EMERGING INDUSTRIES
What the
HEMP? WHAT CPAS NEED TO KNOW ABOUT THIS GROWING INDUSTRY
BY NATALIE ROONEY
D
o you raise your eyebrows in suspicion when you hear the word “hemp”? If so, it’s probably because the word historically has been used interchangeably with marijuana. It’s important to know the difference as both the hemp and cannabis industries continue their exponential growth. HEMP 101 Hemp, also referred to as industrial hemp, is a variety or species of the genus plant Cannabis Sativa L and is distinct in that it does not contain greater than 0.3 percent tetrahydrocannabinol (THC) on a dry weight basis. The low concentration of THC contained in the hemp plant does not cause the psychotropic effects associated with Cannabis varieties which contain higher THC concentrations. Cannabidiol (CBD) is a dominant phytocannabinoid identified in hemp and unique to the Cannabis plant genus. Hemp-derived CBD is a naturally occurring compound concentrated in the resinous flower of the plant. CBD, among many others of the more than 100 phytocannabinoids in hemp, does not cause a psychotropic or intoxicating experience. Let’s repeat that one more time for the folks in the back: Hemp cannot get you high. Hemp is a durable crop that grows in a variety of climates and soil types. It is used in clothing, biofuels, plastics, personal care, feed, and food.
Hemp-derived CBD has surged in popularity. Economic experts predict a multi-billion-dollar U.S. hemp industry by 2020 - yes, this year. During most of the last century, the U.S. imported all of its hemp. It was illegal to grow in the U.S. because it was mistakenly classified as a controlled substance. That all changed a few years ago when the U.S. Congress and more than 40 state legislatures permitted hemp cultivation as part of a research pilot program. China, France, Canada, and Australia are large-scale producers and exporters of hemp, and the U.S. is known to be the largest buyer of hemp worldwide. President Obama enacted the American Agricultural Act of 2014 (the “2014 Farm Bill”), which included Section 7606, titled The Legitimacy of Industrial Hemp Research. This allowed states to pass legislation authorizing their state Departments of Agriculture to promulgate rules and regulations and permit licensing of hemp pilot programs, including marketing research. Hemp isn’t just for making clothes or rugs; it has a growing following for its medicinal uses. Steve Smith, co-founder and president of Pet Releaf and a former CPA with Big 4 experience, founded the company in 2014 because he wanted to find non-opiate pain relief options for Mattie, his family’s aging dog.
Through research, he found more than 1,000 clinical, peer-reviewed studies with mice that showed humans could achieve the benefits of cannabis – pain relief, immune system boost, reduced inflammation – without getting high. Mattie died before Smith could find a solution for her, but he and his wife, Alina, set out to find a natural pain solution for animals. They relocated from Florida to Colorado to be closer to holistically minded veterinarians and forward-thinking people who thought of their pets as family members. Today, Pet Releaf sells and distributes a variety of edible and topical hemp products and supplements for dogs and cats. REGULATORY RIGOR The Smiths founded Pet Releaf as an LLC domiciled in Florida and had little trouble establishing the company as a DBA in Colorado, but they weren’t able to register any products until the last two years because of a lack of clear guidance from the federal government. Regulatory regimes are a states’ rights issue. Many states still won’t register hemp products but also won’t actively take them off of retail shelves. Thirty states allow the sale of hemp products although some have more strict rules. CONTINUED ON PAGE 16 March/April 2020 | www.cocpa.org
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