The White House shocked the press and the world recently when President Trump made the decision to sign off on the Farm Bill, which would legalize the growth and sale of hemp-based products—including the increasingly popular CBD. Though this is great news for proponents of hemp for use in a variety of products, including oils, clothing, bags, and even paper, some analysts argue that it might spell trouble for the THC-based markets.
Congress’ Farm Bill is meant to provide a path to a completely legal industry for the production and sale of hemp. The biggest impact of this bill’s passage will undoubtably be the full legalization of CBD, a supplemental substance derived from the hemp plant. CBD is already incredibly popular, but has thus far operated within a dubious legal grey area.
CBD is short for cannabidiol, a chemical found inside the marijuana plant. Suggested uses for CBD include potential treatment of insomnia, pain, nausea, depression, anxiety, and much more. Every year, more uses for the natural drug are uncovered by scientists and independent researchers all over the world. As a result of the intense variety of applications and grey nature of the product’s legality, the industry has grown significantly in the past few years, recently surpassing the $500 million mark in its total value.
But some analysts argue that this is just the first hint at what could be an even more massive industry. Because the industry has operated in this legal grey area for so long, it has been traditionally spread primarily through word-of-mouth and independent advertising efforts alone. But when governments begin to legalize the hemp industry and the CBD that invariably comes with it, institutional and major endorsers are likely to make the advertisement process even more expedited and efficient.
Additionally, chain retailers, malls, and major online marketplaces will be allowed to openly sell and market these problems without facing either legal problems or public stigmas that would have been associated with the sale of CBD and hemp products prior to their full legalization. Perhaps even more importantly, players who have not been able to enter the industry due to these prohibiting factors might just be able to enter the fray and integrate hemp into their own products.
This could be huge for a variety of industries. Nearly every sector from pet food to beauty products could benefit in some way from the legalization of hemp, and this piece of federal legislation is the key to an expansion of an already-explosive industry. The Brightfield Group of analysts suggested that in the year 2022, the CBD global market will rise to an astounding USD $22 billion, which would trump the current marijuana industry.
Big Brands and CBD
One important consequence of the passage of the Farm Bill is that it will allow dominating businesses all over the country to enter into the hemp market. This is not without consequence, either. the Coca-Cola company remarked in one press release that while they have no significant interest in marijuana itself, they have been “closely monitoring” the development of hemp beverages.
Coca-Cola is not alone. Companies all over the United States have begun to take notice of the millions of Americans interested in CBD. With the legalization brewing, it makes sense that some of these businesses and corporations might attempt to grab onto the public interest and integrate hemp into their product and service lines.
CBD and Scalability
Another advantage that the CBD industry is likely to gain over the existing marijuana industry is that it will immediately be legal in all fifty states. When compared to marijuana, the benefit is clear. Marijuana is recreationally legal in only a select number of states. Not only does this mean that many states are unable to tap into the profits of marijuana sales, but it poses a unique problem for companies that often want to do business across state lines.
As it stands, a company trying to sell a cannabis product will have to ensure that every facet of its production line—from the growing of the plant to the marketing campaign—happen exclusively within their home state in which marijuana is legal.
While the global industry for marijuana will undoubtably eventually grow, change is likely to happen very slowly. In the status quo, there is little hope for a full legalization by the federal government in the U.S. Legalization and subsequent financial capitalization will subsequently have to occur on a state-by-state basis.
But the scalability of CBD is a different issue entirely. The hemp-based product will be immediately able to be manufactured, sold, promoted, and traded in every state. This means that a single operation can operate in multiple states, and that trade between any state to any citizen is absolutely possible. For CBD, this translates to a near-insurmountable advantage over marijuana.
The Farm Bill actually also allows for no significant restrictions on the import or export of CBD or hemp products, which means that the CBD scalability is not even limited exclusively to the United States. Instead, the bill will make it possible for American companies to trade internationally within the growing CBD market. This is something certainly not in the cards for the marijuana industry—at least not for quite a while.
Cannabis Growers to Switch to CBD
As many within the industry can attest to, the cannabis growing industry is incredibly oversaturated. Following the legalization of the marijuana plant in several states on the West Coast, thousands of entrepreneurs flocked to start their own farms to capitalize on the newest profitable market. As a result, it has become incredibly difficult for smaller or newer growers to jump into the industry and turn a sustainable profit.
But when CBD becomes legalized in the United States, those growers who cannot cut it in the competitive marijuana market will be motivated to hop over to the newly-created CBD growing market. This trend is already observable, as many companies are beginning to see the potential of CBD to scale and grow in the short-term in ways that cannabis simply will not and cannot.
In the next 12 months, most analysts predict that companies will continue to move over to the CBD industry in droves, capitalizing on a more scalable and increasingly profitable market.
Hemp’s Success Might Hinder Medicinal Cannabis
One major reason that CBD remains so popular and uncontroversial compared to marijuana is that it lacks the key psychoactive ingredient in marijuana, known as THC. This means that CBD has no significant intoxicating effects on the user, although the benefits are still very much present. For many consumers, this means that CBD can be a viable alternative to marijuana, presenting all the benefits of medicinal marijuana without the downsides of experiencing intoxication.
This means that medical marijuana patients, who comprise a lion’s share of the total marijuana consumed legally in the United States, might very well move over to the growing CBD industry. Along with the benefits mentioned above, CBD can be moved across all state lines, administered without the need for a prescription, and can oftentimes come at a much lower cost than marijuana.
A Complicated Regulatory Road
Following this week’s full legalization of hemp, the government will need to work double-time to figure out how to properly regulate and monitor the new industry as it grows and explodes in the coming years. The massive, largely untapped industry for CBD will only continue to expand following this legalization, and it very well might overtake the marijuana industry as it does so.