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Has there ever been another plant or product with a more interesting history than cannabis? The plant has made its journey from fiber for paper and fabric to today’s societies and economies. The size of the US cannabis market in 2020 is approx 20.47 billion dollars.
In 2018, the USDA Farm Bill hemp and hemp seeds removed of the DEA’s controlled substances act, further enabling a thriving consumer economy around hemp-based products.
Today, sales in the US CBD market are projected to land around $16 billion by 2026. In this product category, you’ll see CBD edibles, beauty products, pet products, and yes, the entire delta-8 (D8) market. Industrial hemp products such as fabrics, papers and more are not included in this sales projection. Steady and exponential growth is predicted in both markets, although 2020 blew up many small CBD businesses. The total value of industrial hemp production in the US for 2021 is valued at $824 million. We are seeing a saturation of products in CBD and D8, but there is a lot of room for innovation in the industrial hemp space as a whole.
Industrial hemp, while not as fun as its other hemp-based consumer counterparts, offers potential innovation a crop that sinks carbon with a myriad of current and potential industrial applications. On the other hand, hemp as a whole has more room for regulation, along with product innovation. The market’s room for innovation, combined with conventional cannabis prohibition, has produced what some cannabis professionals consider a “bathtub gin.” This is D8 and is not heavily regulated.
The lack of consumer protections and murky regulations surrounding the production of D8 have resulted in the substance being banned or under review in 20 states and counting. Mixed sentiment about market growth and ever-evolving regulation has some experts saying the market is unsustainable. Others strongly believe that the D8 is viable and sustainable option for the future of American hemp.
A recent Ninth Circuit court ruling hemp D8 is considered legal starting in May 2022. The important distinction in this court ruling: D8 is legal to possess and sell, but the precedent is not set for legal human consumption through interstate commerce. That may change the next time these substances come before the courts.
Cannabis and hemp manufacturing are different beasts, especially when it comes to the industrial processes for deriving D8. But, there is something to be said for comparisons in the CBD, D8 and hemp markets. In Missouri last year, a hemp farmer set up a booth at his local farmers market with a sign that read “home grown delta-8.” CBD and cannabis professionals may scoff at the irony of this sign. Consumers don’t know the difference. This led to deep controversy and an article in the local news, which raised important questions:
• Can manufacturers of smokable CBD or D8 hemp be punished for not communicating clearly with consumers?
• How will consumers get protections from companies that may deliberately ignore or mislead consumers about the psychoactive compounds, or lack thereof, in their products?
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Focusing our attention on CBD, regulatory concerns also arise for consumer-facing producers:
• Rapidly changing state laws around CBD and D8 can help or hinder these businesses at any time.
• Federal regulation of CBD and D8 is also subject to change. This can affect operating costs and testing procedures as well advertising and marketing language.
All of these questions affect investment decisions and other means of financing for farmers and small businesses.
There are countless articles showing legally operating retail stores selling D8 products being raided by the police. In Georgia, police took D8 cannabis products off the shelves and money from a store owner’s records. They were then forced to return it by the courts. Shop owners are aware that it only takes one law to shut down their operations. Until then, they have the “green light” from the existing landscape.
Faced with murky but evolving regulations in both the CBD and D8, a question arises: Who is at risk?
Of course, there are farmers and small businesses that face a high risk of being closed or fined because the legislation today is not so clear. Alternatively, the sale of D8 products is opening up a new option for passionate operators looking to touch “cannabis” in states not yet legalized. A small business owner from North Carolina verified that profits have increased with its new product range.
There are market opportunities for D8 producers with a lower overall cost to enter the industry than cannabis. Not needing a highly regulated license as a cannabis operator to produce D8 leaves consumers in the dark about the actual content, potency, trace chemicals and any other potential risks of consuming the D8 product. Consumers are not fully informed. This could pose a risk to businesses in terms of lawsuits.
We wouldn’t mention the paradox of imprisoning people for conventional cannabis while D8 companies profit.
D8 Consumers and businesses could be at greater risk if more regulations are put in place around manufacturing, testing and health impact research. This should raise a red flag to consumers and people-oriented business owners. CBD companies will face the same risk from increased regulation. However, more peer-reviewed research is available on CBD. Practices are also being put in place to track and manage product complaints, such as having a COA. In the CBD space, more research can help lead to more confident consumers.