Ask any stakeholder in the hemp industry and they will tell you political jockeying on Capital Hill and in statehouses across the country has reached a record high.
Cannabis industry leaders and lobbyists are criss-crossing the country pushing for sensible legislation to regulate hemp-based THC drinks. The question is: what is sensible regulation?
Some industry groups are asking for hemp beverages to be regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB) and follow the same Alcoholic Beverage Control (ABC) laws that govern the beverage-alcohol space, but at the expense of one of the key drivers of consumer adoption.
Three states – Massachusetts’ HD3303, Mississippi HB1502 and Arizona SB1566 – have introduced legislation to regulate hemp drinks that way. Yet, some hemp industry stakeholders claim these laws would restrict one of the key opportunities that hemp-derived THC drink makers have utilized amid the boom in cannabevs: ecommerce sales.
Another piece of this power struggle is how the regulation of cannabis beverages has spilled over into the non-intoxicating CBD space. Many state regulations being put forward are indirectly (or directly) inhibiting the sale of CBD drinks and gummies, which have been lumped into the prohibition attempts on cannabinoids, said Jim Higdon, co-founder of Kentucky-based Cornbread Hemp and VP of Outreach for the U.S. Hemp Roundtable.
Language in Iowa’s HF105 and Nebraska’s LB316 appears to ban non-intoxicating cannabinoids like CBD as the bills bring tighter regulation to cannabis-derived products.
It is a “coordinated multi-state assault from alcohol distributors” to take control of the hemp beverage industry, Higdon said.
“Control it or destroy it, [the alcohol industry] doesn’t care,” Higdon said. “If [hemp drinks] are going to exist, they want to control it. That’s where the direct-to-consumer part of this comes into play because they can’t control DTC.”
This runs counter to some of the lobbying done by other industry groups aligning with a framework regulated by the TTB and ABC laws. Partnerships with beverage-alcohol take much of the power out of the hands of hemp growers, suppliers and the brands that have helped develop the cannabis beverage segment.
A counter-narrative has developed in recent years presupposing that ecommerce and DTC are in opposition to beverage distributors and brick-and-mortar retail, Higdon said. “[Retailers] do themselves a disservice because they don’t understand the impact that ecommerce has at brand building. It’s a virtuous cycle that moves product off the shelf through DTC advertising hitting social media feeds.”
As major alcohol distributors face a tighter environment, increased regulatory scrutiny and slowing sales as younger generations turn away from booze, joining forces with an emerging, similarly-positioned space doesn’t sound like such a bad idea after all.
Put another way: “It’s clear that we have some growing up to do as an industry,” Higdon said.
Who do you think should handle hemp beverage regulation? Send your thoughts to lsouthard@bevnet.com.