Farm Bill Gives Cannabis Companies Room To Grow
The passage of the Agriculture Improvement Act of 2018, known as the Farm Bill, marks the first time since the 1970s that any part of the cannabis plant (in this case, industrial hemp) has been removed from prohibition under the Controlled Substances Act. “Industrial hemp” is defined as parts of the cannabis plant containing less than 0.3 percent THC, the psychoactive component found in recreational marijuana. Another cannabis extract, CBD, can be derived from hemp, and demand for CBD products is growing. By 2022, the market for hemp and hemp-derived CBD is projected to reach $22 billion, according to a report by Brightfield Group.
Although recreational marijuana has been legalized in 10 states and Washington, D.C., and medical marijuana in more than 30 states, the federal government still regulates all types of cannabis (besides newly legalized hemp) as a Schedule I substance, the most restrictive class that includes heroin and ecstasy. This Kafkaesque labyrinth of conflicting federal and state regulations has resulted in confusion surrounding many aspects of the industry, particularly around taxation, since the Internal Revenue Service treats state-legal cannabis companies no differently than illegal drug traffickers.
In this article originally published in Law360, Elaine Carey and Alexander Arnote highlight the financial and operational impacts of hemp legalization, along with potential opportunities for the cannabis industry.