Episode 101 – Headlines with Hemp Industry Daily



Joe: On this episode of the "CPG & CBD University Podcast," we're taking you back behind the headlines in the industry and some of the curveballs that have been thrown in different states, plus a recap of MJBizCon. And what stories we're keeping an eye on as we wrap up 2021. This is the "CPG & CBD University Podcast" and it starts right now. I'm Joe Agostinelli, host of the "CPG & CBD University Podcast." And here we go off and running with our next 100 episodes. If you joined us for our episode, which hit podcast stores previous to this one, it was episode number 100, we thank you once again for tuning in.

Followers of our podcast, throughout the first 100 episodes, will recognize my guest today joining us via Zoom. Don't forget full video episodes on our YouTube channel. And to subscribe wherever you get your podcasts. Kristen Nichols is the editor of "Hemp Industry Daily." And she is back on our podcast. Kristen, welcome. Anytime and it's been busy since the last time. We say that every time you're around, but it just seems we've got a couple of curveballs, if you will, thrown our way. The World Series just ended not too long ago. So there's the baseball term getting thrown in there. We'll get to the latest news and headlines in the industry.

But first, let's talk fun. And that's MJBizCon. It was back as a live in-person event. Saw some of the social media stories and pictures that you shared on your feed on LinkedIn and, obviously, that MJBiz that's shared throughout the conference. How did the 10th annual event go? And how was it to be back live seeing people in person?

Kristen: It was bizarre but awesome. Everyone, I think, were super pumped to be there. But attendance was down just like acreage, and the hemp harvest is down. Got less interest in hemp as a side business. Maybe folks either they were already in the hemp industry, more interested in moving to the THC side, or folks have exited cannabis altogether? I'm not sure. But they were happy with the attendance overall for the conference, just not the hemp side. There was a, yeah, big crowds, difficulty getting people to wear masks sometimes, but not as much problems as I think they were worried about. And so far, fingers crossed, we haven't heard of anybody coming back saying, "Oh, I tested positive after going." So...

Joe: What were some of the highlights of the show? I saw one of the interesting takeaways was the Hemp Industry Daily Forum that discussed changes to the 2018 Farm Bill. We're just coming off of Election Day at the recording of this podcast episode. Although not a huge election year, could changes come in the Hemp Farm Bill, or what may we see...?

Kristen: Sure. Yeah. Those were the highlights. I think a lot of anticipation already of what people want to see happen in the next Farm Bill. Every five years, Congress cracks that open to change farm policy. So as much work as we've done adjusting to the '18 version, it could all change in '23. And that work is happening right now. If you're in Washington, folks are already heavily lobbying for that kind of thing. So a lot of people are talking...people are looking strongly for hoping that Congress will raise the THC limit between hemp and marijuana to 1% THC. Other folks want to see changes to testing policies, giving states more flexibility, letting them remain under pilot program rules as long as they want. I'm not really sure of the prospects for all of that.

But the other interesting thing I thought that really came out, and our discussions in Vegas, was how many people are thinking deeply on both sides, whether they would like to convert to high THC cannabis production or processing...or if really when that's legal? Or if low THC is their lane, and where they want...is that...is it a threat? Or is it an opportunity if your state, you know, passes Rec and, well, how do things change for me? You know, all those kinds of debates, and there's not a great answer. It really depends on your own business. But that was what a lot of the discussion was about.

Joe: Speaking of changes, let's talk about, well, one of those curveballs I alluded to in the intro, and that comes over from the state of Texas. And just a note to our listeners, the latest information we have and we're talking about, is as of the recording of this podcast, which was on November 3rd. So if things do change, we will update it in the description of this podcast. But boy, Texas coming out and saying delta-8...

Kristen: Texas is always interesting. By the way, I love to tell the story for, like, two years running. We checked the analytics on our website, what people search, right? And number one was "texas," all lowercase, and number two is "Texas" with a capital T. Like, that...people are super interested in what's happening in Texas. Such a big market.

So here's what's the latest. The Texas State Health Department, which everybody there calls "dishes." I think it's cute. This is the department that enacted a ban on smokable hemp. Then the industry challenged. That was ultimately thrown out. The health department issued a ruling. Again, this isn't law, it's kind of their interpretation of the law. The health department said, "We don't think delta-8 THC if it's been converted from CBD, that that's not hemp. That's not legal." There were a lot of people that were selling delta-8 THC products under the impression, of course, that it was legal.

