Legal red-tape strangles domestic CBD, industrial hemp production

Cannabidiol (CBD) has been generating a lot of attention lately. CBD is a common cannabinoid found in hemp and cannabis, and it has been credited as being one of the most medically beneficial compounds in marijuana.

CBD has been touted as having “anti-inflammatory, anti-pain, anti-anxiety, anti-psychotic and anti-spasm effects without troubling lethargy or dysphoria,” properties according to ProjectCBD, an organization which promotes the medicinal use of CBD.

Not all CBD products are created equal

According to a presentation given at CannaCon by Michael Stoltz, a representative for Hempdiol CBD powder, there are three different grades of CBD extracts: IHNE, CNE and CE.

IHNE is derived from industrial hemp; it is non-euphoric and has a THC content lower than the federally allowed threshold of .3 percent.

CNE is derived from cannabis flowers and is also non-euphoric, falling below the .3 percent THC threshold as well.

CE extracts may produce euphoric effects, exceeding the .3 percent THC limit.

The first CBD classification, IHNE, allows producers to import and manufacture CBD extracts in a legal gray area.

Federal law constrains domestic markets

According to Stoltz, growing hemp in America is fraught with legal red-tape, so most companies choose to import either raw product or extracts from abroad. The majority of CBD extracts produced in-bulk come from industrially grown hemp.

One of the key differences between industrial hemp, and marijuana grown for yielding a cannabis crop, is the amount of THC they produce. Industrial hemp yields much lower THC content, but is much more fibrous. Even still, it has faced similar restrictions on it’s cultivation to cannabis crops..

Currently, the main exporters of industrial hemp are growers and producers in Europe and China, where laws are more lax.

These industrial crops offer a wide variety of uses in marijuana products, however, according to Stoltz, some variants of CBD extracts are more commercially viable than others.

“The mainstream movement is that people really prefer powders,” Stoltz said.

This powder is derived from large quantities of raw hemp. Two and a half acres of hemp equals one metric ton of raw product, which is then refined down to around three to seven kilograms of actual CBD. The resulting product is then imported to America and sold to vendors or processors to mix into their products such as cannabis wax, ointments or other products.

Future deregulation could mean big profits

High Times has already hailed the CBD market as a potential modern gold rush, with many companies rushing to get in on the ground floor of production.

So far, the arduous process of growing hemp domestically has kept many potential growers out of the market, even with some signs of loosening restrictions in 2013. Stoltz said the CBD market has the potential to explode if these restrictions are loosened. It could provide a massive new industry to growers, particularly in the mid-west.

However, the federal Food and Drug Administration recently issued a warning to several companies marketing their products as high-CBD content, and the FDA does not recognize CBD as being intended to treat any diseases. Some of these products, the FDA claims, do not have any detectable CBD contents.

It is unclear what the implications of these warnings are, but it does cast a light on the gray area CBD currently exists in. If CBD products are to gain increasing traction in coming years, they must begin to come under state and federal regulation to ensure they are actually delivering what they promise to consumers, Stoltz said.

Good consumer-business relations, coupled with the increase push for marijuana legalization all across the country, could result in the fulfillment of the CBD gold rush. Until then, CBD and industrial hemp products are likely to remain a relatively niche market in the larger legal recreational ones.