“What this will do is put consumers at risk, steal tax revenue from municipalities and states, and ultimately hurt farmers across the nation.”

By Adam Stettner, FundCanna

Congress did something terribly shorthanded. They crammed a massive policy change into a budget deal and mistakenly called it “public safety.”

If the changes stand, it will wipe out a more than $28 billion market, kill about 300,000 jobs, and eliminate one of the best national paths we have today to safe and sensible cannabis reform and regulation. A prime example is when the government burned down a house to kill the spider.

This is not politics. The 2018 Farm Bill is an example of evil politics being used to kill an industry without having the courage to reverse it and fight back.

The Straw Man: “Unregulated hemp is dangerous, so we need a blanket ban.”

Proponents of the change argued that hemp-derived intoxicants such as Delta-8 THC are a public health threat. That it is sold to children. They are untested. That they escaped a loophole in the 2018 Farm Bill.

Although there is some element of truth in their arguments, this is not indicative of the whole truth.

In short, that narrative is written to support blanket prohibition. Every industry has bad actors, companies and people who game the system. Instead of destroying an entire industry to get rid of bad actors, you analyze the problem, determine the underlying problem, and use logic and law to create, regulate, and enforce structure.

That is not what Congress has done.

Leading this charge is Sen. Mitch McConnell (R-KY), who appears to be trying to clean up what he sees as a legislative mess he authored. In 2018, he supported the Farm Bill that legalized hemp. Today, he says this law inadvertently unleashed an unregulated flood of what he calls “gas station cannabis” and that the only solution is to shut down the entire industry.

The correct solution? A framework that includes maximum potency, laboratory testing, package size, distribution guidelines, age conditions, and a structure to enforce the above. All of this would address concerns about “gas station hemp” and the risk to children.

In short, I’m all for regulation. This is not a regulation. It is eradication.

Reality: This is a legal, licensed, thriving and job-creating industry

The 2018 Farm Bill legalized hemp. That law was written, passed and signed by Congress and President Donald Trump, who has since endorsed the benefits of CBD and cannabinoids and asserted that cannabis policy should be left up to the states.

Since then, an entire market has grown up around hemp-derived cannabinoids. Manufacturers, retailers and financial partners have invested hundreds of millions in business compliance, taxation and job creation.

Cannabis entrepreneurs have built legitimate and highly regulated businesses that now employ hundreds of thousands of Americans. Their success does not depend on speculation, but on sustainable business models, sound financial management and sustainable access to capital;

The new provisions ban products containing more than 0.4 mg of THC per container. If passed, that would wipe out 95 percent of the hemp-derived market, according to industry estimates. And it would do so without holding a single hearing or public comment period, driving an industry underground to beg for regulation.

What this will do is put consumers at risk, steal tax revenue from municipalities and states, and ultimately hurt farmers nationwide. It will drive cultivation, production and manufacturing into the black market as it has done in the case of prohibition or unexpected legal structures.

One only has to look at the state’s legal cannabis market, which still operates under federal prohibition, to see a legal market that has grown to $35 billion but has simultaneously fueled an illegal market north of $100 billion.

The ban doesn’t work. Half-baked structures and scattered laws without a clear framework, understanding of basic economic principles and lack of regulation/enforcement do not work.

“This is just the beginning”? Let’s not invent ghosts

Some in the broader cannabis industry fear this is the horse behind future attacks on legal THC. This paranoia is understandable, but wrong.

This is not part of a coordinated federal crackdown. It’s a last-minute misguided attempt to solve a real consumer safety issue using the wrong tool. The maturity of the cannabis industry will be determined by its ability to distinguish between good policy and bad process. It is the latter.

Every part of the plant, regardless of label, requires logic, science-backed education, data, debate, and sensible, thoughtful regulation.

Do you want security? Regulate, not abolish

Intoxicating products must be tested, sales must be restricted to adults, packaging and potency must be clearly labeled. This is called regulation.

We regulate alcohol, tobacco and caffeine. We regulate thousands of other industries. What we don’t do is ban entire industries through the fine print in budget bills.

If Congress wants to fix the Farm Bill’s flaws, hold hearings. Invite scientists. Ask the Food and Drug Administration for guidance. Bring industry leaders to the table. What we don’t need is a hidden policy reversal tucked into a spending bill without public debate.

Over the decades, prohibition brought us figures like Al Capone and El Chapo, and created drug trafficking from all corners of the world. It involves crime, money laundering, loss of life, and it’s all pointless. What will the ban create in this case? Just imagine.

Although scientifically less dangerous than cannabis, the regulated alcohol and tobacco industries today employ millions, generate billions in sales and, above all, provide consumers with standardized and safer products through proper oversight. Yet we continue to vilify and ban rather than regulate.

The financial consequences are real

Ban hemp, and you haven’t gotten rid of “gas station” hemp.

You kill an entire industry, even the good parts. You eliminate hundreds of thousands of jobs. You eliminate tax revenue at the federal and state and municipal levels. You immediately take $30 billion out of the economy and push that money into illegal channels. You’re directly putting the product you’ve outlawed into the hands of children and those you claim to protect. Eliminating jobs and the possibility of regulation, oversight, safer products and age-status in the process.

Banning the industry does not protect consumers, it penalizes law-abiding and responsible business owners who are open to regulation and oversight.

The cannabis industry doesn’t want a free pass, but it deserves fair and responsible regulation. That starts with policy making that is deliberate, transparent and informed by the people doing the work on the ground.

Congress, your actions have created a much bigger problem than the problem you were trying to solve. If you want to keep our children safe and support our farmers and industries, do it the right way by regulating with logic. There is a way to have it all, this isn’t it.

Adam Stettner, CEO of FundCanna, has overseen more than $20 billion in loans in underserved markets.

Max Jackson’s photo.