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Will passage of MORE Act shake up the hemp CBD market?

government
Cannabis liberalization law passes House Judiciary Committee. The law would free the plant, but hemp's status is generally overlooked.

On Thursday, the U.S. House of Representatives’ Judiciary Committee approved a bill that would remove cannabis from the list of controlled substances.

Called the MORE Act, the bill stands for The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act. The bill would also expunge convictions and help repair harms caused by outdated policies.

Overlooked is what effect legalizing marijuana would have on the hemp CBD market.

For one, legalizing marijuana entirely holds within it the provocative idea that what distinguishes hemp from marijuana cannabis products is strictly the end-product THC levels—and source would then not matter.

“It’s possible we could see marijuana-derived CBD products compete with hemp-derived CBD since both sources would be federally legal,” said Rend Al-Mondhiry, attorney at the Amin Talati Wasserman law firm. “But consumers who want low THC or no THC products will probably stick with hemp products, and states will still be able to regulate marijuana more stringently than hemp products.”

The MORE Act could conceivably compel FDA to change its current stance, which has been to slow-walk regulatory certainty around the hemp CBD market. The regulatory agency continues to assert CBD does not fit the definition of a dietary supplement, and is also forbidden from use in beverages and foods, because of the so-called drug preclusion clause in the Federal Food, Drug and Cosmetic Act that states once a substance has been so much as investigated or approved as a drug, it cannot then later become a supplement ingredient. FDA approved a CBD isolate drug, Epidiolex, in June 2018, just months before the 2018 Farm Bill passed that legalized hemp and all its derivatives so long as there is no euphoric THC above 0.3% on a dry-weight basis.

“I don’t think we’ll see immediate action from FDA on CBD as a result,” said Al-Mondhiry. “If all cannabis products are legalized federally, FDA may be compelled to weigh in on cannabis products more broadly and how those should be regulated, outside the drug context.”

Last year. the FDA issued a draft guidance on research considerations for cannabis-derived drugs.

There’s also language in the MORE Act requiring FDA to hold at least one public meeting on the regulation, safety, manufacturing, product quality, marketing, labeling and sale of products containing cannabis or cannabis-derived compounds, not later than one year after the bill’s enactment.

“Although we already had a pretty extensive hearing on CBD in 2019,” said Al-Mondhiry, “CBD could come up at a meeting like this, given FDA’s continued concerns about its safety and the quality of CBD products.”

Originally introduced in 2019, the U.S. House passed the MORE Act originally on Dec. 4, 2020, but it was not taken up by the Republican-led Senate. The current legislation must be considered or waived by several more committees of jurisdiction before it can be brought up for another floor vote.

“While the MORE Act lacks the robust regulatory structure we would like to see in a comprehensive descheduling bill, it represents the increasing support for ending prohibition among both lawmakers and the American public, not to mention the current policies of dozens of states around the country,” said Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association. “This bill would be a huge improvement on the status quo and is helping to further the conversation about what effective federal cannabis policy looks like.

One significant change the MORE Act would no doubt bring to the hemp industry is what the manufacturing and marketing base would look like. Absent clear, pro-hemp regulations, only bold, smaller players have entered the hemp and hemp CBD space. No large, Fortune 500-type corporations have entered because of fear of regulatory uncertainty. The MORE Act would provide legal certainty for cannabinoid healthcare, and lead large CPG companies to enter the market. It would herald a major shakeup as well-funded and well-positioned corporations with comprehensive distribution networks would replace smaller hemp companies. 

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