The Great Myth About Selling CBD

If you’re in any way associated with the cannabis industry, you’re likely familiar with the 2018 passage of the Farm Bill. Congress passes a new Farm Bill every 5 years or so, but this one is unique, because it legalized the growth and commerce of industrialized hemp. The passage of the new bill enables the sale of everything from hemp clothing and paper, to CBD oils and tinctures. It’s a huge milestone for the cannabis industry, which is scaling so fast, it’s a lot like a plane being built as it’s flying.

The passage of this bill has made CBD companies all over the US (and entrepreneurs biting to get into this business), believe they can now sell products with less than .03% THC anywhere they want, without restriction. This is a mistake, as the legislation passed in this bill is neither cut nor dry. And each state has (or will have shortly) unique licensing requirements. Like everything in this young industry, there are nuances that can be difficult to navigate. So before you sign a lease for a CBD store, or start building an ecommerce website, know that just because some of your products might now be federally legal, doesn’t mean you won’t face any regulatory hurdles. Here are some important things to keep in mind.

Federal approval also means federal involvement

Because industrial hemp is now federally legal to grow, the FDA is involved in its’ cultivation and sale. This means that the biggest commerce regulator in the US is able to poke around in multiple facets of the hemp industry, which is a very big deal for producers who haven’t yet had to deal with this organization. This must be taken seriously and intricately understood when entering the CBD business.

The primary challenge is one that’s similar to the supplement industry. Many consumers believe CBD can help them with everything from managing pain to anxiety. In fact, CBD is so popular as an over-the-counter option for pain management, that retailers such as Walgreens, CVS, and Neiman Marcus are now carrying CBD products. The CBD industry is expected to reach $22B by 2022. You can expect CBD products to become incredibly mainstream over the next few years.

The FDA, however, hasn’t tested and approved these claims yet, and companies selling these products can’t market and advertise claims that aren’t approved by the FDA. If they do, it can lead to serious consequences from the federal government, including criminal charges.

Just like the supplement industry, if you make, distribute, or sell CBD products, you’ll need to learn how to market your products in a way that doesn’t appear to make claims not approved by the FDA. If you’re unsure how to do this, or simply want to be extra cautious to avoid fines so big they can put you out of business, ask for professional help.

States still rule

Some states have been navigating their way through regulating cannabis cultivation, distribution, and sales for many years. Some states are just starting that process now and taking best practices from the “early adopter” states like Colorado and Washington. As we know, each state has created their own rules and regulations, many of which don’t line up with the new federal regulations for CBD or with state specific rules regarding industrial hemp and CBD.

Before setting up shop in your state, you’ll need to gain a solid understanding of how YOUR state will regulate YOUR business. If you fail to miss this step, you might find yourself slapped with fines, charges, and a whole lot of problems by your state regulatory agencies. If you want to operate a CBD business across multiple states. You’ll need to learn the ins and outs of cannabis laws for ALL of them. Also, according to the Farm Bill, you’ll need to be prepared to source your CBD from licensed hemp producers in your state.

Additionally, there are a whole set of additional issues and challenges if you are looking to sell your products across state lines or in another country.

The bottom line is, you can’t just roll out your CBD line or products, or retail business, without really thinking through where and from whom you’re sourcing the product, what your state guidelines say, and how you’ll couple all of that with the FDA rules for hemp. The lesson here is to become educated and work with a trusted advisor who knows the cannabis industry.

Learn more about Andrejs Bunkse, Nimbus Legal Of Counsel.