Hemp has been the enemy to many business sectors for decades, and its illegal status kept it from competition. The 2018 US Farm Bill changed this, re-opening an industrial hemp market. But what should have taken off, hasn’t. What’s most confusing, is that its actually local governments which pose the biggest blockades to the hemp industry thriving. Why would they do this when it means getting in the way of a lucrative industry?
The federal government might have chosen to legalize hemp production in 2018, but local governments have repeatedly made it hard for hemp farmers and the overall market; with incredibly strict, over-bearing regulation. Our 100% independent news publication focuses on stories in the growing cannabis and psychedelics spaces. We provide the Cannadelics Weekly Newsletter for readers to stay updated, and offer tons of deals for a range of products, from smoking devices to cannabinoid products like HHC-O, Delta 8, Delta 9 THC, Delta-10 THC, THCO, THCV, THCP & HHC. You can find deals in our ‘best of’ lists, for which we ask you only buy products you are comfortable with using.
Hemp in the US
The history of hemp is a sordid story which reminds us that the US government doesn’t always act for the good of the people, and sometimes in direct contrast to it. Back in the beginning of the US, during colonial times and beyond, hemp was a widely grown crop, used for all kinds of industrial purposes. It was such an important crop, that some colonies like Virginia instituted grow laws in the 1600’s to ensure hemp was grown by local farmers, mostly for use by the military.
During this time, hemp had tons of applications including clothing, paper products, sails and rope for ships, and so on. It was also a main component of many medications starting from the 1800’s, when Dr. William O’Shaughnessy brought it into Western medicine; after researching it in India. Why hemp was illegalized is a great question, and depending on where you look, you can find different answers to this question; some that make more sense than others.
Hemp, and cannabis in general, was used industrially, but rarely smoked for recreational purposes. This changed with an influx of Mexicans in the early 1900’s, who did smoke the plant. This happened around the time that industries started popping up that posed a direct competition to hemp. These included the burgeoning synthetics/plastics industry, run by the DuPont family; and the wood paper industry, with William Randolph Hearst at the helm, who owned a huge newspaper chain, and didn’t want to compete with hemp paper. Between the Mexican association, and push from these industries, as well as the pharma industry; cannabis was illegalized.
The process of prohibition started with 1937’s Marihuana Tax Act, which made it harder for cultivators by instituting more strict licensing requirements. WWII changed this temporarily, and there was a push for hemp farming due to supply issues into the US. This was all quietly shut down by the government post-war, and the case against marijuana and hemp was built even further. It was marijuana, and smoking it specifically, that was essentially used to illegalize the hemp industry, even though that logically makes no sense at all.
Though there was an understanding about the difference between high-THC and high-CBD plants, this information was ignored by the government upon passage of the 1970 Controlled Substances Act, which treated both the same. This law put cannabis of all kinds in Schedule I, saying it was so dangerous that it wasn’t even fit for medicine (which it had been in for 100 years on the Western side, and thousands of years on the Eastern side).
The distinction between the two types of cannabis wasn’t officially re-established until a federal court case – HIA (Hemp Industry Association) vs DEA that ran from 2001-2003. This case, and the re-institution of a definition between hemp and marijuana, allowed the entrance of hemp back into the legal market years later with the 2014 and then 2018 US Farm Bills. The latter of which legalized the cultivation and production of industrial hemp products nationally.
Why do local governments get in the way of new hemp industry?
You’d think that legalizing something and setting up a market is an indication that that market is desired. Sure, visually it looks like hemp production is promoted, but in what looks like a passive-aggressive move, local governments continue to set obstacles to the hemp industry, possibly implying that the legalization is more for show. This sounds odd, for sure, but let’s remember that hemp is growing in understanding as a more environmentally-safe competitor to massive, and massive-waste-causing, industries like the paper industry, the plastics industry, the cement and building industry, and even the oil industry. This on top of it already being a threat to pharma companies.
