“It was a mad rush,” said Colorado Agriculture Commissioner Kate Greenberg.
But the boom has quickly turned into a bust.
In recent months, several CBD businesses declared bankruptcy — including GenCanna, a hemp processing facility in Winchester, Ky., that McConnell visited in April of last year.
“I hope that hemp will be for us some day what tobacco was at its peak,” McConnell told the crowd.
But his hope has so far failed to materialize as the industry struggles on several fronts: The gold rush mentality led to an oversupply, tanking wholesale prices. CBD remains unregulated by the FDA. Consumers are left with conflicting messages about the legality of hemp products while unscrupulous businesses tout CBD as a potential treatment for every illness under the sun, including the coronavirus.
States have written their own jumble of rules to contain the mess. The decline in investor interest in the cannabis sector last year led to financial troubles for businesses focused on expansion over profitability.
“We had really a perfect storm,” Minnesota hemp farmer John Strohfus said. “We had oversupply … and then we had the unfortunate issue of impotence really on the part of the FDA.”
All of those factors are hurting the very farmers hemp legalization was supposed to help.
“There are ongoing conversations with the FDA on CBD products,” McConnell said on the Senate floor last October. His office referred to his past comments and actions in response to questions from POLITICO.
Nothing has materialized, however.
Industry advocates still believe hemp has a bright future. But many producers and farmers are struggling to pivot to non-CBD uses of hemp, such as fiber and grain.
“We hope that hemp is not defined just by CBD alone,” Colorado hemp farmer Dion Oakes said. “That’s just one of countless products you can make from this plant.”
FDA fails to act
The 2018 farm bill legalized both hemp crops and extracts of hemp, seemingly opening up a federally legal market for CBD products.
There was a “clear expectation” after the farm bill passed that hemp-derived CBD was a new, legal commodity, said Jonathan Miller, general counsel for U.S. Hemp Roundtable.
But soon after the bill passed, the FDA made clear that CBD products violated the federal Food Drug & Cosmetic Act — essentially rendering them illegal. The agency hasn’t offered any regulatory clarity for CBD products that are now widely available everywhere from gas stations to grocery stores.
In December, McConnell touted hemp provisions in the 2020 appropriations package, including a measure encouraging the FDA to issue formal guidance.
So far, all that’s materialized from the provision is a March report from the FDA to Congress stating that the agency is “actively evaluating” CBD regulations.
“We are working toward a goal of providing additional guidance, and have made substantial progress,” said Amy Abernathy, principal deputy commissioner of food and drugs for the FDA, in a statement. “We remain steadfast in our effort to obtain research, data, and other safety and public health input to inform our approach.”
“[British authorities] made that conclusion based on the same science that we’re all seeing,” said Miller. “While [the FDA] fails to act, there are thousands of products out in the marketplace … that might not be safe for American consumers.”
The lawmaker who was key to passing hemp legalization, some industry advocates say, seems to be missing from the debate in recent months as they clamor for regulatory clarity that could help stave off the economic downturn for the industry.
“McConnell was a leader in this space. Previously, it gave me a lot of hope,” said Jim Higdon, co-founder of Kentucky-based CBD brand Cornbread Hemp.
The lack of regulations attracted companies looking to profit off public confusion. “In addition to ignorant actors, there’s also just straight up bad actors,” said Higdon, who pointed to the countless unregulated hemp products available on Amazon.
Many CBD producers, especially in Kentucky, seemed to be counting on McConnell’s influence and FDA regulation.
“I haven’t seen him around lately. I hope it’s just because he’s been swarmed with higher priorities,” said Higdon, adding that he hopes access to banking and capital and fast-tracking FDA regulations remain a priority for the senator.
In January, Rep. Collin Peterson (D-Minn.) introduced a bill to regulate CBD products like dietary supplements. But the chances for such legislation are close to zero in the middle of the public health crisis. Hemp advocates are focused on inserting similar language in a coronavirus package, arguing that it could help boost an industry without additional costs to the federal government.
“I understand the FDA … has to balance the need for public safety with new products coming online almost every single day,” Kentucky Agriculture Commissioner Ryan Quarles said. “It’s just that we need action now.”
Hemp farmers like Strohfus say retailers are interested, but the lack of FDA rules are scaring them away from hemp products even when they don’t contain any CBD.
His farm saw interest from large retailers that were ready to sign agreements for cold-pressed hemp seed oil — a food product that doesn’t contain any CBD or THC. The retailers ultimately got cold feet.
Strohfus offered to provide them with testing to show the product did not contain any CBD. “They said, ‘Yeah, yeah, we understand that. But you know, our lawyers are nervous about this,’” he recounted.