The Cannabis Cream Puff War and the Role of Trade Associations

*This piece includes substantial contributions from Justin Swanson (linkedin.com/in/jswanbtc).

It has been described as a “civil war” in the cannabis industry; that is, pitting the marijuana sector of the cannabis industry against the hemp sector, and this so-called ‘civil war’ has received a lot of press and attention in recent months. The “Civil War” has had its twists and turns – its ups and downs – as has the 1991 “Battle of the Ages” between Evander Holyfield and George Foreman, which lasted twelve rounds.

In a nutshell, larger marijuana interests have attempted to eliminate (or severely limit) the federally legal hemp sector to protect the current over-taxed and over-regulated, often limited licensing regulatory structures that have built in more than twenty-four. US states. You may know this better as the dispensary system or commercially regulated marijuana. As an aside, this highly taxed and regulated system was the original “deal” with policymakers about a decade ago that allowed the marijuana industry to “prove” itself. Now that that’s the case, it’s time to “renegotiate” that “deal…”, but I digress.

In this Battle of the Ages, the marijuana industry scored a temporary newsworthy victory with the so-called Miller Amendment, which would nullify the federal legality of virtually all consumable hemp products. Now the Miller Amendment was merely an addition to a House Committee hearing and must endure many months of debate and voting in the House before moving to the Senate. All of this could happen under a new president and a newly constituted Congress in 2025 – a president and a Congress that could change the course of this amendment under any circumstances. The point is that this amendment is far from final government policy, and several unnamed sources have told me that it has “already been gutted.”

One of the main reasons for the marijuana sector’s approach to hemp sector policy is that the marijuana sector has faced economic challenges in recent years, due to the COVID peaks (~2020-2022), and has experienced declining profitability and a lack of support for equity investments. , declining sales figures and associated uncertainties. In short, the marijuana industry is currently facing challenges. Of course, the country has every right to protect itself accordingly. But in light of the federal government’s recent move to move marijuana from Schedule I to Schedule III, the wisdom of the marijuana industry’s blatant opposition to federally legal hemp products is questionable, as I have previously written.

Maintaining the current framework for recreational (or adult use) use in the marijuana sector in light of a Schedule III designation will necessary require a form of de-scheduling (explicit removal of cannabis compounds or the entire plant from the Controlled Substances Act. or CSA) because a compliant Schedule III operator must produce and distribute medicines or medical products. Furthermore, to put it simply, it is not self-evident that a state-licensed business in the marijuana sector qualifies to be approved under the applicable Schedule III medical supply chain standards, or that the federal government will even issue such a would accept approval. And so, already delisted hemp products are essentially a lifeline for the marijuana industry if and/or when these marijuana industry interests do not meet the stringent standards generally applicable to a Schedule III substance. Despite this fact, the civil war continues.

All this back and forth and predictions have put the spotlight on the relevant trade associations in the cannabis industry. Some of these trade associations serve the marijuana industry, some the hemp industry, and many claim to represent both the marijuana and hemp industries. Yet most such trade groups have shown very little understanding of the previous fundamental and strategic concepts – the ‘long game’. With a few exceptions (and those exceptions are highlighted in my subsequent Forbes column, Cannabis Industry Trade Association Blues: Are We All Confused?), cannabis industry trade groups have been largely unimaginative, uninventive, and protectionist, with no sense of vision or understanding of how these pieces can (and will) fit together for more comprehensive cannabis industry policy (vs. a limited marijuana sector vs. hemp sector battles) – is this a whipped cream war?

And in the course of this Battle of the Ages, the hemp industry scored a major victory by and through the state of Florida when Florida Governor Ron DeSantis vetoed a Florida bill that would have severely restricted intoxicating hemp products and effectively gutted Florida’s hemp industry. And this is significantly changing the landscape in Florida as voters face a fall measure that could shift the marijuana industry’s commercial system from a more limited medical model to a full-fledged adult/recreational model.

