Episode 73: Evolving Regulatory Environment of CBD



Joe: On this episode of the "CBD University Podcast," the first four months of 2021 are in the books. A look back at some of the biggest regulatory news from the industry and update on CBD in Mexico from episode 51, and what we are keeping an eye on heading into May. Industry advocate, Attorney Rod Kight, returns to the "CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CBD University Podcast." If you're a returning listener, we welcome you back to our podcast. If you are a new listener, we are glad you found us on your favorite podcast platform of choice. Don't forget to hit that subscribe button wherever you get your podcast to get notifications when new episodes are published each week. And don't forget, full video episodes on the Global Widget YouTube channel and the YouTube channels of our brands. If you're watching the full video episode on YouTube, this is another one of our Zoom episodes. And we are joined by industry advocate and attorney and frequent guest here on the podcast, Rod Kight. Rod, welcome back to the podcast.

Rod: Hi, Joe. It's always good to be here. So, thanks for having me.

Joe: And how's everything down in Mexico?

Rod: Mexico is glorious. It's beautiful down here, and there's a lot of exciting stuff happening, for sure.

Joe: And we're going to get to some of that stuff in the industry coming up in just a moment. But first, it is hard to believe we are through the first four months of 2021. Time is flying by. So, with the first four months in the books...and it's been a busy four months. It seems to be something new and different just about every single day. What's happened to start...what has happened at the start of 2021 that maybe could pave the way as we get into the next four months and head in towards the latter third of the year?

Rod: Yeah. Well, I think, you know, we saw a lot of difficulty through COVID for a lot of industries, including the hemp and CBD industry back in 2020. I think we've seen with the first quarter of 2021 is that ice is beginning to thaw, and the industry is beginning to really move forward in some new and unique ways. As far as some beacons...or that might not be the right word, but some things to look forward that have happened that I think are going to begin to shape the industry, there are at least two that I can think of.

One is the emergence of Delta-8 THC as a hemp compound that consumers really like. And it went from being something that no one had heard of to something that's being written about in "Rolling Stone," in the "Newsweek," and reported on NPR and TV stations. And we get calls about it every day. So, I think Delta-8...and from pulling back and in a bigger picture, new hemp cannabinoids and [inaudible 00:02:48] we're going to be getting to see that market, and it's going to start to roll whether it be Delta-8 or CBG or CBC and other combinations of cannabinoids other than CBD. I think that's going to be big. And we're seeing a preview of it here.

On the other side of things, we see new vape rules where the PACT Act, which regulates tobacco and nicotine products has been expanded so that it now, as of today's recording, has pulled in hemp and CBD products as vapes that don't contain nicotine or hemp. And we're seeing a lot of issues with the regulators on the one hand, but also with the industry as well revamping the way they do things on both sides so that everyone can stay compliant. And I think we're going to see more of that. And, again, just a forecast...maybe a better word than a beacon, but a forecast of how regulations are going to continue to evolve in the industry.

Joe: Shifting gears back on episode 51 of our podcast. We featured the secretary-general of the National Cannabis Industry Association in Mexico. Obviously, a lot of attention on the industry in Mexico because of the size of the market there, as I mentioned earlier, based there now. So, what's the latest on where things stand at the time of this recording.

Rod: Yeah. As the time of this recording, what we have is the Mexican Congress, the lower house has passed bill. It's now sitting in the upper house, which they call the Senate, and waiting to be passed. The Mexican Supreme Court has ordered the Mexican Congress to legalize cannabis no later than April 30th, which as of this recording is just a few days away. We'll see if that happens. The Mexican Supreme Court has ordered the Congress to do this. And Congress has applied for and received several extensions over the years. We don't know yet whether or not that's going to happen or whether they're going to go ahead and pass the bill.

I'll say with just a little bit more background, there was a bill that the Senate approved, sent to the lower house, and that almost got approved. But then there were some tweaks. The lower house has now passed a bill. And now, it's up to the Senate, and they're looking at some tweaks. And much like our Congress, the two houses kind of work together and oppose each other, too, with these bills, and different groups wanting different things. So, I think the short answer, now that I've given the long answer, is that my fingers are crossed that we're going to see full legalization within a week of this recording. Whether or not that actually occurs remains to be seen.

Joe: If there's an update to that, we'll have that in the copy of this podcast's episode once the recording is uploaded. This podcast will be published, obviously, just right after that deadline in the beginning of May. So, we'll update our listeners and viewers on that. And we talked a little bit about it. So, let's shift gears back here to the U.S.

