Association of State Departments of Agriculture (NASDA)’s policy shop.

Of note, I had the chance to have a lengthy conversation about the future of hemp with United States Senator John Boozman (R-AR) who is the ranking member on the U.S. Senate Committee on Agriculture, Nutrition and Forestry. Separately, I had a good conversations with former Obama Administration U.S. Department of Agriculture (USDA) Deputy Secretary and current Secretary of Agriculture of Delaware, Michael Scuse; Kentucky Agriculture Commissioner Ryan Quarles and his Chief of Staff Keith Rogers; and North Carolina Commissioner of Agriculture Steve Troxler.

Kentucky Agriculture Commissioner Ryan Quarles with Atagi.

We had many other conversations with state regulators about both the short and long-term outlook for hemp. For the short term, there is positive momentum for our industry. For instance, in Louisiana, an effort is beginning to include hemp into animal feed. Many folks I met with this week asked about overcoming the many policy and logistical issues that need to be addressed for the success of the industry over the long term. There is a lot of interest at the state level in regulating and managing the agricultural production of hemp, but a lot of work needs to be done. NIHC’s outreach is critical in ensuring we educate regulators about the benefits of hemp and the implications of their policy decisions.

One thing we did learn was that many states want to be able to find ways to promote their hemp farmers and products on a global scale. So, there was great interest in the NIHC’s status as the only hemp organization that is listed as a government cooperator through the  USDA’s Market Access Program. In fact, after our conversation, Commissioner Troxler joined NIHC, (seen right) so we’d like to welcome the North Carolina Department of Agriculture as one of our newest members!

North Carolina Commissioner of Agriculture Steve Troxler, and new NIHC member, with Atagi.

It was good to get out of D.C. and learn in person with what’s going on at the state level. NIHC will be traveling again in the next few months and reconnecting with state regulators and industry thought leaders throughout the summer as we begin to open back up to in-person meetings. To quote Willie Nelson and take a line from his song, “On the Road Again,” it’s a great feeling being out on the road and networking, again. So, we hope to see you on the road!

Speaking of traveling, if you haven’t yet, I’d like to encourage you to register today to come see us in our nation’s Capital in November. Our NIHC in person meeting will be November 14-16, 2021 in Washington, D.C. You can learn more here.

 

 

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Partner in Advocating for a Vibrant Hemp and Cannabis Economy

Shawn Hauser discusses the Hemp Road Traveled and the Road of Infrastructure Ahead

 

Shawn Hauser is partner in Vicente Sederberg LLP, as well as chair of the firm’s Hemp and Cannabinoids Department, where she helps cannabis and hemp businesses navigate the intersection – and often collision – between state and federal law. Her practice helps companies comply with hemp laws, food and drug laws, regulations and licensing, as well as provides them general business representation. “This is unique to our practice,” says Hauser. “By providing clients compliance guidance with state hemp and cannabis laws and an understanding of how cannabis laws may evolve, we help guide them into a more stable and successful future.”

Hauser has been in the cannabis space for almost 12 years. “After graduating from college at the University of Texas, I had a passion to get involved with cannabis reform. I come from multi-generations of psychiatrists who have been dedicated to mental health care, and understood that cannabis is often a safer and more effective treatment to treat many mental health conditions, but that the law needed to change to allow doctors to utilize and understand cannabis as medicine.”

Hauser came to Colorado in 2008 in the early days when caregivers of patients who were receiving medical cannabis treatment lacked a supporting legal system. “I began work on the legalization campaign when I met the partners from McAllister, Darnell & Gottlieb PC who were also working on the issue. They built the firm around it in 2010 and I joined as an associate attorney,” Hauser says. The firm was one of the first marijuana-focused law firms in Colorado.

In 2013, Hauser joined Vicente Sederberg where she continued her work. The firm set out to help shape laws that would work to create a responsible cannabis industry and included hemp. “In 2012, founders of the law firm were key drafters of Colorado’s Amendment 64 which legalizes marijuana possession for adults under state law and requires the state to establish a regulatory structure for retail marijuana. In that framework, we included the state legalization of industrial hemp.”

From that foundation, the firm has built a thriving hemp practice, which grew exponentially with the passage of 2018 Farm Bill. “In the hemp department, we do a great deal of policy work all over the country in addition to legal services, such testifying to the FDA as to the regulation of CBD, advising states in how to regulate hemp-derived cannabinoids in FDA’s absence, and addressing best practices for consumer safety,” says Hauser. “One of our goals is to see the FDA step up. We are passionate to ensure that hemp products are regulated appropriately and responsibility, and appreciate that the federal regulation of hemp sets the table for how all cannabis may be most appropriately regulated.”

 

“One of our goals is to see the FDA step up. We are passionate to ensure that hemp products are regulated appropriately and responsibility, and appreciate that the federal regulation of hemp sets the table for how all cannabis may be most appropriately regulated.”