To understand where things are going, one must look to the past. Cannabis reform was first codified into federal statute a decade ago with the passage of the 2014 Farm Bill and further expanded under the 2018 Farm Bill. These congressional efforts fragmented different varieties of the same plant based on the concentration of one cannabinoid. Cannabis and cannabis-derived products containing less than 0.3% delta-9 THC on a dry weight basis are hemp. An agricultural product that is protected in interstate commerce and permanently deleted from the Controlled Substances Act (CSA). Cannabis and cannabis-derived products containing more than 0.3% delta-9 THC on a dry weight basis are marijuana – a prohibited Schedule I substance under the CSA.

This inconsistent approach to cannabis reform has created a fragmented regulatory landscape across the country that is ultimately counterproductive to stated policy goals such as protecting public health and safety. It has pitted different varieties of the same plant against each other on the hill and in individual states. It has encouraged associations with hemp in their name to advocate for the elimination of the hemp industry and marijuana reform associations to work with prohibitionists to call for the recriminalization of popular hemp products such as delta-8 THC and delta-9 THC .

This grim reality recently reared its head in the form of Congresswoman Mary Miller’s amendment to the 2024 Farm Bill, noted above. The amendment was presented as a solution to protect children by recriminalizing the hemp industry. Despite its stated purpose, it took a legislative maneuver to bundle the policy with 19 other amendments, with a single vote on all unrelated proposals. A ban does not affect the approach to unsafe products on the market. Instead, real consumer safety concerns can be better addressed through comprehensive and uniform federal regulations that include age restrictions, along with uniform testing, labeling and packaging standards. This is just one unfortunate example of the counterproductive policy outcomes that come from a piecemeal approach to cannabis reform.

The state of Florida is an even more recent example of the counterproductive policy results of a piecemeal approach to cannabis reform. This concerns the veto hemp legislation referred to above. SB 1698 was passed by the Florida General Assembly as a solution to protect public health and safety by criminalizing popular hemp products. Thanks in large part to the efforts of the Florida Healthy Alternatives Association, Governor DeSantis saw the policy proposal for what it was: a subset of the cannabis industry capturing market share by turning the competition into criminals. But wait, don’t we all know that a ban is a failed policy?

Governor DeSantis vetoed the bill and encouraged the Florida General Assembly to create “sensible, non-arbitrary regulations (to) provide much-needed stability to both businesses and consumers – protecting public health and safety, sustaining legitimate industries to flourish and eliminate bad practices. players in the market.” Such a comprehensive policy allows regulators to be both proactive and reactive to address the specific risks and benefits associated with the ever-evolving hemp market.

In fact, many states have already done what DeSantis called on Florida to do in the next legislative session. Without federal guidance, states like Kentucky, Tennessee, Georgia, and Minnesota have developed sensible policies to regulate hemp and hemp-derived products within their borders. These states, along with others like North Carolina, are leading the way in regulating this emerging hemp market.

As the debate over the intent of the 2018 Farm Bill continues, American hemp farmers have built a $28 billion domestic marketplace of regulated hemp and hemp products. The future development of this domestic supply chain from agricultural inputs to finished products depends on whether the cannabis industry can move beyond the current simplistic divide that drives a zero-sum legislative strategy that compromises public health and safety.

And so it begs the question why (or how) so many so-called professional associations fail to demonstrate any vision. For more information on the relevant industry associations that do show vision, see my next Forbes column, Cannabis Industry Trade Association Blues: What’s to Lose?.

But how on earth can a cannabis industry advocacy group advocate for the return of any form of cannabis to prohibition? It defies logic and constitutes a Faustian bargain (or a deal with the devil). It’s only a matter of time before the marijuana industry’s strange political partners (the DEA and Project SAM) gain enough power to bring about the total return to prohibition of all things cannabis, which will set the course for America’s progress. the marijuana industry will turn around so far. Coordination and cooperation are therefore essential to prevent this outcome.

In conclusion, many professional associations in the cannabis industry have no signs or dividing lines and very few rules to guide them. But if you had to stand, who would guide you? This is a moment when policy advocates and industry organizations must demonstrate vision and collaboration – not fear-mongering and market share protectionism. Otherwise, these selfish efforts only reinforce the idea in Washington, DC and beyond that the industry doesn’t know what it is. Because an industry that doesn’t know what it is can’t be an industry at all, can it? So go somewhere else and continue your cream war. Your constant battles are starting to get boring.

This discussion will continue in my next Forbes column, Cannabis Industry Trade Association Blues: Are We All Confused?

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