Marijuana Business Magazine July 2020

Page 94

Head Start the result of “determined grassroots people who went to Washington to tell their story.” Farmers called on their congressional representatives and eventually began to see results. Legalization took a first step with a provision in the 2014 Farm Bill allowing a pilot hemp research program overseen by states. Then, through that reform, a story could be told on Capitol Hill of “real, verifiable success and real products,” Wilcox said. But Saphira Galoob, founder and CEO of The Liaison Group, a Washington DC-based cannabis lobbying firm, said marijuana companies also need to think about their “local influencers,” which include community leaders, chambers of commerce and social or service groups. Reach out to those constituencies, Galoob advised, and let them know you want them to feel comfortable with your presence in the community and that you’re committed to be a good corporate citizen. It’s not just about meeting expectations but exceeding expectations and, when something goes wrong, about being transparent, cooperative and conciliatory, she said. “The more we normalize ourselves, the more normal we become,” Galoob said. Ancillary companies also can be a powerful and credible advocate for reform. In fact, support from the American Bankers Association, National Credit Union Association, real estate groups and others helped tip the scales leading to the U.S. House of Representatives’ momentous passage of cannabis banking reform in 2019. Hemp Industry Daily Editor Kristen Nichols contributed to this report.

Jeff Smith covers regulatory and government issues for Marijuana Business Magazine.

92 Marijuana Business Magazine | July 2020

Learning From Hemp Legalization Marijuana companies can look to the hemp industry for guidance on how to prosper after eventual federal reform. Cannabis companies have become more professional over the years and are used to a patchwork of state regulations. But the combination of state and federal oversight will put many businesses to the test. The nationwide legalization of hemp via the 2018 Farm Bill has translated into a protracted period of rulemaking as well as federal and state scrutiny— not to mention slow access to banking services. To survive and thrive in the postreform world, cannabis businesses will need to be well-run with strong skills, business savvy and patience. “Expect constant change and more regulation,” said Diane Czarkowski, co-founder of Canna Advisors, a Colorado-based firm that provides a range of consulting services for marijuana and hemp companies. Experts advise businesses to anticipate changes now by adopting the highest standards from other heavily regulated industries. “The coin of the realm going forward is going to be following best practices and being a responsible industry participant—whether you’re a hemp company producing CBD or a (marijuana) company with THC products or a company involved in both markets,” said Michael Bronstein, co-founder and president of the American Trade Association of Cannabis and Hemp.

Don’t Expect Anything in a Hurry It’s great to be positioned to hit the ground running when marijuana is legalized federally, but don’t expect federal regulators to do the same.

Based on U.S. agencies’ movement—or, in some cases, lack of movement—since the legalization of hemp, federal marijuana policy development is likely to be a gradual process. The U.S. Department of Agriculture spent nearly a year developing interim final hemp rules. As of mid-May—17 months after legalization—only 15 states had received USDA approval for hemp production plans under the interim

final rule. More than 20 states were opting to follow 2014 pilot rules. “It’s going to take years for (hemp) policies to be put in place,” said Geoff Whaling, chair of the National Hemp Association in Washington DC. The banking industry also has been slow to offer services to hemp businesses. It takes time to understand a new industry, and bankers need to feel comfortable in assessing the risk, Whaling said. Many financial institutions still view the nascent hemp industry as too risky to serve. “It took us seven months to get credit unions to accept our business,” he said. “It took (the U.S. Treasury Department) almost a year to tell the banks they could serve us.”

Expect Additional Oversight

The U.S. Food and Drug Administration and other federal agencies will scrutinize the marijuana industry after federal reform—although how quickly that happens will depend on the kind of legislation that passes. “We know that all the various operations along the supply chain might have unique oversight from the federal government,” Czarkowski said. Marijuana companies should anticipate how federal oversight might impact their business and implement those changes now, before they are mandated, she said. Bronstein’s trade group currently is working with a dozen state-level organizations, regulators and industry to develop standards for testing, transport, quality management, track and trace, security and more. The goal is to develop uniform standards to cover every state that has an adultuse or medical marijuana program, Bronstein said. Such standards would smooth out the regulatory bumps that will come with federal legalization. Even after federal legalization occurs, marijuana businesses should expect a continued patchwork of state laws and regulations, which likely will complicate cross-border commerce in some regions of the country. – Jeff Smith