For thousands of years, industrial hemp has been farmed and used as a fibrous substitute for everything from bricks to blouses, but has suffered due to association with its close cousin, marijuana.
But the Green Mountain State is about to get greener. Because of the passage of the Agriculture Improvement Act on Dec. 20, industrial hemp was freed of its long-standing reputation and legalized federally, making hemp-derived products subject to FDA regulation and opening new avenues of commerce, said Tim Fair, founding partner at Vermont Cannabis Solutions law firm in Burlington.
“It says any cannabis plant less than 0.3-percent THC is considered hemp and therefore not subject to the Controlled Substances Act of 1970,” Fair said. “But states can choose to pass more restrictive laws, just like alcohol. It’s still a state’s right to impose stricter regulation.”
Though hemp has been legal to grow and produce in Vermont since legislators and Gov. Peter Shumlin passed Act 84 in 2013, hemp-derived products such as CBD oil have continued to suffer a bad reputation, despite the fact that they don’t get people high.
“A lot of things are going to change now that it’s federally become legal as of January,” said St. Albans producer Michele Waters, owner and operator at VT Grow Shop, Green Mountain Genetics and Green Mountain Hemp Co., which is in the process of opening a second location on Pearl Street in Burlington. “I hope to see the banks let up and get on board.”
“There’s a lot of facets to this,” Fair said. “There are people who believe this is the death knell for the industry. The truth is, we’re somewhere in the middle.”
Sen. Dick Sears, D-Bennington, backed the previous legalization of hemp, saying he’d spoken to a number of people who were using it to make rope and other products, including Sen. John Rodgers, D-Essex/Orleans, who farms hemp in the Northeast Kingdom, and was inspired by the economic and agricultural possibilities of the crop.
“Given the changes in federal law and given the number of people who use it, I expect some regulation to be coming,” Sears said.
Waters said the CBD compound helps with blood sugar, blood pressure and the immune system, blocks hormones that create inflammation, helps with anxiety and works directly with the pain receptors.
And now that the FDA is in charge, people will know just how much to take.
“It’s important to have standardized dosages and labels,” Fair said. “None of that is regulated on a federal level. This will serve the consumer better. Maybe a little more expensive and time-consuming for manufacturers, but it will serve consumers.”
Despite the alleged health benefits of the compound, the association with cannabis made acquiring loans from banks, credit card processors and insurance for producers difficult, as many financial institutions didn’t want to risk their reputations by lending to producers, Waters said.
“The risk inherent on any financial institution, was that (it) could be (mis)construed by the Department of Treasury,” Fair said. “Because of the uncertainty, a lot of the financial world didn’t want to risk the federal insurance. ... The FDIC could revoke their charter.”
Producers also found themselves unable to collect standard business deductions, thanks to IRS code 280 E, which applies to any manufacturer of Schedule I or II drugs.
“Now, hemp is no longer subject to that,” Fair said. “We will soon be able to see hemp and CBD products cross state lines with no problem at all.”
“We’re hoping the laws will free up, and this can get more into the public’s hands without the stigmas that people will attach to the cannabis,” Waters said. “It’s the best thing that’s ever happened.”
“A good 50 percent of my business has been CBD sales right from the start,” said Lauren Andrews, RN, clinical aromatherapist and owner of AroMed aroma therapy and CBD shop in Montpelier and Berlin. “Consumers will be able to buy with a lot more confidence.”
Andrews said she acquires only locally-grown, organic hemp for her CBD products from local farmers, the real beneficiaries of the new legislation.
“Farmers will now be able to buy crop insurance, and get loans for equipment that they couldn’t before,” Andrews said.
But not everyone is excited about legalization of hemp. Producers were, up to this point, cannabis cowboys, and many fear regulations will kill small operations by coming in and imposing requirements on their production, Fair said.
“The industry has grown in a largely unregulated market,” Fair said. “There was no oversight, no regulatory framework. Now that hemp has become an agricultural commodity, oversight of hemp falls under the USDA. Once you extract CBD and put it into a product, (it) falls under the FDA under the Food, Drugs and Cosmetics Act.”
Hemp-derived products will henceforth be sorted into three different categories: medical, topical and not for human consumption, which includes products like dog treats, Fair said.
Fair said, the market is already so large and accepted by society as a whole that the FDA won’t be setting unreachable requirements and shutting producers down unless the production facility poses legitimate health risks.
“Our sales are definitely up because of CBD products,” said Tracey Orvis, wellness manager at the Middlebury Natural Foods Co-op. “Between 25- and 35-percent up in the vitamin department, all because of CBD.”
The co-op first started selling CBD products in 2017, and now carries around 11 brands of capsules, tinctures, gummies and topical salves by Prism Hemp Works, Champlain Valley Organics and Elmore Mountain Therapeutics, among other local producers. Orvis said she gets calls every day regarding the products, whether they’re from producers hoping to sell to the co-op, or consumers looking for it.
Now, even pre-rolled CBD cigarettes are beginning to hit the market, Fair said.
Rather than be afraid of regulations, Fair said producers and consumers will see tighter restrictions on poor-quality and imitation versions of CBD, such as the industrial hemp grown in China that tests high for pesticides and heavy metals.
“I want to help as many people and pets as possible,” Waters said. “CBD helps to regulate all the systems and functions in the body. It wants to create a homeostasis.”
“There are so many crazy products,” Orvis said. “I took it once, and it helped me sleep ... it helps with pain management. I have a lot of family members who I’ve given it to, who have said it helps a lot.”