For years, hemp CBD products have been held to vastly different legal and regulatory standards than cannabis. But new rules from the Oregon Liquor Control Commission seek to change that. The rules aren’t in place yet; regulators are still considering them. But the change would require industrial hemp growers and processors to obtain a special permit if they wish to sell their products in a licensed cannabis retail store.

Growing CBD Demand Prompts Oregon Regulators to Consider New Rules

Cannabidiol (CBD), the therapeutic yet non-psychoactive compound produced by cannabis plants, has become a nationwide health and wellness phenomenon. And the popularity of CBD has catapulted the United States’ hemp industry into the national spotlight. Last December, the 2018 Farm Bill took the extraordinary step of federally legalizing industrial hemp and all of its products (with less than 0.3 percent THC). Yet prior federal legislation had already cleared the way for states to legalize and regulate their own hemp industries.

In Oregon, hemp regained its status as an agricultural commodity three years ago. Today, the state is one of the country’s centers of industrial hemp cultivation, along with Colorado and Kentucky. (Republican Senator Mitch McConnell of Kentucky has long-championed legalizing industrial hemp, and was the main proponent of this and previous Farm Bills’ pro-hemp legislation.) This year’s federal legalization of hemp paves the way for FDA approval and regulation of hemp products like CBD.

But currently, most hemp CBD products are not subject to any regulatory oversight or standards. As these products rapidly grow in popularity, however, consumers are demanding more protections. Indeed, a 2017 study in the Journal of the American Medical Association found that less than a third of the 84 CBD oils, tinctures, and liquids tested contained as much CBD as the labels claimed.

New Rules Might Drive CBD Products Out of Oregon’s Retail Cannabis Industry

For growers and processors, though, additional OLCC requirements are more likely to drive products out of Oregon’s retail cannabis industry. Hemp producers in Oregon can easily sell CBD products online or in states that don’t require special licensing. Under the rules’ current iteration, producers could even sell CBD products at traditional retail shops in Oregon. The OLCC proposal would only require hemp companies to obtain a license to sell products in OLCC-licensed cannabis dispensaries.

As a result, some growers are already planning to eschew cannabis retail licensing requirements, should they take effect, and take their business elsewhere. “Oregon isn’t our only market,” Big Top Farms owner Sykes Mitchell told The Bulletin. “I doubt I’ll spend the money on this permit to go into the OLCC market,” said farmer and president of the Deschutes County Farm Bureau. “I already sell on Amazon.”

Other producers are embracing the proposed rules as a chance to build consumer trust and brand identity in a young industry. Consumers already expect cannabis products with THC to be tested, labelled accurately and free of harmful contaminants. Why not CBD? It’s a question Oregon regulators are giving themselves until March to figure out. The OLCC board will hear testimony from growers, retailers and others in the industry on January 15. The OLCC suspended its hemp certificate program in April 2018.