Hemp is about to be legal in the United States on the federal level.
ED NOTE – The Farm Bill was signed into law by the president last week. Senate Majority Leader Mitch McConnell decided to prevent the States Act from getting a floor vote again, after Cory Gardner reintroduced it as a rider to other legislation.
The 2018 Farm Bill, which has been passed by both the House and the Senate is only awaiting a presidential signature to become law. The bill should before Christmas, likely this week even, and it’s the first time that the entire government has gotten behind legalizing hemp as part of the bill.
What does legal hemp mean for the cannabis industry? What does it mean for America in general? Will it change our lives? Will we all get to wear shirts that feel like they’re made from bamboo but cost half as much?
Hemp and marijuana aren’t really the same. But they really aren’t different.
They are derived from nearly identical plants, yet they have completely different purposes in the modern world. Hemp plants are narrow, spindly and rarely left to flower, so they don’t develop the THC concentrations that marijuana plants contain at the time they are harvested. Hemp plants tend to be on the tall and gangly side, and are mostly grown for their fiber.
CBD products can be derived from hemp plants or marijuana plants, CBD is simply a cannabinoid found in the cannabis family of plants, and both hemp and marijuana plants feature prominently in the cannabis family.
China currently produces about half the worlds hemp, and they are the largest supplier of wholesale CBD; this could change dramatically over the next five years if American farmers can find enough profit in hemp production to swap out fields that are currently producing other crops.
With the current tariff situation taking its toll on midwestern and other rural farm communities, hemp could offer a possibility for replacing crops that are no longer economically viable. This could, in turn, lead to more prosperity in these communities, provided they can learn to produce industrial hemp and derived products as cheaply and efficiently as their Chinese counterparts.
In the meantime, we should start to see more banks open up the pipeline for hemp and CBD products transactions. There are any number of financial institutions who have been prepping for legality, and should be ready to start acquiring in the space in Q1 of 2019, if not before the end of this year.
These will be legitimate accounts – correctly coded (after all, Mastercard and Visa are running transactions for adult use cannabis in Canada right now with MCC codes that properly qualify them), and hopefully with a lower risk level than the banks have been assigning it to date. CBD has one of the lowest chargeback rates of any product we’ve seen, and it’s our opinion that it shouldn’t be considered a high risk product in the first place, if we are going to use the standard criteria for risk and chargebacks assessment that the card associations currently have in place.
CBD brands are going to be fighting for survival.
With the legalization of hemp production, and the removal of CBD from the DEA’s Schedule 1 (or schedule anything lol) listing, the number of companies who attempt to get into the CBD business is likely to multiple exponentially; this means that a lot of companies will be left by the wayside due to an inability to run an actual business.
If you’re not up on what it takes to manage a legitimate business – and many who have been in the shadows for so long are not used to staying current with the tax man, local zoning laws and all those other pesky things that are involved in being successful at operations before you fill that first sale order…
Brand building – via marketing, advertising, finding and connecting with influencers and other members of your tribe will be critical to the health and success of your CBD product line, no matter what your focus is and what sort of products you will be selling. Connecting and engaging with customers and patients should be at the top of your to do list when it comes to creating long lasting relationships with these folks who put their faith and trust in your products.
Now is definitely the time to start sorting out your short and long range goals and plans for achieving those goals. If you’re not sure where to start, we can certainly help.
Devising a strategy that includes mobile, social, events, and outreach is priority number one for the overall success of your business.