After 35 days, the US government fully reopened, bringing back around 800,000 workers who were either furloughed or required to work without being paid. It is estimated that the shutdown cost the American economy at least $11 billion. This has led the daily news and is still looming as the shutdown is a possibility if a resolution isn’t agreed to by February 15th, 2019.
What is not talked about in the news is how the shutdown has delayed the new 2018 Farm Bill signed in December. The Farm Bill moved industrial hemp from a Schedule I classification into a legal, regulated crop. Industrial hemp has a THC content of 0.3% or less. In turn the Farm Bill legalized CBD derived from hemp, a non-psychoactive compound that is now being used in pet products, cosmetics, health products and beverages.
While the government was shutdown, the US Department of Agriculture (USDA) has been unable to approve state program regulations. In addition, the Federal Bureau of Investigations (FBI) has been unable to conduct required background checks to move applications forward for farmers applying for a license. The USDA reserves the authority to approve or reject a states’ industrial hemp program. Essentially for the last 35 days there has been no progress to move industrial hemp forward and allow farmers to obtain licenses needed to start their business.
The shutdown has also put a halt on any progress toward Food and Drug Administration (FDA) loosening CBD rules. Although hemp derived CBD is now federally legal, the FDA has final say in adding it to food or health products. The FDA issued a statement confirming that CBD is still considered a drug ingredient and requires the agency’s approval before adding it to food or health products. For the bigger supplement companies, it will be quicker to obtain FDA approval but smaller companies now have a backlog of the shutdown to wait out before they can begin manufacturing.
Gleam Law, a cannabis law group located in Seattle, Portland, San Francisco and Los Angeles is at the forefront of the legal uncertainty in the cannabis industry. Orion Inskip, lead attorney on CBD and hemp-related matters, had this to say about the changes the 2018 Farm Bill will have on CBD,
“Although Hemp derived CBD is no longer a controlled substance, it still qualifies as a food, drug, or cosmetic under the FDA’s rules and the FDA was quick to announce that they are retaining the authority to regulate CBD in all its forms. Now, all CBD companies will have to comply with FDA and ISO manufacturing practices, obtain manufacturing certificates, and prove all claims made in marketing. The giant supplement companies, who already comply with the FDA’s regulations in their other products, have been patiently waiting for this other shoe to drop. They know it is far easier for them to add FDA complying Hemp CBD to their products than it will be for the fly by night CBD processors to bring their operations into FDA compliance.”
Farmers that were already approved for hemp production are not affected by the shutdown. However, due to the shutdown, farmers who were hoping to take advantage of the CBD boom are having to wait to invest or add plants to their crops. With these delays, new farmers may miss the spring planting season and miss out on the 2019 growing season.
The 2018 Farm Bill is a huge win for the CBD industry. It has opened the door to banking, insurance and other protections that were unavailable previously. It will also be a win for consumers as FDA regulations will require consistency in products and quality controls. However, just as the longest government shutdown has crippled other areas of the US economy it appears it will affect the newly legitimized industrial hemp sector.