The thing is, all the industries above have corporations and lobbyists that pay greatly into the pockets of congressional representatives on both state and federal levels, making it more than possible that there is quite a large financial push from within, to keep this industry down. Along with this, its place as a ‘cash cow’ has led to insane taxation seeking to squeeze out every penny, to the detriment of the actual industry.
Recently it was reported that the hemp industry in Oregon is in trouble, and that its not about a lack of interest either. Farmers are repeatedly trying to jump through hoops to create these enterprises, and are continually being thwarted by new, and often overbearing, regulation. Governments usually make it easy when they want an industry. Consider the opioid industry, and the multi-billion-dollar lawsuits, which haven’t slowed anything down. Those medications are still sold, with a recent governmental proposal to lower prescribing guidelines…that’s how much their sale is desired. Even the travesty of overdoses hasn’t limited the industry, and that’s a real danger…so why are governments giving hemp farmers such a hard time? And what exactly are the problems?
How do local governments get in the way of new hemp industry?
What are the tactics used to slow down what should be a skyrocketing industry? Jackson County is one of the biggest cultivation areas in Oregon, and yet in March of this year, state regulators declared a state of emergency for cannabis, which creates a moratorium on new licensing. In fact, by law, when a state of emergency is called, such applications must be denied. The state of emergency announcement acts retroactively, going back to the 1st of the year, and continues till the last day of the year, effectively meaning no new licenses for growing hemp can be given out or used for an entire year.
Why is this happening? What terrible threat is there that now keeps hemp from being grown, as opioids are still widely prescribed and sold? Apparently, the biggest concern is rooting out all those farmers (reported as 53% last year) whose crops exceed the .3% THC maximum. Though this is advertised by the government as something done by sneaky growers cultivating marijuana under the guise of hemp, simply being over the limit can actually imply no more than, say .4% THC, which hardly makes it what they’re saying.
Considering its already known that its hard to stay precisely within these limits, the more reasonable factor is that farmers are just barely missing the mark, and this is a massive excuse to stop production. I mean, again, opioids…everywhere. Still. Even if it’s real marijuana, though the growers might not be sanctioned, it is a legal state. Should this really stymie the entire industry?
The other issue? Unregistered growers. Translation? Growers for which no tax money is collected by the state. Translation? Black market. Let’s remember, the legal cannabis industry can’t compete with the black market past a point, and this means both state governments and the federal government (federal for hemp only) are constantly trying to find, and get rid of, operators in this market. Whereas it really should be obvious by now that this won’t work, apparently, its not. Realistically, if governments want their legal industries to work, they need to stop with the overtaxing (both excise and to consumers), drop overly strict regulation, and stop treating the industry like a cash cow.
Instead, governments have retained their insane, non-working tax structures, and incredibly restrictive regulations, and then do antics like this where they stop the real industry, so they can have more time to find anyone making an illegal buck. Again, is this really an issue that should stop a legal market?
I don’t remember any large clothing manufactures being forced to stop all function until every knockoff vendor was found and put out of business. Does anyone else? Nope? Once again, no danger to consumers. After all, consumers have lived off this black market for the last 100 years. Calling it dirty and unsafe now, is about the dumbest smear campaign, yet that very logic is used to explain why these growers need to go. Translation? Money lost to taxing bodies. Period.
Into the future
Similar issues of regulation and/or high taxes are seen nearly anywhere that hemp (and marijuana) industries exist in the US. Take Washington, for example, where complaints over taxes still exist ten years after the start of the market. Or California, where the market has suffered so badly, that the state is actually overhauling its tax structure in hopes this can reinvigorate it. Hawaii is yet another example, with cultivators in the state fighting against overly restrictive regulation that restricts access to the local market, and requires a painful three-day notice period for crop transport, testing, and inspection.
There are plenty of other factors that also effect the hemp industry, like overproduction. 2018-2019 was a good time for CBD sales, and this led to inflated expectation for demand, which was subsequently not met. Operators jumped in without thought or research, and somehow no one considered it could be nothing more than a fad. This misconception led to a massive amount of overproduction, lowered prices, and a harder time competing. The inflated expectation came from nearly every publication, which all touted unrealistic numbers, based on no experience. Never a good idea.
