For CFOs dealing with a competitor who has less regulatory scrutiny because of a technicality or slight difference in product, the current challenge for cannabis companies competing against hemp-derived cannabis products will sound like familiar territory.
Hemp (cannabis containing less than 0.3% delta-9 THC) is federally legal under the 2018 Farm Bill. Officially called the Agriculture Improvement Act of 2018, the Farm Bill was a major piece of U.S. legislation that continues to govern agriculture and food policy. It removed hemp from the Controlled Substances Act. It also allowed for hemp cultivation, production and interstate transport, giving regulatory oversight to the USDA while permitting states and tribes to develop their own hemp programs.
Unlike hemp-derived cannabis, regular cannabis, derived from cannabis sativa or cannabis indica, colloquially known as marijuana, is a Schedule I narcotic and federally illegal despite many states legalizing it and creating large state-run cannabis programs.
Though rollout success has varied, these state-run programs have led to businesses operating under tight regulatory pressure. Because of cannabis' federal scheduling, they cannot benefit from multi-state operations at scale and qualify for far fewer tax deductions.
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