Episode 108 – 2022 Hemp Headlines 2 Watch



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Joe: On this episode of the "CPG & CBD University Podcast," Happy New Year. It's our first episode of 2022. We're ringing in the new year looking ahead at the headlines you should be on the watch for in the hemp industry in the year ahead. We're looking into the future on this episode of the "CPG & CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CPG & CBD University Podcast," and on behalf of all of us here at Global Widget, we wish you a Happy New Year. This is the first episode of 2022, and here's to a new year's resolution you can get started on early. Subscribe to our podcast. Get notifications of new episodes each week by subscribing on your favorite podcast platform. Don't forget, full video episodes available on YouTube, and what a better way to kick off the new year than to tell you exactly how the next 365...I don't think it's a leap year...no, 365 days in the year ahead are going to go in the hemp industry, because it's so easy to predict, and usually we don't know what's gonna happen day-to-day, but let's just lay it out there for 2022.

And to start off the new year, who else to have on our podcast to go through some of the stories you should be on the lookout for than Kristen Nichols, a frequent guest here on the podcast. She is the editor of Hemp Industry Daily. Kristen, happy New Year, and welcome back to the podcast.

Kristen: Thanks so much. It's always such a pleasure to be here.

Joe: So, quite the year in the hemp industry in 2021. We learned a lot about other cannabinoids outside of CBD. We talked a lot about delta-8, delta-9, CBG, CBN, so let's start off there. Prediction time. What are we going to hear about in 2022 when it comes from the cannabinoid space?

Kristen: Again, I think the story continues throughout '22, not just delta-8 and delta-10, other isomers, other lab-created cannabinoids. Without getting too boring and wonky and scientific, a lot of people think they're synthetic, but in the...some, they're just as processed as any other thing you extract out of the plant, in some ways, and there's a lot that folks are doing tinkering with new product formats. I think there's a search for different cannabinoids that people are going to be able to find a therapeutic use for, find reasonable ways to extract at scale, maybe in a lab, not necessarily from the plant, so I think that trend continues all the way through the year.

Joe: Are there any other cannabinoids we haven't talked about yet, that... I mean, it seems like a year ago, we really didn't mention delta-8 all that much, and then all of a sudden, boom, delta-8 was here. Is there something that's maybe in the background, maybe kind of sort of being talked about now, that could be something that comes out in 2022 that we're not even discussing right now?

Kristen: Yes, and I'm too stupid to know what it is. [crosstalk 00:03:21] You just kind of get yourself sideways, but I think that's a very good point. There is stuff that we don't know, that folks that are smarter than me in the lab work on. I'm hearing about HHC, which is kind of another sort of analog, a little different. And increasingly, some extractors [inaudible 00:03:41] the same technology that extract cannabinoids from cannabis plants can extract psychoactive elements from mushrooms. It's the same tech, so I think we're going to see a lot of experimentation on the other side. And another trend I think that continues all throughout the year is crackdown, crackdown, crackdown, on the part of state and maybe the federal government, warning about what people are doing with these things.

Now, I think it's important to point out, we don't have dead kids showing up in the hospital every week on this stuff, so it's a scary new world, but it's, you know, keep it in perspective. It's not COVID. But I do think there will be a lot of focus on this stuff, and a lot of states really scrambling to keep this stuff in adult use dispensaries, and try to keep it out of gas stations and drugstores.

Joe: You know, we saw a lot about that in 2021. It seems like just as much delta-8 was become an emerging trend, I mean, we still haven't figured out what's going on with CBD yet, but here we are, delta-8 legislation all around the country. Do we see more of that now, as we get into the delta-8, delta-9, delta-10, where state-by-state, maybe there are different regulations in regards to what one state is doing to another?

Kristen: Absolutely. And I...some big manufacturers and some big industry groups blame the FDA, and say it's because they were so slow, and have not really gotten over their opposition to over-the-counter CBD, this is why folks are doing this stuff, because they've made a bunch of CBD [inaudible 00:05:15] things they need to convert, or because... Let's say I am a conservative retailer, I'm a little nervous, but I see all these things the FDA has been saying about CBD. I don't see anything they've said about, you know, this other thing I've heard of, but it looks like it's working. So, it can give people an incentive to find other routes to market when they see obstacles to getting CBD to market.

So I do think the FDA shares some blame for this trend. Again, like, I don't...I'm not gonna act like this is like the, not like a fentanyl outbreak sweeping the nation, but I think we're seeing a lot of innovations, not really driven by the market or consumers, but driven by manufacturers and retailers looking for a hedge, and something that they think could give them an edge while we're waiting for some certainty from the feds.

Joe: We'll get to the FDA in just a moment, but first, one more question on the states. Anything we're watching as we kick off this new year, as to maybe some pending legislation or something that could happen, you know, early on, as legislatures get back into session?

Kristen: Mm-hmm. Again, I think the big story when legislatures start their work this month, probably going to be delta-8, but there's some really other interesting elements folks are gonna want to watch, and one big one is California. They changed their law last year to allow CBD in foods and drinks. But there is an asterisk. "Subject to rules and regulations that will be determined by the state health department." So if I am making products that I want to sell into California, I'm going to be watching that health department very closely.

Another state a lot of people are watching is New York State. They have a new Cannabis Control Commission that is going to oversee... What I like about this... I think we'll see more states doing it. The same people that regulate marijuana are going to regulate hemp extracts. And they're already doing a couple things that they plan to make final by the end of January. One is to create this craft designation, where you could put on a label, "This was made local..." Like, it's kind of a grown local kind of thing they have, and I think that will be a precursor to we'll see something that's similar on the THC space.