Lawsuit ensues. And the first step was whenever there's a law that hurts your company, or you don't like, or you think this is not right, the first thing you do is ask a judge for an injunction, or a temporary restraining order, which basically says tell the government, whoa, whoa, let's take a look at this before you start, you know, fining people or putting people in jail. That's a very common first thing you do whenever the legislature or Congress passes something you don't think is right, or that it is...or someone has done something that you don't think is right.

Okay, so a delta-8 manufacturer...No, I think retailer, not a manufacturer, a delta-8 retailer in Texas sued, in Austin, looking for, again, that temporary injunction just to say, "Hang on, let's take a look at this. We want to look at this with some lawyers." And what the judge said was no, which was surprising, because usually, that's kind of a no-brainer that they at least say, "Okay, we'll look at it."

So it's way too soon to say where this is going to land. But that's such a big market. So right now, it's if you're selling delta-8 products in Texas, or making them in Texas from hemp-derived CBD, the interpretation is that's not legal in Texas. Now, the million-dollar question is, what does enforcement look like? Just like the FDA, if I'm selling it in a gas station are...what is my local sheriff's deputies gonna think when they walk in and see it? That's an open question. So a lot...all eyes are on Texas right now. Really too soon to say where that's gonna land.

But I think...Oh, wait another thing that is so interesting about Texas is that their state legislature only meets every other year, which means that if there's something people don't like, it takes longer than most states to get the law changed. So wherever that lands, it's going to be pretty influential for the next couple of years and change the market there.

Joe: And speaking of change, more changes fresh off of the recall election in California, Governor Gavin Newsom signed into law, California's new CBD law, and it's attracting a lot of attention from manufacturers worldwide. Why the...what the changes and why all the attention?

Kristen: Okay. That's another...The only thing bigger than Texas, of course, California, the world's fifth-biggest economy all by itself. Here's why this is such a big deal for everybody. If you've ever been in the natural, or dietary supplement, or natural products space, you know that people that make things like echinacea or vitamin C, or any of those products, look to California because they say i f you can be sold in California, you can be sold anywhere in the world. They have the toughest testing, and labeling, and purity restrictions pretty much of anywhere.

So what...So right now, for the last three years at least, their health department there, not the Texas Health Department, the California Health Department, their interpretation has been, "Uh, uh, uh, the FDA does not allow CBD in food, drinks, or dietary supplements. It can't be sold here. That has been spottily enforced, and they are commonly sold in dispensaries. Anybody watching from California probably knows, "What are you talking about? It's at the corner market right here."

So it has been kind of it's up and down how it's been enforced. But now that the change, in a bill that was passed last year that you mentioned, the governor signed right after succeeding and defeating a recall and staying in office, this will again go to the California Health Department to write those rules. And that is why there's so much interest. What are they going to look like? Will there be dosing limits? Which no state really has right now. Some states have something like it. But what is that going to look like? How is it going to be sold? How will it be tested? Will it be tested like pot, or marijuana, or higher THC cannabis products?

A lot of manufacturers in the high THC space feel like it should be. We have to do X, Y, and Z testing. CBD should have to do the same. So that's going to be very influential for companies, maybe like yours, or like companies in Canada and all over the world that are interested in selling into that market. For example, probably one of the largest companies in cannabis right now is this company Canopy Growth in Ontario, outside Toronto. They have been red light on entering California because of all the...again, it's a big company. They're publicly traded in Canada and not interested in getting sideways with regulations here. The second that California law passed, Canopy, boom, announced a huge rollout in, like, 45,000 stores in the U.S. of some CBD drinks like sparkling beverages. It's not just that they're selling in California, they're selling everywhere now. Because they have that certainty I guess...And they prefer it from the federal government, that this is the next best thing. So that's why it is so interesting to so many folks.

Joe: And, you know, that's an interesting point. So when we talk about waiting on the federal government. But does it really just take a couple of these high-impact states, Texas, California, to have laws like this that may finally push that federal regulation we've been talking about since this time last year?

Kristen: Yeah. And there's precedent for this, whether it's fuel efficiency standards, again, air quality standards. There's lots of things, in fact, where the feds kind of followed big states. So this wouldn't be the first time that ever happened. Although I have to point out, California was the very first cannabis rebel, if you will, 1996 is when they passed medical. Here we are decades later. Still, no change in this control to...There was a big belief the reason that they started going to states, the [inaudible 00:12:23], is that all these cannabis reformers in Washington were a big joke. Nobody would meet with them. Nobody would return their calls. Back when people sent faxes, nobody would... I mean, they were just a joke and a half.

