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New definitions of hemp in the Farm Bill

Plus, Eaze’s biggest investor is foreclosing on the company

Monday, May 20, 2024

Good morning.

Happy Monday, everybody. And to our Canadian friends, Happy Victoria Day a.k.a. May 2-4.

Let’s get to it. 

-JB & JR

This newsletter is 762 words or about a 4-minute read. 

💡What’s the big deal?

Draft Farm Bill distinguishes between industrial and intoxicating hemp

What happened: The House dropped its draft text of the new $1.5 trillion Farm Bill, which is set to be voted on later this year.

This new version of the bill splits the definition of hemp into two, unlike the older 2018 version:

  • Industrial hemp is defined as hemp grown for fiber, food, or ‘non-cannabinoid’ products.

  • Hemp grown for cannabinoid extraction is any hemp grown for the purposes of extracting cannabinoids like intoxicating delta 8 or delta 9 THC to be made into products for human or animal consumption. 

Let’s back up: The old Farm Bill passed in 2018 created a loophole that ‘legalized’ the production and sale of products, like beverages and edibles, containing intoxicating THC derived from hemp through a chemical process. 

That loosely regulated market has exploded in recent years, with intoxicating hemp products finding their way into gas stations and grocery stores throughout the country. 

An unlikely coalition of federal and state lawmakers, cannabis companies, and anti-legalization groups alike have called for these products to either be banned or more tightly regulated, saying that they present risks to consumers. 

What’s next? The 2018 Farm Bill expires by September 30, so a vote will be expected before then.

But it remains to be seen whether this version of the Farm Bill will become law. It still has to pass both chambers of Congress, where the details will be hotly contested — the House version differs from the Senate version in many key ways.

And, the Senate version does not make the same distinction between industrial hemp and hemp produced for cannabinoid extraction. 

Special interest groups from cannabis companies to anti-legalization groups will all lobby on the bill and want to have their say, so we’ll see what the final version looks like. 

The final word: Clearly, more regulations are needed to guide the intoxicating hemp industry. That doesn’t mean these products should be banned entirely, though. They clearly have a market, and consumers should be able to buy them.

But any nascent industry that relies on businesses themselves to be good actors, rather than guiding their behavior via stringent, but fair and enforceable rules, is a risk to consumers.

We’d call for a more tightly regulated intoxicating hemp market. 


📊 Stat of the day

69% of voters favor legalizing cannabis nationwide, according to a new Fox News poll. That’s up from 63% in 2019. 

Quick hits

Tech billionaire Jim Clark is foreclosing on Eaze, California's leading delivery service, in which he is the largest investor, reports WeedWeek

The DEA’s proposed rule to reclassify cannabis to Schedule III will officially hit the federal register on Tuesday — meaning the 60-day public comment period starts then. Here’s the full rule

A new bill proposed in the New Jersey Senate would regulate delta-8 THC and other intoxicating hemp products, reports New Jersey Monitor. If passed, it would force companies that sell these products to apply for licenses and be regulated by the state’s Cannabis Regulatory Commission. 

Big cannabis companies suing the federal government over cannabis prohibition want the public to be able to watch Wednesday’s hearing in a Massachusetts federal court via a livestream

📈 Chart of the day

The six largest US cannabis companies, or multistate operators (MSOS) paid about $1.5 billion in 280E tax last year, according to a new analysis from GreenWave Advisors. Trulieve paid the most, at about $400 million and just over 8% of revenue.

Companies that sell a Schedule I drug in the US aren’t able to deduct regular business expenses — meaning the tax will go away once the Schedule III change is official:

🚀 Deals, launches, partnerships

Tilray registered with the SEC to potentially sell up to $250 million of stock

📰 What we’re reading

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