What the Cannabis Industry Really, Really Wants This 2020 Election Season

And what about your state’s ballot initiatives? Speaking of those, whatever your party affiliation and political stance, if you own or invest in the cannabis industry, certain election-time questions almost certainly have your attention:

• When exactly the Food and Drug Administration will write regulations declaring CBD products official dietary supplements
• Whether the House, with a vote expected soon, will pass the (MORE) Marijuana Opportunity, Reinvestment, and Expungement Act (and whether the Senate will follow suit). VP candidate Kamala Harris, interestingly, is sponsoring the MORE Act, which would de-schedule cannabis from its illegal status and enable CBD business banking.
• Whether decriminalization will move forward and criminal records for minor marijuana offenses will be expunged nationwide (a trend already begun in several states), especially given the nation’s current racial reckoning and far higher arrest rate for minorities.
• Whether the legalization of adult-use (21 and over) cannabis will pass the three states that have that question on the ballot – the states being Arizona, Montana and New Jersey – while South Dakota’s ballot is the first to pair both adult- and medical-use legalization and Mississippi will vote on medical use only.

Of course different voices in the cannabis world have different priorities, starting with Romano Romani, lobbyist at the Cannabinoid Industry Association (CBDIA). “The current bills in Congress that remove the technical illegality of CBD based upon the ‘exclusionary rule’ are at the top of the ‘wish list’ for CBD companies,” Romani weighed in by email. “There are a number of senior senators from both sides of the aisle who may attempt to add the substance of one of these bills to a funding measure during the lame duck session of Congress.”

A Different View about the 2020 Election’s Biggest Takeaway

John Kagia, chief knowledge officer at the cannabis research company New Frontier Data, had a separate take on cannabis and the election. In terms of priorities, for instance, Kagia skipped right to those five states’ cannabis initiatives. Certainly it’s not unusual by now to legalize – 11 states (and the District of Columbia) have already done so for adult use, and 33 states (and D.C.) have for medicinal use. But what Kagia highlighted was what three of those five states – Arizona, South Dakota and Mississippi – portend about what he calls cannabis’s “permeation” into American culture.

“These are historically conservative parts of the county,” Kagia said, “so the fact that you’re seeing pretty robust polling suggesting that these initiatives could pass – this is the second time Arizona has voted on legalization and the [earlier] initiative lost on a razor’s edge – is just a reflection of how much more mainstream this issue has become than it was ten years ago.

“This is much less a ‘left/right’ issue,” Kagia continued, “because broadly speaking, when you look at medicinal cannabis, Americans see the value of it.” Not only is it a positive alternative to opioids for pain relief and the opioid epidemic, he said, but there’s a convergence of cannabis’s therapeutic value with the national attention being paid to law enforcement and policing

Beyond that, there’s the considerable revenue benefit cannabis offers to states in these trying economic times. “It’s not that legal cannabis is going to be a panacea for all that is broke in state and local governments,” Kagia said, “but [the benefits are clear] if you look at a state like Colorado that in the first six years of legalization for five million people has generated nearly $8 billion in legal cannabis receipts and over a billion in tax revenue.”

Two thousand miles east, New Jersey’s expected legalization this election promises to make make the Garden States a “phenomenally consequential market on the East Coast,” Kagia said, due especially to its positioning next door to New York and the mid-Atlantic states.”

Where the Two Major Parties Stand

“Both the Trump administration and the Biden camp have been fully supportive of the CBD industry, and both have been sensitive to the changing attitudes to the changing attitudes among most Americans among most Americans toward the use of cannabis,” CBDIA’s Romani said in his email.

Others would disagree. President Trump has vocally supported the rights of states to make their own decisions about legalizing and regulating cannabis but has made no such move at the federal level. Similarly, he hasn’t moved on his stated support for federally legalized medical cannabis.

Former Vice President Biden, who openly opposed decriminalization during the Obama administration, now says he’ll make good on that change if elected – as well as records expungement.

Kagia, meanwhile, offers a more mixed view of what either administration might do. In short, even cannabis’s “permeation” into general acceptance doesn’t mean across-the-board Democratic/Republic acceptance, he said.