 

“We do a lot of work with other industry stakeholders and have key alliances that complement our regulatory practice, such as our close alliance with Kleinfeld, Kaplan and Becker,” says Hauser of the Washington D.C.-based law firm who focuses their practice on Food & Drug Law and Advertising Law.

In the meantime, while all that comes to fruition, the firm helps clients navigate the patchwork of state regulations for cannabis and hemp. There are a lot of moving parts and complicated federal, state, and local laws relevant to setting up an industrial hemp or cannabis-based business.

“Usually, a client comes to us because they are in hemp supply chain, as a farmer, retailer or brand, and they want to know how to be compliant at the federal level in the light of the Farm Bill, as well as with the FDA and within the complexity of state laws,” says Hauser. She notes that businesses have more to consider than a normal business. They must set up proper corporate entities, negotiate contracts, ensure that business insurance is adequate (watching for exclusions unique to the industry), review marketing materials including product packaging and labeling, develop products within tight legal parameters, complete various safety studies, manage ingredients properly, set up proper production and supply and distribution chains that are complaint, and mitigate the unique risk inherent in the cannabis industry. There are also the environmental laws to be followed, especially on industrial hemp production. It is quite complex.

“The good news is that Colorado continues to serve as a model state for others to follow,” says Hauser. “We are leading the way in hemp. Our governor has done an outstanding job to help us get leaps ahead from when we started. We have a level of infrastructure, agency expertise, and informed and effective rulemaking processes that is unparalleled, with state leadership and industry dedicate to having the most responsible and effective robust hemp program. Governor Polis has organized stakeholder groups for every aspect. Top universities and ag folks are quickly taking things to next level. We are bolstering state industrial hemp companies through incentives to build processing facilities in Colorado to make things like concrete and hemp plastics, all game changing for the planet and industry.”

Once the federal framework is complete, Hauser sees the U.S. as a major market on the world hemp stage. But the road to accomplishing this is slowly working its way out in equalizing state to state in the rules for production and sale of consumer products, and in developing the infrastructure and research needed to support a true industrial hemp industry. “Hemp having varying sets of rules for production and sale state to state is one the industry’s biggest barriers. The failure of the FDA to effectively regulate products leaves an emerging market without regulation to guide it,” she says.

“Right now, with CBD and consumable hemp product regulations, many states regulations conflict with federal law, but federal law is generally not enforced absent companies making serious drug claims,” says Hauser. It makes it difficult for states to enforce, creates unique legal exposure to businesses who follow federal lay but violate state law or vice versa. It also makes investors leery, creating banking and insurance conflicts.

In the future that Hauser is advocating for she sees a healthier hemp world. “I see federal legalization and development of a vibrant U.S. cannabis and hemp industry that includes broader acceptance of cannabis as medicine and as an alternative to alcohol, as well as a healthy dietary supplement, ingredient in foods and cosmetics as appropriate, and a natural alternative to more harmful ingredients currently used. Hemp is revolutionary and can be used in animal feed, plastics, fuel, all kinds of products. It can have a role in reversing climate change. There are so many uses, we have only seen the tip of the iceberg.”

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Hemp Pricing Update

 

A funny thing happened on the race to the bottom recently with respect to hemp biomass and processed material pricing, pricing has stabilized, at least for now. This is an important development for both farmers and processors who have spent the last two years scrambling to make ends meet.

The stable prices, first reported by PanXchange (https://panxchange.com/panxchange-hemp-benchmarks-analysis-april-2021/) , came as a surprise as the hemp industry entered the 2021 planting season with an estimated 201 million pounds of excess biomass and inventories of distillate and isolate bloated. Given that prices had fallen heading in to January, seeing prices stabilize in April and May seem counterintuitive, yet promising.

What is driving this leveling? Some analysts attribute this to the increased demand for smokable flower, while others are suggesting that demand for biomass and processed materials to support delta-8 demand may be the culprit. Regardless, the question now is whether this is finally the floor in pricing or is it just a bubble that will soon burst with further price declines in tow.

Stable prices, if it continues, are good for the industry as it makes operations and sales more predictable. It also gives cultivators and processors more security, especially heading into this planting season. For those cultivating and processing that have buyers, it would be best to lock in prices via a contract. Based on the PanXchange report, “Looking ahead, expect to see premiums inch up for higher quality products.” The key word here is quality. For those trying to unload lower quality products on a fire sale, there will still need to be a street fighter mentality when it comes to pricing and competitiveness.

On the other hand, if this is a bubble, and prices start falling again, then it will continue to reap havoc throughout the supply chain. Investors will be hesitant to invest citing increased risk and difficulty in modelling the business, product manufacturers and processors will hold off placing orders waiting for lower prices and cultivators will continue to end up holding the bag. The market will seize up.

Regardless, there is a window of opportunity here for those operators who have struggled for the past three years. Our advice, get while the getting is good. For those entrepreneurs who have remained steadfast in the industry, this may be the light at the end of the tunnel.

Enjoy this respite, there is more work ahead heading into year 3.

 
 

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