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CBD business expanding with legalized hemp
RICHARD WEINER
Legal News Reporter
Published: October 22, 2019
Lance Jones said he noticed with interest when Ohio passed Senate Bill 57, legalizing hemp production and removing hemp from the controlled substances list at the end of July.
The 33-year-old Akron native and former Kirby salesman had heard about a few ex-Kirby folks who were opening up a hemp-based CBD business in Texas. When he followed through on the tip, he found a franchise opportunity for hemp-based CBD, started and run by people he knew who had already made millions with Kirby, he said.
The company was called “Purely CBD” (https://www.purelycbd.net/), and it created, manufactured and distributed its own products, along with the CBD products of other companies, and has started franchising the business.
Jones was in. He brought the franchise to Northeast Ohio, opening his first retail store in Canton in September and followed that one up with a storefront in Kent, located in the Acme plaza on East Main Street, which opened on Oct. 1. That will be followed by a new store in Akron, which will bring the company’s total in Ohio to eight stores—with many more on the way.
The new franchise fits a pattern of CBD business growth, said attorney Nicholas Weiss, of the Chagrin Falls-based Gertsburg Law Firm Co., LPA. Weiss is a native of Maine, where marijuana is legal. He is on the faculty of the Cleveland School of Cannabis, where he teaches about Ohio’s marijuana and hemp laws and policies.
Weiss is in a rapidly expanding area of the law.
“The hemp and CBD markets are beginning to come into their own,” said Weiss. “Hemp is now officially legal—even though you could get it before the law was passed,” he added.
Weiss said that the new hemp law allows the production, distribution and sale of hemp-based CBD products that have less than .03 percent of THC, which is the psychoactive ingredient in marijuana.
CBD is short for cannabidiol, an ingredient in both the hemp plant and the marijuana plant. It is not psychoactive, but does produce a number of physical responses, including relaxation. At least that is according to people, like Jones, who promote CBD. Jones disclosed that the FDA has found no health benefits and will not allow CBD sellers to promise any particular benefit from the substance.
Hemp as a crop includes several distinct parts, each with their own uses, explained Julie Doran, founder of the Ohio Hemp Farmers Cooperative (https://ohiohempfarmerscooperative.com).
At the top of the plant is the flower, she said, which is the part of the plant that contains THC and which CBD is made from. The rest, the stem and branches, do not contain that ingredient, and are utilized for industrial purposes ranging from paper-like products to wood-like products to plastic-like products and cotton-like products and more.
“Farmers now are growing for the flower, because that’s where the money is,” she said, noting that there are not enough commercial manufacturing facilities in the country to make use of the stalk and stems, and there are none in Ohio. “There are about 15 facilities in the country, and all of them have warehouses full.”
Doran estimated that it would be at least three years before Ohio had the manufacturing facilities to be able to use Ohio hemp—the amount of time that she estimates Ohio will have a viable hemp growing business.
Doran’s family farms 4,500 acres in central Ohio, and she started the co-op with the intention of educating farmers, legislators and the public about both the plant and the business of hemp. Her family does not grow that plant, but her business, Meigs Fertilizer Company (https://meigsfertilizer.com/) is a large supplier of cannabis-specific fertilizer to the legal marijuana and hemp business around the country.
Hemp growing will be a difficult business to get into.
Doran explains (and has done so to the Ohio legislature and many farmers) that hemp is a very complex and difficult plant to grow.
“People with large farms who are used to growing corn and soybeans are not prepared for the kind of intense, hands-on approach that hemp requires,” she said. “It is more like growing small crops like vegetables or hops. You have to be in the field every day, taking care of every plant. Big farmers are looking at this, but I would say that you should plany only about ten acres. Fields also have to be seven to maybe 20 miles away from each other to avoid cross-pollination.”
Plus, she said, seeds are very expensive—from $8,00 to $30,000 a pound. The latter is one reason she started the co-op, she said.
Early news reports indicated, and Weiss agreed, that the legalization of hemp in Ohio had inadvertently made marijuana legal—sort of—because no Ohio law enforcement agency had equipment sensitive enough to test THC levels at .03 percent. He said that his understanding is that law enforcement is working to obtain the necessary testing equipment, but he also said that he has been involved in some criminal defense under the law as well.
Whatever the current state of law enforcement is on the matter, Ohio’s nascent legal hemp market is expanding rapidly. Kroger has announced plans to sell CBD oil, as have a number of other large retail chains. Doran said that Wal Mart wants over 150 different hemp CBD SKUs. Local grocers The Mustard Seed make their own in-house brand of CBD oil. And a brief drive around the area will find drug stores, gas stations and numerous other locations advertising CBD products.
Jones differentiated his business from the local drug stores, grocery markets and head shops now selling CBD by noting that Purely CBD sells dozens of “full spectrum” products that can have THC levels up to the legal limit of 0.0299 percent. Those products include gels, creams, cigarettes, gummies, tinctures, and even coffee and pet supplies. Very few other stores have more than just gummies.
Companies who were in the hemp business before the new law seem to have a difficult time adjusting. Several stores that sold CBD products before the new law was passed refused interviews. There are several Ohio-based hemp CBD manufacturers, but none of them returned telephone calls asking for comment on the new law, either.
Wherever the CBD business, and perhaps the legal marijuana business, goes, Weiss will be paying attention, he said.
“We are positioning ourselves to service that entire area as we all get up to speed.”