The Democrats’ position is easier to frame, he said, given Kamala Harris’s sponsorship of the MORE Act and how with the Act’s passage, legal banking open up and put pressure on non-adult use states to legalize.

The Republican position is more nuanced, according to Kagia. “There’s not going to be a lot of championing of cannabis reform amongst Republican leaders this election year, he said, because legalization is heavily supported by younger, more liberal voters – the kind of voters the GOP doesn’t want.

Still, there is progress, Kagia pointed out. “It’s the first time we’ve seen cannabis [activism] from both parties kind of forcefully address and stake out positions on how they might assess or regulate cannabis under their [hoped-for] administrations without it being a reflexive push toward prohibition,” he said.

CBD as a Dietary Supplement

Meanwhile, FDA regulation looms large within the CBD industry landscape. Just look at several emails to Leafreport responding to queries about the election:

“We’d like to hear from the 2020 candidates about their support of [dietary supplement bill] H.R. 8170] and [decriminalization bill] H.R. 2843,” wrote Grace Kaucic, senior communications manager for Bluebird Botanicals.

“What we want to hear from candidates is that they will urge the appropriate regulatory agencies to act promptly to provide clarity on the regulatory path and disclosure requirements for the industry and CBD products,” wrote Laura Fuentes, founder and CEO of Green Roads.

From Funky Farms’ affiliates contact Douglas Hollingsworth: “Will the candidates
push for the FDA to establish a regulatory framework for hemp-derived CBD
products?”
And, from SabaiDee’s Gary Simpson, head of affiliate/partnership relations, the
observation that “Cannabis laws are still a grey area … we would like to hear how
the candidates plan to introduce new transparency around cannabis laws for both
businesses and consumers.”

From Global Widget’s Chief of Compliance Margaret Richardson: “Global Widget would want any 2020 candidate to specifically instruct the FDA to release the necessary guidance related to CBD being treated as a dietary supplement within 60 minutes days of entering office.” Global Widget is the mother company of the CBD brand Hemp Bombs.

Kagia, of New Frontier Data, was not convinced that firming up CBD’s legal status would be altogether a good thing. “If you look at the interim rules that the DEA has just proposed that would essentially govern CBD, one of the ways in which they have written these rules is actually going to create quite a lot of risk and exposure to CBD processors in particular, but also hemp growers,” he said.

He was referring to the 0.3 percent THC maximum for hemp plants, which means that plants even a bit above that figure are regulated as marijuana. “Nature doesn’t work to decimal precision,” Kagia pointed out. “So there is an element of risk, which has caused acute concern with the hemp and CBD community about how this is going to be potentially enforced by either administration.”

One of the big takeaways, he said, was that the 2018 Farm Bill legalizing “hemp” was just the beginning for activating the CBD market. “I don’t think we’re at the point where we’re certain that that’s going to happen.”

Even Senator Mitch McConnell, R-KY, who’s current Majority Leader of that governing body and a fierce advocate for hemp (an important crop in the Bluegrass State) might be a determining factor. “Whether the Senate reverts to the Democrats or stays with the Republicans, the CBD industry can count on the friendship and help of Senator McConnell,” said Romani in his email. McConnell, he said, “has been working diligently behind the scenes to resolve the CBD problem.”

Again, however, Kagia went in a different direction. CBD “is only a small proportion of the opportunity that the plant represents,” he said. Given the huge interest in and momentum around cannabinoids in the U.S., stakeholders in the hemp economy are concentrated on factors around CBDs, certainly, but also on hemp as a fiber and grain market and on their derivative markets. “Those are going to be years in the making because the downstream infrastructure just has not been established yet,” Kagia said.

One thing for sure, Kagia added: “It’s really important to understand for stakeholders involved in this market or looking to get involved in this market that the regulations that will govern CBD are far from settled at either the national or state level, and even though hemp is legal through the Farm Bill, even though these markets are operational, the final regulations that will govern this industry are being developed now, and it’s critically important for those concerned about how this will be regulated that they make sure their voices are heard.”

And the last word — from Tom Gonnella, CEO of Receptra Naturals: “I think it would be helpful if we had a leader in Washington that first recognized the importance of our industry to natural health outcomes and then advocated for the change we need to see to operate like a normal business and industry. If that means starting with the FDA, then we need that champion in DC.”