On December 20th, 2018, President Trump signed into law The Agriculture Act of 2018, an $867 billion effort better known as the U.S. Farm Bill. While the legislation largely continues and extends existing agriculture and nutrition policies, there is one very significant new wrinkle: the bill also legalizes hemp production.

Note that we did not say the bill legalizes marijuana, which remains on the federal list of controlled substances. Rather, it defines hemp as being any C. Sativa plant with THC below 0.3%, so we’re talking about a plant used for CBD oils, among many other things, not medicinal or recreational marijuana.

Also understand that the bill’s passage does not mean you can begin growing hemp plants next to your Heirloom tomatoes in the backyard … all production will be regulated by both federal and state agriculture departments.

Still, this is a huge step forward for the cannabis industry for several reasons: first, it distinguishes hemp from marijuana and removes the former from the controlled substances list for the first time in 50 years. This is a back-to-the-future sort of move; the production of hemp used to be not only legal, but encouraged (as evidenced in the World War II-era short film Hemp for Victory … watch it here). Let it not be forgotten that beyond the myriad medicinal uses of CBD products, hemp can be made into much more mundane products like rope and canvas.

Next, this provides an alternative, and potentially lucrative, crop for American farmers. This is a big reason why the legislation was heavily backed by Senate Majority Leader Mitch McConnell of Kentucky, where farmers are suffering from the dwindling demand for tobacco.

Third, the bill promises a potentially huge spike in interest for CBD oils and related products ranging from topical creams to supplements to teas, already a $1 billion industry despite its uncertain legal status. With the blessing of the federal government, look for better quality control and a wider variety of legitimate CBD options.

Possibly bigger than all of those things, however, are the intangibles of this change relating to the cannabis industry: a foothold for producers to get infrastructure in place for future marijuana legalization, a potentially huge shift in the stance of the banking industry as it relates to supporting cannabis production, and – we hope – a continuing adjustment in public attitudes and a greater understanding of the untapped potential of cannabis.

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