So they decided, and this is back in the '80s, like, okay, if we're gonna do this, we have to go to states, because no one is ever going to take a seriously. No one's taking us seriously here. So that started in California. And they thought, aha, when California goes, then they'll have to listen. And this is like the Clinton years. So we all know, the federal government has continued to just not listen, even when DC legalized Rec adult-use marijuana. And DC is like...Congress is, like, no, no, no, no, no, you know, they just ignore it. So I think it's coming. But it's slower than folks hoped.

Joe: And what a better way to transition into my final question of the episode, and maybe of the year for us before we get together again. It is the middle of November, as crazy as that sounds. We don't expect anything on the federal level, obviously, for the rest of this year. But what do you keep an eye on for these, you know, final six weeks or so of 2021 making news?

Kristen: Well, we're gonna still stay in DC. Of course, Texas and California, which you already talked about. But even though no one expects there to be big cannabis reform in Washington, right now, Congress, of course, is still chewing over this enormous potential infrastructure or spending package. And here's why that really matters for hemp, not necessarily for flour products or cannabinoid products, but for this industry really wants to take off by things like carbon credits and incentives to require manufacturers to use carbon neutral or carbon sequestering techniques and components, and things like replacing concrete or building cars. That kind of thing could really unleash some big potential in hemp.

I think frankly, sadly, without action or requirements from the feds, it's probably not gonna happen that, you know, everyone's gonna wake up and decide they want it really cheaper or more expensive. But better for the environment, renewable products. So I think that's what I'm keeping an eye on. Another big question, just real quick, is Democrats are kind of reeling a little bit. They didn't do great in this is kind of off year. So all eyes are now on the midterms. Will Democrats really lean in on, like, change, and reform, social justice, and environmental goals? Or will the ruling Democrats kind of ratchet back and try to keep the ground they have, not make any big splashy changes that affect cannabis, or environmental policy? Those kinds of things. So I really think that's what I'm watching. What about you?

Joe: Yeah, no, I think it will be interesting going into 2022. And we've talked about this for the regulation. But, you know, it seems like momentum has come to a stall here in 2021. And, you know, as we go forward, I mean, a year ago, and we talked about this on a few past episodes, we weren't even talking about delta-8 as a potential top story for 2021. And here we are 11 months later, and still talking delta-8 and big changes from states. So it'll be interesting to see where we head into the new year.

Kristen: I can't wait.

Joe: And we will get back together at the start of that new year to get maybe some predictions for 2022 and see where the industry is gonna go.

Kristen: Sure. Yeah.

Joe: How does that sound?

Kristen: I cannot believe that I would...we would be ending '21 without a commissioner of the FDA.

Joe: Yeah.

Kristen: We still don't have one. So maybe that's the prediction.

Joe: Now we know our first prediction for 2022 when we get back together. Kristen Nichols, thanks as always for taking time...

Kristen: Oh, thank you so much.

Joe: ...out of your day to join me on the podcast. And you know, thank you...Throughout the year, this will probably be the last time we get to catch up before the end of the year. But thank you for everything, and we'll definitely have you back right after the holidays as we preview 2022...

Kristen: Yeah, you have a great holiday.

Joe: ...with the big stories we're keeping an eye on.

Kristen: Awesome.

Joe: So from all of us here at Global Widget, happy Thanksgiving to you and everyone over at the "Hemp Industry Daily."

Kristen: Thanks.

Joe: Keep up the, yes, great work, and we'll certainly be in touch.

Kristen: Thanks so much.

Joe: Kristen Nichols, the editor of "Hemp Industry Daily," my guest on this episode of the "CPG & CBD University Podcast." And stay up to the minute on all the latest industry news and headlines by visiting www.hempindustrydaily.com. Updated every day. You can sign up for their email newsletters. They come right about 3:00 Eastern and then MJBiz about 6:00 Eastern every day. So all the top stories right in your inbox.

And thank you for listening to this episode of the "CPG&CBD University Podcast." If you haven't done so already, hit that subscribe button wherever you get your podcasts to get notifications of new episodes each week. And don't forget, full video episodes on YouTube. I'm Joe Agostinelli, the host of the "CPG & CBD University Podcast." Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult with your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This podcast is not intended to provide legal advice regarding the legal status of CBD and CBD products.