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Joe: On this episode of the "CPG & CBD University Podcast," March Madness in the hemp industry. We go behind some of the hottest headlines and everything hemp-derived cannabinoid with "Hemp Industry Daily." This is the "CPG & CBD University Podcast," and it starts right now.
I'm Joe Agostinelli, host of the "CPG & CBD University Podcast." Thank you for tuning in. And I hope you hit that Subscribe button wherever you get your podcasts. Don't forget to watch full video episodes on YouTube. We are diving into everything hemp-derived cannabinoid health and wellness on this episode. As we get behind some of the headlines making news at the start of 2022, it's crazy to think we're almost at the end of March. We welcome back to our podcast, Kristen Nichols of "Hemp Industry Daily." She was last with us in January for our 2022 predictions. And now she's rocking a brand new fleece after her Georgia Bulldogs won the National Championship. So, hey, congrats to the Bulldogs. I'm not an Alabama fan so it's nice to see somebody different win for a change.
Kristen: It's exciting but it's also a sign of the apocalypse that The Braves and the Bull Dogs won in the same year. The world is gonna end soon.
Joe: Yeah, yeah. Now we need baseball back.
Kristen: Yeah, that sort of thing.
Joe: By the time this podcast gets uploaded, perhaps there will be a season back, we'll see what happens. But Kristen, as always, thanks for joining me. Always a great conversation we have you on.
Kristen: Thanks so much for having me. It's always a blast.
Joe: And as I mentioned, hard to believe it's March already. We'll talk March Madness, as I alluded to a little later on. But first, let's start about some of the stories from the first just couple months of 2022. It seems like we could spend hours talking about what's going on so far this year in the industry. But let's start off with a new commissioner of the FDA, which we talked about back in January, we kind of figured this was gonna happen. Cardiologist, no record on cannabinoids. But someone who's familiar with the post, what does this mean for the industry?
Kristen: I think it means more of the same, the FDA is gonna remain hyper-focused on pandemic and pandemic recovery. They now have suddenly a bunch of vaccines that are going bad, they then you decide what to do with those. He does seem to...in his...he had confirmation hearings in the Senate. And what was interesting about those was that CBD never came up. For those who will want to say, "Okay, the FDA is doing nothing. Let's have Congress fix this." You can see from, like, confirmation hearings, you have a hundred folks who can ask this guy anything they want, nobody asked about CBD. I don't think the message to the FDA from Congress is, "We need you to act on this." I think they're not getting that message. I don't see any change coming from the FDA in '23, '22, or '23, really anytime soon.
Joe: Let's move over to the USDA, they recently released their first study about the hemp industry and maybe this could help move things along. But what does that study show?
Kristen: It's huge. First off, you may know, the ag census is older than the people census in this country. They do it every five years, and it's really exhaustive. They know to the half-acre what's being grown commercially. And you guys, this is information that our colleagues on the THC side would die to have. Things like per average per-acre yields, how much you spend on fertilizer [inaudible 00:04:18]. Something else that is brand new that I've never seen anybody come up with is a price for a clone or young plant or a liner, what they call it. What people are paying for seeds, what people are paying to put on their land, these prices were really surprising to me. They were low to the industry comparison. I wrote some down so I'll mention.
So, basically the average price for flour right now, $39.60 a pound. That seems a lot to people, like, people in cannabis. As you may know, there are marijuana growers in California that complain they can't make ends meet on $400 a pound. Well, guess what's coming when It becomes legal? However, $39.60 a pound is exponentially more than you get for a pound of a lot of other crops. So, again, I think we're going to see these numbers drive a lot of traditional farmers to take a new look at hemp. A lot of folks know that the Farm Bill passed in '18. Or the Farm Bill that allowed nationwide hemp production passed in '18 and there was a lot of interest. And then a lot of people gave up as a bust, they did one season, they didn't make 100,000 an acre, thought it was, you know, crap deal. Well, these numbers, $39.60 a pound, and you're getting like 2,000 pounds an acre, those are extremely compelling numbers to a traditional flour producer. So, I think we're going to see an uptick in acres. Although there were only about 50,000 acres last year, I think we'll see an uptick. I think we'll see more inside production. I think we'll see a lot of farmers giving us a new look.
