At last month’s MJBizCon, the premier gathering for cannabis and hemp industry experts, investors and industry professionals addressed cutting-edge issues in this rapidly expanding market. Here are McGuireWoods lawyers Tim Loveland and Royce DuBiner‘s top 10 takeaways from the conference:
- Despite the quickening evolution in CBD products and variation in enforcement responses from federal, state and local government entities, industry experts do not anticipate further clarification in the near future on the position of the U.S. Food and Drug Administration (FDA) regarding CBD products and production.
- A strong banking relationship continues to be an integral component of growth for hemp and CBD product producers and manufacturers. Hemp businesses should be aware of the potential for future changes in the federal government’s position with regard to cannabis banking and such businesses should position themselves to act quickly to shore up their relationships for future growth and investment opportunities should such changes manifest.
- Expansion of the cannabis market in Illinois and Michigan opens the door for new entrants and growth in the industry; however, the regulatory requirements in these states are much different than the regulatory framework seen in Western states. Hemp companies looking to expand to the Midwest should carefully consider the impact of these regulatory processes.
- Delays in obtaining licensure for growing seasons may substantially impact the ability of a hemp producer to timely capitalize on revenue opportunities. Growers and investors should always be mindful of the supply, demand and anticipated wait time for licensures for growing seasons.
- Hemp operators and future growth strategies and partnerships should carefully consider the risk of delays in change of ownership or outright restrictions on licensure transferability when considering deal structuring.
- It is important for hemp operators to establish a working relationship and connections with local government officials to facilitate compliance. Effort put into government relations on the front end can go a long away in preventing miscommunications or penalties during inspections and may also help regulators better understand the business.
- As in any regulated industry, compliance is an essential part of working in the CBD and hemp space. Hemp producers, manufacturers and retailers should continue to practice safety and good manufacturing practices in alignment with FDA and state government guidance in adjacent industries.
- The Safe Banking Act is slowly moving forward in Congress and has generated bipartisan support. After a contentious political year, however, industry experts anticipate further delays in the Senate in moving the Act forward.
- Industry experts anticipate that lenders and investors will more actively engage in hemp acquisitions in the upcoming year. Lenders, investors and prospective sellers should consider their diligence plans, priorities and deal structuring in advance to best position themselves to capitalize on this growing industry.
- New Jersey and Louisiana were the first state programs approved by the U.S. Department of Agriculture (USDA) and additional programs are expected to be approved in the upcoming months. USDA continues to promulgate growth and manufacturing regulations as these standards and state programs evolve.
McGuireWoods is a full-service law firm with experience assisting clients in hemp and CBD businesses. For questions about this alert, please reach out to industry team members Kate Hardey, Tim Loveland or Royce DuBiner.
Cannabis is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and, as such, it remains a federal crime to grow, sell, and/or use cannabis. Any content contained herein is not intended to provide legal advice to assist with the violation of any state or federal law.