We've seen quite a bit of movement, really, from state to state with recent legislation. What are some of the key points in what we've seen so far? Do you think we're going to continue to see more state-by-state regulations before we get anything out of the federal government?

Rod: Yeah, I think we are. I think, by and large, the cannabis industry whether we're talking about marijuana, we're talking about hemp, or we're talking about CBD or THC, is a state-by-state thing. And I think that's going to be the case no matter what. We're likely to see Congress pass some new laws regarding marijuana and CBD. And for all we know, maybe even hemp itself over the term of this administration in the next four years. But what's likely to happen in a lot of respects is that Congress is going to...it might pull THC in marijuana off the controlled substances list. It may redefine hemp and increase THC levels or whatnot. But I think it's still going to give a lot of leeway for the states to regulate these products in the way that they deem fit. So, we're going to continue to see a patchwork of state regulations.

I will say that just in the past week, we now have...all 50 states have legislation that allows growing hemp. So, Idaho became the 50th state. Whether or not that means that CBD products are going to be big in Idaho remains to be seen. But we do now have all 50 states growing hemp. So, again, to answer your question, I think we're going to see a lot more in the way of a state by state patchwork versus an overarching federal framework.

Joe: So, as we look at into the summer, what are we keeping an eye on in the industry? What are some of the industry trends regarding products that consumers and retailers may start seeing as we get into the summer here?

Rod: Yeah. I think we're going to start seeing some consolidation. We've got really good reputations, nice facilities, nice manufacturing companies that have been doing it well for years. We're going to see a lot of consolidation in the industry. I think we're going to see a lot of big-name brands really begin to sort of take hold. And a lot of the smaller brands are going to be either acquired or going to go away. And I think that's going to be a trend that's going to play out over the next 18 to 24 months. Certainly, over the summer, it's going to begin to take hold. I think we're going to begin to see more products with different cannabinoids now that the public is beginning to be aware that there are more compounds than just your CBD or THC. The Delta-8, I think, was a big harbinger of that. We're going to see some...a lot of regulation and rollout of new products that way.

Then I think, this fall it's going to continue. And I think we're going to see the hemp industry really kind of get its stride back. And CBD is going to become...if it's not already a household term, and I think it probably is, it definitely will be by the end of this year.

Joe: Any other states we're keeping an eye on for maybe new legislation? I know you just had a blog article about Kentucky not too long ago. Is there anything that we've seen out of DC in the first few months here of the Biden administration that may have a preview of what's to come for federal regulation?

Rod: Yeah, good question. So, on the state front, yeah, I'd recently read a blog about Kentucky. The Kentucky Department of Agriculture had a legal opinion out about Delta-8, stating that it was illegal. And I read a blog essentially saying that, "I disagree with the legal opinion," and that set forth the reasons in that. As far as states, you know, New York just legalized marijuana. And it's a comprehensive framework, and we're going to see that sort of roll out over the next several months and years even. California has a pending CBD bill that would specifically authorize CBD in foods. Right now, CBD is not authorized in foods in California. Although, you can find them most everywhere. I think we're going to see passage of that bill.

With respect to the Biden administration, I think the main thing we've seen is, first of all, we're going to see a changeover in a lot of federal agencies that change the tone on whether it be the FDA primarily. Potentially, other agencies like the DEA and how the feds regulate cannabis products, and specifically, hemp and CBD. But also, I think most notably as of today's date, we've seen passage of the SAFE Banking Act with the House of Representatives. There's a lot of momentum, and most commentators tend to believe that it's going to pass the Senate as well. That's huge because banking has been an issue that has really held...or lack of banking, I should say, held the industry back for years now. And so, I think that's going to be the first step towards some real positive forward growth.

Joe: Well, Rod, as always, I want to thank you for joining us. There's certainly a lot more to look forward to. We, of course, look forward to having you back for some more updates as this industry continues to evolve.

Rod: Yeah. Well, thanks for having me. I'm always happy to be here. It's good to talk with you, Joe.

Joe: And Rod Kight, industry advocate and attorney, my guest on this episode of the "CBD University Podcast." We've talked a little bit about it. Stay updated on all his great work by visiting his website at cannabusiness.law. You can read all of his latest blogs. Don't forget to hit that subscribe button wherever you get your podcast, for all the latest industry news right here from the "CBD University Podcast."

Once again, Rod Kight, my guest on this episode. I am Joe Agostinelli, the host of the "CBD University Podcast." Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. The 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 content is not intended to provide legal advice regarding the legal status of CBD and CBD products.