The FDA Is Stunting the Growth of America's Nascent Legal Hemp Industry

The hemp boom has failed to materialize, and regulatory uncertainty is to blame.


Wither hemp? Earlier this month, the editors of the cannabis investment news site Technical420 lamented that a predicted hemp boom had failed to materialize. "[T]he sector has not lived up to expectations," the site declared. Likewise, Hemp Industry Daily reported this week that hemp farmers found "production costs far outpaced profits" last year.

Others outside the industry have also taken note of hemp's struggles. Earlier this week, Politico reported that laws passed in Washington, D.C., that were intended to propagate a domestic hemp industry have instead proven to be "a flop." Why? One explanation is that hemp producers and investors didn't account for the Food and Drug Administration (FDA) when they made their bets.  

Growing hemp, which is used around the world for food, fuel, and fiber, was long illegal in the United States. The federal ban was thanks entirely to the hemp plant's psychoactive sister, marijuana, and the paranoia that crop causes among people who like to ban things. The 2014 farm bill loosened the federal ban on growing hemp ever so slightly by allowing state governments (rather than private farmers) to grow it. But it was the broad federal decriminalization of hemp instituted by the 2018 farm bill that spurred farmers across the U.S. to plant hundreds of thousands of acres of the crop.

I was optimistic that the 2018 farm bill—which was otherwise awful—could foster a "homegrown hemp renaissance." But while some in Washington saw the farm bill as reason enough to get out of the way of hemp farmers and those who make products derived from hemp, others in Washington saw an opportunity to meddle. Politico suggests a lack of FDA regulations governing hemp-derived cannabidiol (CBD) is partly to blame for hemp's struggles. But that's misleading.

In reality, the FDA has effectively banned CBD foods. "It is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement," the agency declared, also noting it would study the matter indefinitely.

In other words, soon after Congress legalized growing hemp, the FDA banned the single most profitable use of hemp.

States responded to the FDA's stance by banning CBD food sales. Farmers growing hemp were suddenly stuck between a rock and hard place. While the ubiquity of CBD food products is one indication that businesses of all types—from groceries to convenience stores to gas stations, and the CBD food producers that market their products to those sellers—are ignoring the FDA ban, bans are bad for business. "The agency's indecisiveness trickles down," I wrote. "States that have banned CBD products typically 'cit[e] the FDA's stance' as the basis for their actions." 

The impact of the FDA's stance has been dramatic. Politico notes it's harming even non-CBD hemp sales.

"[R]etailers are interested, but the lack of FDA rules are scaring them away from hemp products even when they don't contain any CBD," the publication reports, noting that one hemp farmer who'd thought he'd found a buyer for his cold-pressed hemp seed oil instead saw the buyer back out, citing company lawyers nervous over the FDA's stance.

In 2014, much like the FDA today, it was the DEA that stood in hemp's way. After passage of the farm bill that year, I wrote, the DEA "held up a shipment of seeds destined for Kentucky, and forced the state to sue the federal government in order to seek their release." Senate Majority Leader Mitch McConnell (R–Ky.) was instrumental in forcing the DEA to back down.

Though McConnell pressured the FDA to act on hemp this past fall, the agency has mostly sat on its hands. And, as this week's Politico report notes, so-called "Marijuana Mitch" appears to have been "missing from the debate in recent months."

Hemp farmers are in limbo—yet again—because of Washington.