Hemp-Derived CBD Business

Hemp-derived CBD businesses have many opportunities as well as legal complexities. Whether you are growing hemp for CBD, processing/extracting hemp for CBD, or selling hemp-derived CBD, it is imperative that you stay abreast of the constantly changing laws, policies, and enforcement statements. From a federal perspective, the 2018 Farm Bill included CBD within its definition of legal hemp as long as the hemp in which the CBD is derived contains no more than 0.3% THC. From a Florida state perspective, a bill was passed in Florida’s 2019 Legislative Session that would no longer make hemp and CBD illegal in Florida. Nonetheless, the Food and Drug Administration still does not authorize CBD to be sold as a dietary supplement or food additive and has come out with several statements about what can be included for labeling and marketing of CBD products. The FDA further clarified in March 2020 that it still has the authority to regulate all products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act and section 351 of the Public Health Service Act. Specifically, the FDA’s authority includes cannabis-derived compounds that derive from hemp as defined by the 2018 Farm Bill. Therefore, hemp-derived CBD businesses will need to weigh the risks and benefits of conducting their CBD business. We are here to help you navigate all these legal complexities.

• Hemp Licensing and Registration for CBD Farmers – On April 16th, 2020, the USDA approved Florida’s hemp program. As a result, the Florida Department of Agriculture and Consumer Services began the licensing process for hemp cultivators.  A hemp cultivator can grow hemp to sell as seed, fiber, oil, or nursery plants. A hemp cultivator must tailor its operating strategy and procedures to create the best hemp material for the desired end product. There are several steps you could be taking now to ensure that you are ready when it comes time to submit an application. We will assist with drafting the application to help your farm obtain a license to grow hemp.
• Hemp Licensing and Registration for CBD Processors, Distributors, and Retailers – FDACS passed rules to obtain a Hemp Food Establishment Permit. A Hemp Food Establishment Permit is required for any establishment that manufactures, processes, packs, holds, prepares, or sells food consisting of or containing Hemp Extract. There are very specific steps you must take to obtain your Hemp Food Establishment Permit. Contact us today to learn how you can obtain your Hemp Food Establishment Permit.
• Intellectual Property Protection – With the 2018 Farm Bill and the USDA’s approval of Florida’s hemp program in April 2020, there is a rush for new brands to enter the market. It is imperative that any new brands or existing brands protect their brand, including the name, logo, the phrase, or the like. This is generally achieved by registering those items as trademarks. We will assist with protecting your brand to the fullest extent of the law.
• Packaging Compliance – The recently-passed hemp bill requires specific information on the packaging of hemp extracts, including a scannable barcode or quick response code linked to the certificate of analysis of the hemp extract by an independent testing laboratory; the batch number; the internet address of a website where batch information may be obtained; the expiration date; the number of milligrams of hemp extract; if specific cannabinoids are marketed, the milligrams per serving of the specific cannabinoid must be listed along with its corresponding serving size; and a statement that the product contains a total delta-9-tetrahydrocannabinol concentration that does not exceed 0.3% on a dry-weight basis. Moreover, each hemp-derived product must follow non-hemp-specific packaging requirements, which include, but are not limited to, a compliant Supplements Facts Panel or Nutrition Facts Panel. We will assist you with ensuring that your packaging complies with all the laws, rules, and other regulations for Florida’s hemp program.
• USFDA/USDEA Approval – One of the previous hemp bills that was filed in the 2019 Legislative Session contained certain requirements for USFDA or USDEA approval for distributing or selling extracts as a prescription drug or an over-the-counter drug. While such language did not make it into the final version of the hemp bill, other laws and regulations may still impact the sale of extracts as prescription drugs or over the counter drugs. We will help you navigate any USFDA and/or USDEA approval process so that you can ensure your extract sales are legal.
• Property Acquisition – There are some very specific criteria in determining the best property for a CBD-processing-facility. We have a group of realtors that have identified specific properties that are conducive for CBD-hemp-processing. We will assist with the entire property acquisition process from identifying the proper property to negotiating and closing on the sale of the property.
• Company Formation – There are a lot of variables to consider when forming your company. We will assist with ownership type, ownership structure, and preparing formation documents.
• Land Acquisition – Under the recently-passed hemp bill, an applicant seeking to be licensed to grow hemp must identify the land to be used for growing hemp. So, if you do not currently have the land, then you will need to find the right property. We will assist with the entire land acquisition process from identifying the proper property to negotiating and closing on the sale of the land.
• Sourcing Seeds for Farmers – Under the recently-passed hemp bill, a licensed Florida hemp grower must use seeds certified by one of the following: a certified agency as defined in s. 578.011(8); a university conducting an industrial hemp pilot project; or a member of the Association of Official Seed Certifying Agencies.  You will also need to ensure you have quality seeds at competitive pricing; and ensure you are complying with the testing and reporting requirements that will be required by FDACS. There are very specific rules promulgated by FDACS so sourcing the right seeds and complying with the seed requirements will be an important part of your operations. We will assist you through the entire sourcing process from identifying the right seeds to suit your needs to negotiating the supply contracts.
• Sourcing the Hemp for Processors – You cannot process your hemp until you have the hemp. You need to ensure you have quality hemp at competitive pricing. You will also need to make sure you are complying with the testing and reporting requirements that will be required by FDACS. Additionally, you will want to ensure that the seeds used by your supplier in growing the hemp were certified as required by the recently-passed bill. We will assist you through the entire sourcing process from identifying the right grower to suit your needs to negotiating the supply contracts.
• Acquisition of Equipment for Farmers – Growing hemp is not as easy as some of the crops you may be used to growing, especially if you are growing for CBD. Depending on your operations, you may need to acquire equipment to assist with the growing process. If you are planning to also process your hemp into, then you may want to consider using a small-scale extractor. We will assist with identifying the equipment that suits your needs.
• Acquisition of Equipment for Processors – Setting up an extraction facility is no easy task. There are various equipment manufacturers making all sorts of various claims.  We will assist with identifying the equipment that suits your needs based on your budget and operational goals.
• Finding your Market – One of the biggest risks for farmers is growing your crop and having nowhere to sell it. It is imperative that you do not scale your business faster than the demand for your crop. Assuming you do not process the hemp on your own, we will assist you with identifying a processor to purchase your hemp. We will also assist with the negotiations of any supply contracts with processors/customers.
• Reporting/Testing Compliance – In order for hemp to be legal, it must contain no more than 0.3% THC. This creates various requirements with reporting/testing compliance. We will assist you in ensuring that your operations comply with all reporting and testing requirements. We will also help you contract with a third-party testing lab that meets all the requirements in the recently-passed hemp bill and any other rules or regulations that are passed.
• Bookkeeping and Accounting– Like any business, bookkeeping and accounting are key to understanding your business as well as complying with legal requirements. We will assist you in implementing proper accounting systems to properly capture the necessary data.
• Employment Matters – Like any business, there are various employment matters that must be properly dealt with. We assist with various employment matters including offer letters, equity compensation, separation agreements, employee handbooks, and litigating employment disputes.
• Commercial Litigation – Most businesses have to deal with some amount of litigation. But, litigating a case in the hemp industry has its own set of complications and challenges. We are experienced and aggressive litigators.