There's one last thing that is a tiny detail in the survey, but I think is compelling and really huge. And that is, 80% of hemp farmers are white. And that seems like such a white industry. But you guys, 97% of overall farmers are [inaudible 00:06:11]. The fact that we're talking about a significant exponential difference in how many people of color, new farmers, young farmers, socially-disadvantaged farmers are taking a look at this, I think there's a lot of emphasis, of course, on seeing people of color join this industry. I think it's happening and I think it really has a lot to share with our colleagues growing other crops.
Joe: You know, and it's interesting to point out too as you talk about the increase in acreage, we're talking jobs, economic impact, supporting a lot of families, more or less just the price of the crop.
Kristen: Absolutely. Is good for the soil, I think we're gonna see a lot more investment in using hemp as a cover crop. Another thing to remember with hemp and there's this talk about, oh, that CBD is such a bust. It takes...look at acres, is not the same as the size of an industry. It takes a lot more land to grow fiber and grain and granola than it does...you can produce a lot of cannabinoid product in a 100-square-foot greenhouse. So, can't sell...like the biggest...for example, the number one leader in acreage last year was Montana, heads and above. And the reason is not that Montana is the ground zero for the CBD or hemp industry, the reason is, Montana neighbors the prairie provinces where they grow a lot of oil seeds and, like, grain, and that just takes more land and you put 1,000 acres in, you don't put stuff in a greenhouse. So, if you look at the value of the industry, that acreage is compelling, but it's not the whole story.
Joe: And talking about cannabinoids, one of the editorials you recently wrote, and I invite our listeners and viewers to go read it at hempindustrydaily.com, deals with the reaction to delta-8 THC from MJ operators and why it was wrong. Why is that?
Kristen: Okay. Well, I'm going to date myself here. But I've been covering this industry for a long time and I've been covering other industries for a long time. And I cannot believe the way marijuana operators have operated for so long. A lot of people don't know this, when the United States at the end of Prohibition, it was a law for a while that you couldn't tax alcohol. Why did they do that? Because the whole point was to knock out the black market. A lot of people also don't know that before the passage of the income tax in this country, the biggest funder of the federal government was alcohol tax. They had to move away from that. So, it's been weird to me covering all kinds of cannabis at every level, the state level, every level of THC I mean, how incredibly high this plant is taxed. And producing it is taxed.
One thing makes me roll my eyes, that people take as a point of pride, when I say that marijuana is reacting the wrong way. There's something that is called seed-to-sale and vertical integration where you grow the plant and you extract the plant and you make the product. And it's seen as like this great thing. And people really bragged about being vertically integrated. And I don't know if they realize where that came from, is in the '90s and in the early 2000s, when this industry was starting, there were a lot of politicians that thought, "Where's the stuff coming from? It's got to be coming from Mexican drug cartels." So if you wanna sell pot, you got to prove you grew it, you got to prove you...because you probably just got it from a drug dealer. Well, what we've learned was that was never happening, there's never been any indication that there's any kind of cartel influence over the American cannabis industry. And when you think about that too, Prohibition, if you think about the seed-to-sale system we have, what if you legalized whiskey, but you had to weigh the corn that went into it, and then you had to film the corn fermenting. Right now marijuana people have to film plants growing. That is so stupid. Why you have to film a plant growing, what? To prove it's not a drug cartel. It's very silly. So, in my opinion, a lot of the cost of marijuana is in all this red tape, or all this, in my opinion, unnecessary regulation for a product that, frankly, is not making a lot of people sick.