And they've also changed... Like, they used to say, "Here's a maximum dose you could have in a edible." They're raising those to be more in line with other states, so I think there's going to be a lot of attention on New York and where they head. And then, to finally, the entire industry, not just THC, not just CBD, not just...well beyond cannabis, all employers, all companies gonna be really watching the feds to see what is the latest on vaccine mandates and the COVID pandemic, and what they need to do to stay in business, and how that's affecting business, which I'm sure we'll talk about later.

Joe: Yeah, and let's talk about the FDA. Seems like as we were going into... I remember having a similar conversation...

Kristen: Yep. Every year.

Joe: ...about a year ago, and then even maybe a year before that, and now here we are, two years later, a year later. So, 2022. Are we finally gonna see some action from the FDA, or are we still gonna be a little bit aways?

Kristen: No way they do anything in '22. But here's what I think is what I'm seeing. A year ago, I saw company after company after company after company, in their, kind of, projections to investors, and to retailers, say, "As soon as the FDA..." which, you know, "...next quarter, maybe by the end of the...or probably by the end of the year... Here's all these bills in Congress..." And you saw all kinds of, like, "Well, as soon as the FDA, then..." you know, "your money will triple, and here's...you'll make all your riches."

What I'm seeing, in the last quarter of 2021, heading into the new year, I'm seeing a emphasis on being lean and mean among CBD companies, and instead of telling investors, "Well, as soon as Congress waves its magic wand, we'll be gajillionaires," they're talking about, "Okay, we're gonna do...focus efforts on doing business in California, in these markets." Understanding that FDA change is very unlikely... As we're recording this, there's still no confirmed head of the FDA. It's very unlikely the FDA will have much bandwidth for anything beyond this pandemic, and the important work they're doing to stop it and slow it. I just think it's very unlikely. But I think there's ways to make money, even in the current landscape, and that's what companies are focused on.

Joe: So, what are a couple of the other headlines, or maybe big stories we're gonna see coming in 2022?

Kristen: Okay, I think there's gonna be a lot of emphasis on companies playing a role and addressing climate change, finding regenerative agriculture...if you're a grower, working on regenerative practices. Manufacturers looking for more sustainable practices, that's gonna continue throughout the year, and I think there's gonna be a lot more emphasis on those kind of ESG goals among businesses. I think a trend that started at the end of last year, popped up in a bunch of Q3 earnings, and it's gonna keep continuing, is a shift, again, in the CBD market, for two... They say consumers want lower price point items. We're seeing a spread in gummies and edibles, and a decline in the higher price point features and those kinds of products.

Another thing that I think absolutely continues, and even intensifies, in 2022 is a shift that everyone has seen, to selling products online. About...at the end of 2020, there was an analyst note, and you saw this pop up in a lot of companies. Companies that predicted... Actually, this is probably predicting...this is a prediction from Cantor Fitzgerald, that 66%, that's two thirds, of all CBD sales by now would be in the FDM channel. That's food, drugs, mass. That's the grocery store, you know, your Sam's Club, your Walmarts. Sixty-six percent of CBD would be sold there. Six percent would be sold online.

Well, probably because of the pandemic, and this FDA uncertainty, the...in fact, probably about the opposite is true at the end of 2021. We only had 6% of CBD being sold in those FDM channels, and almost all of it sold online or, through natural, like, specialty retailers, like a Vitamin Shoppe or something like that. So, I think that trend absolutely continues. Focus on selling online, focus on selling lower price point CBD items. Because I don't think there's gonna be a huge regulatory change that's gonna change the industry for everyone.

Joe: Biggest story of 2022 will be?

Kristen: Oh. Will be... Sorry. Cannabis legislation that includes hemp being actually debated. I don't think it'll pass Congress, but I think it's going to at least get a hearing in '22, maybe after the midterm elections, and we're gonna really see how hemp plays a role in this larger national debate.

Joe: And I was just gonna mention it as we head into 2022 here in this year that is ahead, obviously important to mention, we talked about this going into 2020, I remember, is it is gonna be a big election year. I mean, obviously, the President's office still has another two years to 2024, but midterm elections could see some change, and that could maybe affect things.

Kristen: Absolutely. Don't forget, the former Majority Leader of the U.S...the control of the United States Senate in '22 could play a large role in how this industry is regulated, where you're, it's, believe me or not, people are already making plans for the 2023 farm bill. That lobbying is getting going, and there's gonna be a lot of interest, and it really depends who controls the Senate. Democrats, who control the Senate now, have repeatedly said they don't wanna see incremental progress, they don't wanna see things like banking reform and this and that. They want to see kind of a larger, holistic approach to cannabis regulation.

That's not what the industry wants to hear. They want to hear little...they would rather see, you know, like we say, like, "Let's get the FDA to allow CBD. Let's get banking. Let's get these pieces." So I think that will have a big impact on how people in the CBD space do business, and also, of course, the THC space.

Joe: Sounds like it's gonna be another exciting and very interesting year in the industry ahead, and...

Kristen: For sure.

Joe: ...look forward to having you back on the podcast throughout 2022, for all the latest news and headlines, and all the changes that'll happen in the industry. Kristen Nichols, editor of Hemp Industry Daily, my guest on this episode of the "CPG & CBD University Podcast." Happy New Year again, and as I mentioned, we look forward to having you back throughout 2022. It's gonna be a fun year. Buckle up.

Kristen: Yeah, for sure. See you soon.

Joe: And don't forget to stay on top of the latest headlines in the industry by visiting www.hempindustrydaily.com. All of the great articles from Kristen and her staff each and every day, covering the industry. And don't forget you can also hit that subscribe button wherever you get your podcasts to get notifications of new podcast episodes each week.

I'm Joe Agostinelli, 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 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.