Following Monday’s passage of the SAFE Banking Act in the U.S. House of Representatives, the question of CBD regulations is once again at the forefront of business owners’ minds nationwide. Be sure to check out our free downloadable to help you build or modify your CBD brand’s messaging during this period of potential change.
A Brief History of Federal CBD Laws
Both the cultivation of hemp and marijuana were legal at one point in the U.S. Everything changed in 1937 with the passage of the Marijuana Tax Act. This legislation criminalized marijuana and imposed heavy taxes on hemp growers. This forced many farmers to abandon hemp for other crops. For a long time, there was not much public knowledge on the differences between hemp and marijuana.
Fast forward to 1970, Congress passed the Controlled Substances Act. This classified marijuana as a Schedule I narcotic. Other Schedule I drugs include heroin, ecstasy and LSD. According to the Department of Justice, these drugs “have no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision, and a high potential for abuse.”
Clarification on key differences between CBD and THC occurred in 2014 with the passage of the Farm Bill. This bill defined hemp as cannabis Sativa containing .3% or less THC. The bill also allowed agricultural departments and academia to cultivate hemp for research. It also relieved the DEA from governing CBD oversight for the FDA and USDA.
In 2018, Congress felt enough research was done to pass the Hemp Farming Act, which was included in the Farm Bill of 2018. This further defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” More importantly, it legalized CBD in the United States.
Of course, there was (and still is) a long way to go with CBD education for the general public.
Federal CBD regulations
Despite the passage of the SAFE Banking Act in the House directly impacting the cannabis industry, there could be ripple effects for the CBD industry as well. According to Reuters, “The bill clarifies that proceeds from legitimate cannabis businesses would not be considered illegal and directs federal regulators to craft rules for how they would supervise such banking activity.”
MarketWatch says, “The bill would exempt cannabis business transactions from being considered proceeds from illegal activity and subject to anti-money-laundering laws. It would also prohibit banking regulators from asking banks to terminate a customer account unless there was a valid reason aside from reputation risk.”
From an Insider Media Relations view of this news, there are two sides to the coin. The first is that cannabis is continuing to be more widely accepted in the United States. This is a significant news story. Considering 17 states have already legalized recreational marijuana, 36 have legalized medical marijuana and others are making waves for one or both, marijuana is not the cringy “hard drug” we Millenials were taught about growing up. Because hemp is legal, it’s already gotten a headstart on marijuana in terms of public acceptance because of education. However, there’s a long way to go.
The other side of this coin addresses the CBD industry. Are they prepared for sweeping federal marijuana reform? A recent poll by POLITICO and the Harvard T.H. Chan School of Health found that 54% of American adults are familiar with CBD products and 15% use CBD products. That’s a significant number but 46% is still a massive amount of the population that aren’t familiar with CBD products. This could lead to a significant messaging problem for CBD brands who don’t want their products associated with products that contain more than .3% THC.
Now is a great time to use the momentum of the SAFE Banking Act passing to educate your consumers and build trust in your brand!
Future Federal CBD Regulations
According to this article by Ganjapreneur, President Biden supports leaving decisions regarding legalization for recreational use up to the states, rescheduling cannabis as a Schedule II drug so researchers can study its positive and negative impacts and, decriminalizing marijuana use which would automatically expunge any prior criminal records. He also supports legalizing medicinal marijuana. That stance is a touch less sweeping than what House Democrats are supporting and have supported in the past.
When it comes to CBD regulations, there has been little movement from the FDA when it comes to marketing and labeling. While CBD is legal, there are no FDA-approved CBD products. This means that retailers cannot make medical claims or even therapeutic claims about their products without potentially drawing the ire of the FDA. To date in 2021, the FDA has already issued warning letters to 4 different companies in the U.S. for breaking those rules.
In a press release last month, FDA Commissioner Hahn highlighted the FDA’s commitment to “educating the public about potential risks using CBD,” “closing the knowledge gap in both safety and potential benefits” and “monitoring the marketplace with a focus on the greatest risk to public harm.” These three focus areas will not yield immediate results.
Where does this leave CBD companies? If your brand already has a strong PR outreach strategy, stay the course. Keep working to educate followers, build a network of loyal consumers online or in-person and stay in the know when it comes to relevant proceedings.
If you’re still working toward this goal, that’s okay too. Sweeping marijuana reform would require some very strong messaging to the public about the differences between CBD products and THC products. There are many companies that may not be prepared to handle the wave of questions that will come with reform. Prior to reform begin building your plan for PR outreach. Be in a position where you can have an answer ready when your customers ask!
If you want to dive even deeper into the conversation, be sure to watch our video recap below!