And marijuana operators, so I think what is wrong, we are so thrilled to be legal that they will take 15%, 20% excise taxes, and an enormous amount of testing on panels we don't even know if it's right. Why are we testing for this or that? They just don't even ask questions, it's just, "Yes, test us, tax us. Let's just be legal." And now that the hemp industry is growing up, the cannabinoid extraction industry from hemp, as you know, is much more than CBD today. There's all different other cannabinoids, you can alter other cannabinoids and make them into things that are intoxicating or have different effects on the people that use them. Instead of being...what I think is the correct response from the marijuana industry is to say, "Look, all this stuff you're seeing in delta-8 and in delta-9 even, you know, this is in every, there's no regulation." And yet people aren't dying and showing up in hospitals, why are we taxed? Why do we have to film our plants growing? Why do we have to pay 20% excise taxes? Why do we have to...?
Instead, what we're seeing in state after state after state, is the marijuana industry running to lawmaker saying, "Hey, it's not fair. Why do we...it's not fair. Make them get tested, make them have, you know, a policy, you know, all this, like, drug panel testing and heavy pesticides and heavy metals, and that should be tested just like cannabis." Instead of asking, why is cannabis tested like this? Who decided that the public needs all this? That's what I mean by the wrong response. There seems like there's a natural rivalry. I don't think there needs to be and I think the answer is, ask why...As I said, stop asking why the hell hemp isn't regulated like this and start asking, why the hell are you? That's what I think is the wrong response. It's very strange to me, any other industry, food, or any other thing, say a state said, "No, we want to tax this 30%." "Oh, the industry would be hollering." Why? Why aren't we taxing autos or whatever our state makes, oranges in your state, or whatever we're growing. Why are we taxing this 30%? But you don't see that kind of pushback from THC cannabis and I wonder why. And I wish that they would take a cue from hemp producers and say, "Let's get taxed like them."
Joe: All right. And as I mentioned, greater tutorial, and you can read it over, hempindustrydaily.com. A lot of great information in there. And speaking of regulation, we continue to see states try and regulate products. But it seems like some are just creating more confusion than they're helping to do anything else. So, we're talking California and perhaps now some last-minute action in Washington, what's going on there?
Kristen: Every other day, there's a state...This is the time of year, the first quarter, is the time of year when lawmakers get going, state lawmakers, I mean. Everybody's in session. We're in an even year so, like, almost everybody's in session, and it's a popular thing to do. Things get trendy. What's the problem you need to solve as a state lawmaker? Right now we're seeing a lot of states be like, "Oh, we gotta get this..." Again, like I said, "We got to get this scary delta-8 stuff out of gas stations," although no one's ever died from it. It's a huge problem. Never mind the opioid crisis and things that kill people every day. But this is the thing we need to look at. So, we're seeing state after state just in the last couple of weeks, like you mentioned, Washington, Michigan has done something, a lot of states, Virginia is looking at things to, like I talked about, put these kinds of regulations that you see on high THC marijuana products and apply them to cannabinoid products from hemp.
What's frustrating, there's a lot of frustrating things, not just the taxes, and I've talked to folks that make intoxicating hemp extracts and say, "Look, we get it, we don't think kids should be buying this. We are okay if it can't be had in gas stations and that kind of thing. We just think there should be one set of rules and it should come from Congress." Because you can sell hemp across state lines, I can grow hemp in Colorado, I can extract it in Nebraska, and then sell it in Kansas. You can't do that with marijuana right now. So, they're like, "We want one set of rules." And I don't see any indication that Congress is going to wade into this. And that was what is frustrating. If I am any kind of business owner working with these products, you still have...just last week, interviewed one of your neighbors, your CBD store, which is a 500-chain retailer based in Florida. And I asked, they sell delta-8, "How do you navigate this?" And they're like, "We have a team of lawyers." You know? And you shouldn't need a team of lawyers to open a store. You know, if I have a store in Birmingham, Alabama, I shouldn't need a team of lawyers to figure out how to open a store 20 miles away across the Georgia state line. So, right now, I don't see a lot of interest from Congress.