Right now, a lot of hemp production is geared toward the CBD and cannabinoids market, which in and of itself shows the lack of understanding among growers of applications outside of drug-related or wellness products. Perhaps as actual industrial uses like plastics and paper start to pop up more, the hemp industry will see further invigoration, and a massive rise in production. After all, THIS is what ‘industrial’ hemp is meant for in the first place. And yet even despite this, I have yet to hear of a government promoting these uses.
Why hemp for plastic and paper (among other uses) hasn’t ballooned out exponentially could be related to many things including existing industries that don’t want competition. Perhaps this is why local governments get in the way of the hemp industry, which was just legalized. It should be understood by now that leveraging too-strict regulation, forcing high taxes, and trying to weed out black markets at the expense of legal ones, will never lead to anything good. And though stories abound about the large taxes brought in for cannabis, in states like Massachusetts, one can only wonder what that number would be, if governments stopped trying to sabotage the industry.
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Cannabinoid Market Sales Data: Where Is It?
It’s odd to have a large and ongoing conversation on a topic, yet not be able to reference information for it. Such is the case right now with the cannabinoid market in the US, which includes the likes of delta-8 THC, HHC, THCO, and delta-10 THC. Writers keep talking about product popularity and market expansion, but in the end, there is no real cannabinoid sales data to elucidate the situation. Where is it?
Finding cannabinoid sales data is quite difficult, which means understanding the size and depth of the market is nearly impossible. Maybe in the future, more companies will release data, but for now we’ll have to wait and see, and speculate only. We cover tons of topics in the emerging cannabis industry, and put out the THC Weekly Newsletter, so you can subscribe and keep up with everything going on. Plus, sign up and you’ll get some sweet deals on products like edibles, vapes, and other cannabis paraphernalia, including cannabinoid compounds. Keep in mind, *cannabinoid products are not everyone’s cup of tea, and we only encourage people to use products they are comfortable with!
What is the cannabinoid market?
The cannabinoid market is a market made up of different naturally occurring, or synthetically-made, cannabinoids, which are sourced from hemp plants. This includes hemp-derived delta-9 THC, and CBD. All the cannabinoids in the cannabinoid market, apart from hemp-derived CBD, either only occur in small amounts that are not enough for product production (delta-8), or simply don’t appear in nature at all (delta-10).
This market came to being with the 2018 US Farm Bill, and the legalization of industrial hemp and industrial hemp products. This was done by way of a new definition for hemp, which separates it from high-THC marijuana. Anything under .3% THC is considered ‘hemp’, while plants with above .3% THC are considered ‘marijuana’. The definition for hemp, however, only includes the plant itself, and does not include synthetic forms – or analogues – of any of the compounds found within hemp.
This is important, because though all cannabinoid products are sold as ‘hemp-derived’, none of them exist for public consumption without synthetization. This discrepancy becomes more profound when considering that some of these compounds don’t exist in nature at all. Though I suppose ‘hemp-derived’ is a loose enough term to fool consumers into thinking what they’re getting is a direct product of the hemp plant, this is 100% false. Since they use synthetic processes, none of these products fall under the definition of hemp, making them prosecutable (in theory) under the Federal Analogue Act.
The idea that they are in fact illegal, despite marketing lines from vendors claiming federal compliance, was backed up when the biggest sales platform, Shopify, banned all items that do not meet federal regulation. While this is often cited as a response to the under .3% THC issue, the much more damning aspect is that these products all necessitate synthetization.
This doesn’t make the compounds dangerous, as none seem to be thus far. But as an unregulated market, and with unscrupulous vendors willing to create lies to sell products – even going as far as using bogus third-party testing facilities to gain user trust, the ability to know what else is added to products, or if they’re cut with something, is impossible. Plus, since all use synthetization methods which the companies are not being open about, we know nothing about these processes, or what dangerous chemicals they might leave behind in a final product.
How does it exist if it’s not legal?
