CBD Laws Largely Symbolic Victories, as Business Opportunities Are Few and Far Between

cbd laws

By John Schroyer

In 2013, CNN aired a documentary by Dr. Sanjay Gupta that featured a young girl whose innumerable seizures were relieved by a high-CBD medical marijuana strain.

The documentary – and Gupta’s concurrent proclamation that marijuana does indeed have medical benefits – had an immediate impact. In the early months of 2014, lawmakers in 11 states legalized CBD-based oils. Four more states have followed suit this year, bringing the total to 15.

But unlike the two dozens states that have legalized medical marijuana in a much broader format, almost none of these CBD laws are designed to actually deliver medicine to patients – meaning there’s almost no business opportunities.

At this point, only Missouri and Florida have adopted laws that are likely to result in the actual production of medical cannabis for CBD-based medicines, according to several advocates.

The other CBD laws are seriously flawed in one way or another and will either have to be abandoned or amended down the road by lawmakers.

“There are pretty predictable features that will cause these (programs) to fall short,” said Chris Lindsey, a legislative analyst with the Marijuana Policy Project.

Few Opportunities, Heavy Restrictions

While Missouri and Florida are paving the way for cannabis-related businesses, the opportunities are extremely limited.

The Missouri Department of Agriculture is only allowed to issue a pair of licenses to cannabis growers, who will also be responsible for processing and dispensing CBD oils. Those licenses were awarded in February.

The Missouri law actually requires that CBD be produced from hemp and that the resulting oils sold to patients have maximum THC levels of 0.3%. Some advocates have interpreted that to mean growers will be allowed to use marijuana strains as long as the THC levels are that low, but it’s still unclear if that’s the case.

“We’ve been talking to cultivators all around the country, and it seems that industrial hemp may not be effective medicine,” said Mara Meyers, the chief operating officer of BeLeaf, one of the two Missouri licensees.

Meyers also said Missouri setup isn’t exactly conducive to turning a real profit. Although the law allows each of the two licensees to set up a maximum of three dispensaries apiece, she said one of the primary concerns is a low patient count.

Meyers is hopeful that the patient and customer base will grow once sales begin (BeLeaf is slated to begin dispensing CBD in December or January).

“We are not going to make money for many years,” Meyers said. “We’re both looking at substantial capital to be able to build this facility and be able to dispense it at six locations, but… the market will come.”

In Florida, the state is accepting applications until July 8 for just five business licenses, which officials plan to issue sometime in the next few months.

Mike Smullen, a co-founder of Altmed, was originally planning last year on setting up a major MMJ company in the state.

Company leaders also are now on the fence as to whether they’ll even turn in an application for one of five licenses to grow and sell high-CBD, low-THC medical cannabis because of the program’s high entry barriers and heavy restrictions. The company is also now looking outside Florida’s borders for business opportunities.

“It’s 50/50 right now,” Smullen said. “When you look at all the hoops that one has to jump through in order to do this business, unless you’re rolling in money, it’s a lot to take on.”

So far, the state hasn’t received a single business application, though numerous groups will likely apply as the deadline nears. Smullen said the simple cost of applying for a license, coupled with how much it would cost companies to adhere to all the varying regulations, has persuaded many would-be contenders that it’s not worth it.

“People I respect who were planning on jumping in have completely decided to move off of this right now and wait,” Smullen said. “We’re sort of the only ones left right now saying, ‘We may do this.'”

And, similar to Missouri, there’s a dearth of registered patients waiting in the wings, Smullen said, along with a serious shortage of doctors who have taken the required eight-hour online course to be legally allowed to recommend CBD.

Symbolic Victories Elsewhere

The other 13 CBD states have promoted the passage of their laws as victories for families with epileptic children. While symbolic, the laws likely won’t further the MMJ industry, create any new business opportunities or deliver medicine to patients, experts say.

MPP’s Lindsey said there are typically two ways that lawmakers essentially pull the teeth out of their own CBD bills: They either require a prescription, or they require universities to grow the marijuana, which the Drug Enforcement Administration will never permit.

“You see that happen a lot in these CBD laws,” Lindsey said. “A lot of states will provide protections for patients… but they won’t put into place any system that allows cultivation and distribution. So it’s, go somewhere else, and if you come back, then you’re good. But the problem then is, who’s going to distribute to you?”

But some observers believe there’s an upside to CBD laws even if they don’t immediately create workable systems: They could help lead to broader MMJ programs down the road at the state level and might help usher in change federally as well.

“There’s a lot of positive things that are happening because so many states have put legislation on the books,” said Heather Jackson, executive director at the Realm of Caring, a Colorado organization dedicated to helping seizure-stricken children obtain CBD treatment. “So I think there’s a bigger picture here.”

John Schroyer can be reached at johns@mjbizmedia.com