Will North Carolina’s Hemp and CBD Industry Shut Down Overnight?

Currently, the CBD and hemp industry in North Carolina could be coming to an end. This is caused by a combination of factors consisting of (a) the state’s removal of the hemp exemption from the definition of cannabis effective June 30, 2022, and (b) the expiration of all current hemp ordinances and laws in the state on June 30 2022, and (c) the NCGA (North Carolina General Assembly) is unable to enact new legislation protecting the state’s hemp industry. These events could be catastrophic for thousands of members of the hemp industry and the millions of consumers of hemp products in NC.

THE PROBLEM

Under previous NC law, industrial hemp was exempt from the description of cannabis; however, by June 30, 2022, the exemption will no longer apply and all forms of marijuana will be considered illegal, with the exception of hemp.

Here is the law:

As of June 30, 2022, marijuana in NC means any part of the plant of the genus Cannabis, whether growing or not, as well as the seeds, the extracts of any part of the plant, and any salts, compounds, derivatives, preparations, or mixtures of plant, but does not include grown stems of the plant, fibers from the stems, cake or oil, or even the seed of the plant, which is not germinable.

Additionally, all of North Carolina’s industrial hemp laws expired on June 30, 2022, and the state’s Hemp Commission should have been dissolved. According to Industrial Hemp Commission discussions on August 5, 2021, the North Carolina Industrial Hemp Research Pilot Program is no longer in existence as the 2018 Federal Farm Bill establishes a program to produce domestic hemp. The promotion came into effect on June 30th. As of June 30th, there are no hemp regulations or laws in North Carolina, nor is there any governmental agency in NC that regulates or oversees hemp.

THE RESULTING CONSEQUENCES

What does all this mean for North Carolina’s hemp industry? There is no denying that NC cannabis growers who have been granted USDA approval to do so will abide by the law. Because of this, NC lacks a USDA-approved hemp plan. Under the hemp provisions of the Agricultural Improvement Act of 2018 (2018 Farm Bill), hemp and hemp producers in states such as North Carolina without hemp plans that have received USDA approval are subject to USDA regulation.

According to the USDA website, the 2018 Farm Bill “establishes a federal plan for growers in Native American states or territories where hemp production is legal and where there is no separate USDA-approved plan.” In other words, NC hemp farmers with USDA licenses are doing well.

what about the rest of us The solution to this question is not yet known. The legal phasing out of all hemp laws will at least raise questions about what goods and activities are allowed in North Carolina. Worst-case scenario, it will give law enforcement the ability to bring charges against those handling, producing, distributing, or possessing hemp goods.

HOW DID THIS HAPPEN?

The simple answer is that we don’t know how it came about. I’d like to think that the NCGA made a simple mistake in assuming that the federal government would regulate all hemp if it didn’t take action to update the state’s hemp regulations. It’s possible that everything will go according to plan and NC will maintain a worrying status quo.

A controversial GOP-supported medical marijuana law (SB711) is currently under discussion in North Carolina, but a majority of the state’s hemp industry opposes it because it creates nearly insurmountable barriers to entry for large marijuana multi-state operators ( MSOs) and others are non-corporate interest organizations like Big Tobacco.

There are many other issues with the bill as well, but that’s an article for another day. These include the complete absence of any social justice regulations, the requirement for vertical integration, the limit on the total number of licenses for the whole country to 10, the incorrect composition of the advisory board, the restricted qualification requirements, etc.

The majority of well-informed NC hemp industry stakeholders believe that passage of SB711 will seriously harm both their businesses and their customers.

It appears that powerful interest groups such as MSOs and Big Tobacco have primarily championed SB711. Sources also claim that the NC Senate will pass the law in mid-May. According to the Speaker of the House, the House of Representatives will not debate SB711 this year, although it may be just a hoopla. The bill’s timeline is really anyone’s speculation.

Given that all of NC’s hemp legislation expires on June 30th, and that SB711 is likely to pass the NC Senate in May and move into the House of Representatives in June, one can’t help but wonder if the state’s decision to ban hemp was premeditated. In that case, the ten medical marijuana license holders would effectively have a monopoly over all cannabis — both hemp and marijuana — in the state. While it’s apparent that hemp cultivation by USDA-licensed farmers will continue to be legal in North Carolina after June 30, it’s not yet known what will happen to post-production hemp, including CBD products. One way to interpret it is that they’re only offered by the state’s ten medical marijuana licensees, which would completely destroy the hemp sector there.

To be clear, none of the above assumptions about whether or not this particular collection of events is targeted are fact. The important point to remember is that it makes little difference if this turn of events was an accident or the result of relentless lobbying by MSOs and Big Tobacco. Whatever the outcome, it could spell disaster for the NC hemp, CBD, and hemp-derived cannabinoid industries.

FINAL EFFECT

What is clear is that the potential demise of North Carolina’s hemp and CBD industries could be due to the failure of the North Carolina General Assembly to issue clear hemp regulations.

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