Great question! Why would a country that loves having drug wars, put up with an illegal drug market that’s right under its nose? Drug wars are highly unpopular, have caused extreme damage, and maybe most importantly, have never done anything useful. This means a lot of taxpayer money spent to ruin lives, and not much more. While the federal government sold the idea of these wars more easily in the past, it’s much harder these days.
And especially when the drug in question is weed, or anything related to it. Not only are we talking about a drug with no death count (in great contrast to the current opioid issue), but it’s one where about half the country already live in places where its legal, making it that much sillier to wage wars against it. At least not outwardly. Though Shopify didn’t make a statement about the federal government, it could be assumed that this is why the site did a 180º turn so quickly. The federal government might not be able to get the public onboard with a drug war, but it can enforce its own sales laws.
A last point about the government openly going after these compounds, is that it’s a dicey move if the people catch on. What do I mean? The government itself most certainly pushes synthetic cannabis products in the form of synthetic pharmaceutical cannabinoid medications like epidiolex (CBD) and dronabinol (THC). As in, pretty much exactly what it puts out smear campaigns for (synthetics are dangerous!) are exactly what its pushing.
The more the government outwardly comes down on synthetics, the more it puts itself in the position of needing to answer the question of why pharmaceutical synthetics get a pass, while others do not. To make it even more questionable, many of the illegal synthetics, like THCO, were made by the US government during the 1900’s, and none are attached to a danger profile. The US government would obviously know this since it made them.
Where’s that cannabinoid market sales data?
The problem with an enterprise in an illegal industry reporting any kind of information, is that it makes it known. Though there are plenty of estimations for how much money drug cartels and other criminal organizations bring in, no one knows for sure, because illegal operations don’t report to any government. This goes beyond simply not paying taxes, too. It doesn’t bode well for any black market operation to have private information known by governments.
This is itself a damning notion to the idea of the ‘federal compliance’ that these companies like to advertise. If they were federally compliant, and doing well, they’d be happy to report their earnings, But they’re not doing that. Not directly to government agencies, and not to press or anyone else. For as much as people like to talk about the market, and its size and popularity, no cannabinoid market sales data exists publicly to back any of it up.
Does this mean sales aren’t quite as high as marketing would have us believe? Possibly. Or, they could be higher, and keeping numbers out of the press maintains a level of privacy for these companies. If it was known for sure that they were really making bank, the government might be that much more earnest about getting involved. At least for now, the whole thing is questionable, and under a shield of confusion; meaning no one really knows the size of it, and nothing has been confirmed.
Personally, I’m a bit stumped. While I never meet anyone who knows what these products are, the market does seem to truck along. That it’s a marginalized industry is for sure, but in a country with around 350 million people, even marginalized industries can do okay. From my experience, most people who buy these products don’t understand what they are, or where they’re from. Given the choice between a synthetic, and something actually plant-based, most seem to prefer the real option. This means the industry likely will never fully compete with the real one, whether black market or above board. Having said that, if a product is in every little roadside store, and offers something not otherwise available in certain locations, it can still net a decent profit. It suffices to say that though the cannabinoid industry has not released sales data, that money is coming in.
Does anything exist?
Most companies involved with the cannabinoid market are not large corporations or publicly traded, which is how this information stays hidden. Publicly traded companies must submit information to both the government and shareholders, that private companies do not. It’s through one of these publicly traded companies, that we get anything at all in terms of the cannabinoid market and sales data.
In December 2021, Hemp Bench Marks published a form that was submit to the Securities and Exchange Commission, by the publicly traded company LFTD Partners. This now represents the only situation in the field where such data has been released, and this company is the parent company to brands like Lifted Made which produces URB Finest Flowers.
As per its own description in the S1/A filing, “Our business is primarily engaged in the identification, structuring and seeking to execute on acquisitions of all or a portion of one or more operating businesses involving the manufacture, sale and distribution of products infused with hemp-derived cannabinoids (including but not limited to delta-8-THC, delta-9-THC, delta-10-THC, CBD, CBG and CBN).”
