While headlines abound pitting the hemp industry against marijuana companies, many entrepreneurs would prefer a stable regulatory environment in which both can operate.
Art Massolo and Adam Terry, the vice president of business development at Cycling Frog and CEO of Cantrip, have found themselves fighting for their rights to sell hemp-derived THC goods and against state-level bans of their products. The two joined a recent lawsuit filed against New Jersey after the governor signed a new law banning out-of-state intoxicating hemp products.
Cycling Frog was also part of a similar legal action in the Empire State.
But never-ending legal battles aren’t what either of the two want. And they’re hopeful that enmity between the marijuana sector and hemp interests is starting to wind down, given that more and more traditional marijuana firms are making the leap into hemp.
One of the most recent converts was Tilray Brands (Nasdaq: TLRY) (TSX: TLRY), which last month announced a new line of hemp-based delta-9 THC beverages. Other major marijuana companies that have already debuted similar product lines include Curaleaf, Wana Brands, Cookies and Green Thumb Industries.
“By this time next year, I don’t think we’re going to be having much conversation about the war between marijuana and hemp because every marijuana company is also going to be a hemp company,” Terry said.
Joint efforts
Massolo added that he’s been actively trying to collaborate with marijuana firms on lobbying policymakers – both at the federal and state level – to help them realize that two industry sectors are only divided by the arbitrary federal definition of hemp as cannabis with only 0.3% delta-9 THC by dry weight.
“We’re just trying to figure out how to get this marijuana industry and the hemp industry to get closer and closer, because we’re the same freaking plant. And that’s what really bothers us,” Massolo said.
“We are selling the exact same molecule, whether it’s in a dispensary or whether it’s in Total Wines and more. And unfortunately, we’re both following our own rules to get there. And are those rules the right rules? Absolutely not. I think the dispensary system is absolutely insane and not necessary,” Massolo added. “Neither side really needs to be fighting each other. It’s just the laws that we’ve been given.”
The key moving forward, according to both Massolo and Terry, is education of policymakers at nearly all levels of government, so that industry rules will begin to make more sense in the future. That could start, they said, with the next federal Farm Bill, which isn’t likely to be approved until sometime next year. The last one expired at the end of September without Congress having approved a new one.
A danger there, however, is a proposed amendment that, if adopted, would prohibit any intoxicating hemp-based cannabinoids.
“There is a possibility that … it could be just kind of pushed through and some guys are going to rubber stamp this and the hemp industry could be gone from one day to the next,” Massolo said.
Defined by demand
If the landscape remains unchanged however, Terry predicted that the intoxicating hemp sector will continue to surge for one very obvious reason: consumer demand. That, he said, has been more than proven by the success of both marijuana markets and the markets for intoxicating hemp goods.
And he argued that state lawmakers will have to adjust to that reality under federal law.
“Their constituents are going to demand it to some extent, because they like these products. They like that they can find them in local liquor stores,” Terry said. “We’re going to have to figure out some sort of basic infrastructure to underlie everything. And then in the long arc of history, I believe these are going to be sold everywhere in the United States.”
The path forward also may include more state-level legal battles like those shaping up in both New Jersey as well as in California and Missouri, if the status quo prevails at the federal level. Massolo and Terry said they believe they have a winning legal argument that the 2018 Farm Bill – which legalized hemp goods – will win out in court over state-level bans of intoxicating hemp products.
“In no state has anybody been able to prove that emergency medical treatment is needed, that children are dying, that anything actually bad is happening. They’re just using these scare tactics,” Massolo said. “I believe that is a winning argument for us, and I do believe that the federal preemption is just a piece of the puzzle.”
[[{“value”:”The executives of Cycling Frog and Cantrip noted that several marijuana companies have already branched into the hemp market.
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