Cannabis Industry Faces First Test By Federal Regulators

The vaping epidemic created a crisis for the cannabis industry. Federal regulators can point to this epidemic as a reason to ban THC, CBD, and vaping products as a public health risk. At a minimum, the regulatory pendulum will swing and produce a significant number of new laws and regulations.

So what is the industry’s playbook for moving out of crisis mode and getting back to business?

1. Acknowledge the Problem

The cannabis industry must acknowledge that it is facing a crisis. Industry leaders should join the efforts to quickly identify the cause of the illnesses, and help structure appropriate standards to protect the public. Under current circumstances, federal and state regulators are mixing together cannabis, CBD and vaping into one bucket of risk. The regulator’s solution may treat one or all with the same regulatory response.

The cannabis industry should help regulators define the issue, and differentiate between legal market products versus black market activity. The cannabis industry should avoid the pitfalls of becoming entangled in unsettled questions surrounding hemp-based CBD products and vaping technologies. Regulators should keep the three product lines separate and develop isolated regulations that address the unique risks posed by each industry.

2. Help Structure a National Response

State’s rights allow the cannabis industry to grow and innovate independent of the federal government. The downfall of this regulatory structure is that each state and local municipality develops its own regulatory response. The multitude of new laws and regulations that will be enacted in response to the vaping crisis will increase the overall operating costs for the industry. The industry should use this opportunity to do the right thing. Help develop national standards that address public health before the federal government does it for you. A national standard is easier to incorporate into an enterprise compliance program and ultimately more cost-effective.

3. Proactively Address Related Issues

Competition between the cannabis and hemp industries continues to grow as both fights for limited real estate, regulatory restrictions, and consumers. The regulated cannabis industry should proactively review product offerings such as CBD infused products, gummies, among others, to address potential public safety issues. The cannabis industry can start a consumer education program to offer suggestions on safe product use and how to limit consumption by minors.

This crisis will force CBD into a regulated environment. The CBD hemp industry should address the fundamental issues around testing, product disclosure, and labeling requirements. The CBD industry might benefit the most from a self-regulatory organization that will oversee compliance with a framework that addresses the risk posed by the industry. By proactively creating an SRO with teeth, the states may be able to push back on efforts by the FDA to completely ban CBD products.

The cannabis industry will make it through this period. However, the industry should learn its lessons and be prepared for the next one.