As per Q2 of 2020 filing information, LFTD brought in over $1.26 million for net sales, and “49% of sales were generated from the sale of e-liquid and disposable e-cigarettes, 47% of sales were generated from the sale of hand sanitizer, and 4% of sales were generated from the sale of hemp and hemp-derived products.” By the next year at the same time, “LFTD reported over $6.69 million in net sales, a more than five-fold increase year-over-year. Ballooning sales were driven almost entirely by hemp-derived cannabinoid products” The company further stated, “95% of sales were generated from the sale of hemp and hemp-derived products, and 5% of sales were generated from the sale of e-liquid and disposable e-cigarettes.”
Revenue went up again in Q3 of 2021, with the company bringing in $8.8 million. This can be seen in an accompanying 10Q form LFTD filed to the SEC in which it shows that hemp-derived products brought in nearly all revenue in the most recent quarter: “During the three months ended September 30, 2021, approximately 99% and 1% of sales were generated from the sale of hemp and hemp-derived products and e-liquid and disposable e-cigarettes, respectively.”
LFTD was in the process of acquiring Savage Enterprises at the time this information was released. Savage Enterprises is a similar company which is not publicly traded. However, because of the business deal, Savage did have to release some info as well. According to filed documents, Savage’s sales nearly doubled between Q3 of 2020 to Q1 of 2021, going from just over $2.77 million to over $5.26 million. It then pretty much doubled in each following quarter, rising to over $10 million by Q2 of 2021, and then to over $20 million in the most recently accounted for quarter. Savage says its rise in revenue is “primarily driven by the growth of its award-winning hemp products brand Delta Extrax, under which Savage sells hemp-derived delta-8-THC, delta-9-THC, delta-10-THC, THC-P, THC-O, HHC, and other emerging cannabinoid products.”
What does this mean in terms of entire market data? Which products specifically are selling? And how do these numbers compare to other comparable companies? None of that is known. Seeing numbers from one company (or even two) can be misleading because there’s no basis for comparison, or way to know if the numbers represent a lot or a little of a total industry. Another point to consider, is that this deal never went through. LFTD cancelled it in mid-December, not long before Shopify began banning cannabinoid products. How much Shopify’s move hurt these companies is unknown, nor it is understood if other commerce sites doing the same, could stymie the growth these companies have made.
Is the cannabinoids market dangerous?
I suppose one could say that this depends on how danger is defined. If it’s the possibility of anything bad happening, then I suppose there’s some danger, though in the form of additives, or processing methods, not the compounds themselves. Weed and weed products don’t come with a direct death toll, but plenty of other drugs do.
Like opioids, which the government not only promotes by allowing pharmaceutical companies to sell them, but which wants to lessen guidelines for prescribing, even as 70,000+ people die of opioid overdoses a year. And even as these companies face billion-dollar law suits because of the damage their drugs have caused. Or there’s alcohol, which kills an even higher 95,000+ a year, which can be found everywhere, and which is known to cause indirect deaths through things like drunk driving.
That the government allows these things, but has anything negative to say about the regular cannabis industry, or the cannabinoids industry, is funny at best, and incredibly concerning at worst. Even ketamine has been pushed under the table in favor of people dying from opioids. The idea of the death toll of just these two drug classes (opioids and alcohol), makes it incomprehensibly stupid that there are still smear campaigns for anything related to cannabis.
What is concerning, is how low companies in the cannabinoid market will go to sell their products. However, even saying that is a stretch considering the lies, hidden truths, and buried drug information of pharmaceutical companies. Though I often talk them down because of the business tactics used, I will take most any of these cannabinoid companies over a government-backed pharmaceutical company. Period.
As a writer covering the industry, I don’t have an issue with the cannabinoids market, I just want it regulated so that it can be ensured that products aren’t cut with bad substances or additives, or made with dangerous processing techniques. Apart from that, it would be incredibly interesting if the cannabinoid industry released enough sales data to get a better picture of what’s going on. However, due to the nature of it all, this is unlikely.
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