Congressional Research Service Notes Hemp Industry’s Recent Decline Amid FDA Inaction On CBD Rules

A new report from the Congressional Research Service (CRS) offers an overview of challenges facing the nation’s hemp industry as lawmakers work to craft a regulatory framework for the lawful marketing of CBD products amid ongoing inaction by the Food and Drug Administration (FDA).

In the report, released Friday, CRS said FDA’s determination that it lacks the necessary authority to create cannabidiol regulations has created a situation where lawmakers must themselves step in. Researchers noted that the hemp market has taken a major economic hit since being legalized under the 2018 Farm Bill.

“Some claim that the lack of a federal regulatory framework for hemp-derived compounds has contributed, in part, to disruption of the U.S. hemp market, leading to both lower prices received by growers and subsequent production declines,” CRS said, referencing a U.S. Department of Agriculture (USDA) report that shows sizable losses in production value from 2021 to 2022.

“Losses were pronounced in the hemp flower market, which is the source of most hemp-based derivatives and compounds such as hemp-derived CBD and other cannabinoids,” the new report from congressional researchers says. “USDA reports that the farm-level value of all hemp flower production totaled $204 million in 2022, down from $687 million in 2021.”

FDA said it carried out a comprehensive review before reaching the conclusion, in January, that it couldn’t effectively regulate the complex market. But the resulting uncertainty is widely blamed as a primary driver of the industry’s economic woes. It’s also led to confusion within the marketplace as businesses continue to sell a widening variety of cannabis products, including intoxicating cannabinoids such as delta-8 THC, without meaningful oversight.

In response to the ongoing inaction, the CRS report says, bipartisan congressional lawmakers have introduced legislation to fill the regulatory gap and provide for the lawful marketing of CBD as food items or dietary supplements. A recent House subcommittee hearing specifically focused on the impact of the lack of FDA rules, and a separate pair of bicameral health committees has solicited expert input on the issue as they consider potential legislative fixes.

“This issue, or aspects of it, could be debated as Congress considers reauthorization of the next farm bill,” the report from a CRS agricultural policy specialist says. Late last year, in an earlier report, CRS also outlined a number of ways that stakeholders hope to see federal hemp laws revised to better support the industry through the large-scale agricultural legislation that is reauthorized every five years or so.

State marijuana regulators, as well as hemp industry associations, are among those who responded to the House and Senate committee requests for information. And while there was some disagreement about the scope of FDA’s current regulatory authority, they largely agreed that Congress needs to take a more holistic approach to the issue and consider rules for all hemp-derived cannabinoids, including delta-8 THC.

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At the Drug Enforcement Administration (DEA), officials have made clear that the agency considers synthetically produced cannabinoids—which delta-8 THC often is—federally illegal controlled substances that are not covered under the 2018 Farm Bill.

Meanwhile, House Oversight Committee Chairman James Comer (R-KY) said in April that his panel would be launching an investigation into FDA’s CBD review. He requested that the agency turn over documents related to its decision not to regulated the cannabinoid. Even before the agency made that decision, the congressman expressed his intent to address the lack of rules.

FDA’s announcement that it wouldn’t be regulating CBD came days after the agency released finalized guidance that focused on developing cannabis-based drugs, and outlining the unique considerations for scientists around hemp and marijuana.

The agency did separately receive some bipartisan praise earlier this year for releasing first-ever guidance on developing psychedelic medicines. At the same time, it is working to review the federal scheduling of marijuana under a directive from President Joe Biden last year.