CBD and Hemp Legal and Regulatory Roundup – May 2021

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Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:

The CBD industry faced difficulties in 2020 amid competition, regulatory uncertainty and a global pandemic that disrupted retail operations, including:

  • CV Sciences, reported 2020 sales of $24.4 million, a 55% plunge from 2019 ($53.7 million). The company attributed its lackluster performance to the COVID-19 pandemic and growing market competition related to an uncertain regulatory environment;
  • Medical Marijuana’s revenues dropped about 38% from $57.7 million in 2019 to $37.7 million in 2020. The company reported an annual net loss of $95.8 million, versus net income of $84.4 million in 2019.
  • The Americas division of Elixinol Global’s annual revenues plunged about two-thirds to $8.5 million from $25 million in FY19. Lockdowns related to COVID-19 weighed on Elixinol Americas’ revenues, and Elixinol cut its full-time headcount from 98 to 39;
  • BDS Analytics’ estimated CBD sales grew 55% in 2020 to $4.3 billion, including sales through general retail, pet care and dispensaries. It cited, for instance, the closures of many dispensaries and CBD retailers during the pandemic. Nonetheless, hemp-based CBD sales grew to $2.2 billion in 2020 through general retail, which includes e-commerce. Such sales were up about 45% from $1.2 billion in 2019;
  • Charlotte’s Web Holdings’ revenues grew to $95.2 million from $94.6 million in 2019. Then COVID-19 emerged. In an effort to “mitigate these compounding factors, we took action to rethink and reprioritize our business,” she explained. Among other moves, Charlotte’s Web cut prices by an average of 15%, she said, which propelled sales in the second half of 2020. Fourth-quarter revenues increased 17.9% year over year and 7% over the third quarter of 2020.  Natural Products Insider

U.S. District Judge James Boasberg dismissed a lawsuit filed by the Hemp Industries Association (HIA) and RE Botanicals against the DEA. In his opinion, he lacked “subject-matter jurisdiction” over the issue between the plaintiffs and the DEA, noting Section 877 of the Controlled Substances Act made it clear any challenge to the DEA’s rulemaking had to be brought in the U.S. Court of Appeals for the D.C. Circuit. However, the judge noted the HIA and RE Botanicals raised “interesting” questions about the DEA rule that appears to outlaw common methods to make hemp extracts into CBD by saying elevated THC levels during manufacturing aren’t allowed, even if the final product meets the federal definition of hemp. Meanwhile, a related lawsuit remains pending in an appeals court in D.C.  Hemp Industry Daily

Two bills in the Calif. Legislature would establish a new regulatory framework for hemp-infused goods, including CBD-laced foods and drinks. They’re poised to become law this year, and may accelerate the state’s hemp industry, as well as provide marijuana businesses an opportunity to expand into a federally legal crop. However, a Senate analysis shows the bills have as many supporters in the hemp and cannabis industries as they do opponents, and the bills are likely to be amended. Assembly Bill 45 and Senate Bill 235, which are identical and moving along parallel paths, have the support of Gov. Gavin Newsom. For hemp farmers, a proposed ban on smokable hemp flower is an obstacle. “The approach has been, ‘We will give you regulation of CBD, if you will give us a smokable-flower ban,'” said Josh Schneider, the CEO of Cultivaris Hemp. “That is not a trade the farmers are interested in doing, because it won’t be comprehensive enough to actually deliver benefits to the farmers growing hemp.”  Marijuana Business Daily

The Mass. Department of Agricultural Resources put out guidance letting hemp be grown on land that’s part of the state’s agricultural preservation restriction (APR) program. The guidance clarifies hemp may be grown on all APR land. Since marijuana remains federally illegal, marijuana can only be grown on land that’s not federally funded and isn’t subject to enforcement by the U.S. Department of Agriculture. Most APR land acquired since the 1990s was purchased using federal funding, so practically this opens up much more land to hemp farmers than to marijuana growers. Hemp farmers must still apply for a license from the state agriculture department to grow hemp.  CommonWealth Magazine

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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