However, one other thing that happened recently that I think is really interesting is, the U.S. House had their first hearing just in the last month or so about what should be in the next Farm Bill. There's a lot of hemp items that are on everyone's wish list for Congress to do in the next Farm Bill, but I hadn't heard this, the Chairman of the House Agriculture Committee, David Scott, who said, "We probably should talk about all THC cannabis, not just low-THC cannabis in the next Farm Bill." Like, why isn't the Farm Bill the vehicle that legalizes marijuana nationwide? And I had not heard that. And that's...you know, it could have been a throwaway comment. The hearing was not about, again, hemp, it was about other priorities in the Farm Bill. I thought that was a really interesting comment. And I really am curious to see where that goes when they really do crack open the Farm Bill next year.
Joe: And I was just gonna allude to that point as we head towards...I mean, it's hard to believe the first quarter of 2022 is over. And in the next few months, we're gonna see all the campaigning for the midterm elections really start to pick up, and have midterm elections in November. So, what's the timetable for new Farm Bill look like, and could we see impacts from how things shape out in November?
Kristen: Oh, I think for sure. I don't know...we have not seen, I have not seen in the last 20 years, there's even as popular as cannabis policy gets that really drives elections. There's a perception out there that cannabis or cannabis on the ballot brings young people and liberals to ballots, there's no evidence that that's actually true or that it changes votes. However, there is a interest in talking about social justice policy, there's very few members of Congress left who would be opposed to any kind of...look, and everybody is aware. Don't forget, D.C., it has recreational adult-use marijuana. So the people in Congress drive by it every day, they know, they're not stupid. So, I'm very curious to see how this...and we're gonna see the industries come together right now. There's definitely a divide between, "I'm a THC operator," "I'm not a THC operator, I'm in hemp." I'd be curious to see if there's more holistic cannabis policy coming out of Congress and what that means for how businesses approach this plant and making products from it.
Joe: Kristen, as always, a lot of great information. And it's interesting, we talk about the start of the year, just the start in legislative session. When we get back together again, we'll be heading towards what will be the summer break for a lot of the legislative session. So I'm sure there's gonna be a lot to digest [crosstalk 00:18:16.895] headlines.
Kristen: Oh, yeah, there's gonna be a lot of idiocy that come through I'm sure.
Joe: We'll keep a tab on it. And obviously, you can always follow the latest headlines by visiting the website at www.hempindustrydaily.com. Great articles each and every day from the industry, one of the leading media voices in the industry. And I did mention, it is March. There's this March Madness thing that's gonna be starting up this upcoming week depending on when you are first listening to this podcast, but March Madness tips off right after the initial posting of this podcast. I know Georgia, hey, you guys are football schools, you already won National Championship. Do you have a team on the basketball side or no?
Kristen: No. Georgia State I think has an outside chance. But no, if you're in SEC Country, the only basketball school is Kentucky. But they're so different than everybody as you see. Before that, has a title not too long ago, they won basketball and football that same year. [inaudible 00:19:16].
Joe: Yeah. I'm a Syracuse fan and...
Kristen: Oh, and how are they this year?
Joe: Yeah, we've spent better years. We'll see. They won't be in the tournament. What's that?
Kristen: I don't even know where is the final for this year.
Joe: Yeah, as the guy who used to work in sports [inaudible 00:19:35], I want to say it's either, maybe New Orleans.
Kristen: Oh, that would be fun.
Joe: I have to look it up after this. You may have stumped the host of college basketball.
Joe: Awesome. Kristen Nichols, the...
Kristen: I don't have the [inaudible 00:19:49].
Joe: Kristen Nichols, the editor of Hemp Industry Daily, back in the office. Great to see you back with the office background. Things are getting back to normal.
Kristen: I know. Thanks. See you soon.
Joe: We look forward to having you back on our podcast once again soon. And again, I invite you to stay up to the latest details of all the headlines of the industry by visiting, hempindustrydaily.com. And don't forget to hit that Subscribe button wherever you get your podcasts and catch full video episodes of the Global Widget YouTube channel. I'm Joe Agostinelli, host of the "CPG & CBD University Podcast." Thanks for tuning in.
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