On Tuesday, the USDA (United States Department of Agriculture) announced that certain farmers growing hemp for research purposes will be able to get insurance coverage under the WFRP (Whole-Farm Revenue Protection) program for the 2020 planting season.

Hemp farmers get insurance coverage

The USDA’s RMA (Risk Management Agency) clarified that producers authorized under the 2014 Farm Bill are eligible for the insurance coverage. Only farmers growing hemp for fiber, flower, or seeds can access the insurance coverage. The insurance covers up to $8.5 million in revenues generated from farmland.

In a press release, the USDA’s RMA administrator, Martin Barbre, said, “Numerous producers are anxious for a way to protect their hemp crops from natural disasters.” He also said, “The WFRP policy will provide a safety net for them. We expect to be able to offer additional hemp coverage options as USDA continues implementing the 2018 Farm Bill.”

On December 20, 2018, President Trump signed the Farm Bill, which legalized hemp and its derivatives. However, the USDA stated that it’s still in the process of developing regulations under the bill. So, other farmers have to wait for the regulations. The USDA confirmed that cannabis, which contains less than 0.3% of THC, is eligible for the WFRP plan.

Why less than 0.3%?

Hemp is a type of cannabis that contains less psychoactive THC and more of CBD (cannabidiol). Hemp contains less than 0.3% of THC, while cannabis contains between 5% and 20%. THC delivers the psychoactive effects of the drug or the “high.” CBD is mainly used in medical applications like pain relief and mood alteration. Also, CBD acts as a raw material for fabrics and food.

Regulators are treading the waters carefully. Regulators can target cannabis companies quickly if they aren’t careful.

At times, the regulations aren’t defined well. For example, Curaleaf (CURLF) (CURA) received a warning from the FDA about incorrect marketing. Based on Curaleaf’s response, the rules weren’t clear. However, Curaleaf intends to comply with regulators.

Growth in the US hemp business

The development from the USDA couldn’t have come at a better time for cannabis companies. Companies want to expand their hemp business in the US. Canopy Growth (WEED) (CGC) is researching hemp and hemp derivatives at its Batavia facility in Illinois. The company acquired AgriNextUSA, a hemp enterprise, in March.

Earlier this year, Tilray (TLRY) acquired Manitoba Harvest—a hemp food manufacturer. The company introduced a portfolio of hemp-extracted products in the second quarter. Today, Curaleaf was trading over 11.0% due to its bullish outlook, while Canopy Growth and Tilray were trading 0.5% and 3.5% higher as of 11:55 AM ET.

With companies’ research work in full swing, they need hemp in large quantities. The insurance coverage on hemp gives farmers safety and ensures the flow of hemp to these companies.

B.C. sold less legal cannabis than any province other than Prince Edward Island in the first nine months of legalization and officials blame supply shortages and a slow rollout of retail stores.

Statistics Canada data shows B.C. sold $19.5 million worth of legal pot from October 2018 through June 2019. The only province that sold less was P.E.I., which took in $10.7 million with only a fraction of B.C.’s population.

In its annual report, B.C.’s liquor distribution branch said problems with supply and slower than anticipated provincial and municipal approvals resulted in the province’s cannabis industry evolving at a slower rate.

“Managing inventory levels in an environment of product shortages and unknown customer demand is very challenging,” the branch said. ”The LDB is currently building inventory levels in anticipation of future public and private retail stores.”

Alberta has sold the most legal pot, raking in $123.7 million from its dozens of licensed stores. Ontario, which only began opening brick-and-mortar shops in April, sold $121.6 million while Quebec sold $119.2 million.

Saskatchewan and Manitoba sold $38.2 million and $32.2 million respectively. The Atlantic provinces also sold more than B.C., with Nova Scotia raking in $47.9 million and New Brunswick nabbing $25.9 million.

B.C.’s liquor distribution branch said in its report that Statistics Canada estimates $2.2 billion worth of cannabis was sold in the fourth quarter of last year across the country, but 65 per cent of it was purchased illegally.

The branch report said its strategy on pricing is focused on being competitive with the illegal market and there were 212,000 retail transactions through store and online sales, with an average transaction value of $74.38, in the first six months of legalization.

When edibles are introduced, the industry will need to adapt again, it said.

Branch CEO Blain Lawson said it had a $2 million revenue shortfall this year, due mostly to the upfront costs of adding the distribution and retail sale of cannabis to its operations.

The national supply shortage has held back legal sales across the country, but B.C. was slow to open stores and it also has the strongest black and grey market in Canada, said Michael Armstrong, an associate business professor at Brock University in St. Catharines, Ont.

Vancouver and Victoria granted business licences to illegal dispensaries in the years prior to national legalization, and some of those shops have remained open despite not being authorized under the new regime, he noted.

“If there are hardly any stores, yeah, some people will go to the government website, but most people … if they’re already getting good service, they’ll just keep going to their grey market or black market retailer,” he said.

He said price and quality are the two biggest factors in a cannabis consumer’s decision of where to shop. Price isn’t playing a big role yet because the product shortage means legal stores sell out no matter what, he said.

“There are enough consumers who are willing to pay the roughly 40 per cent extra for the legal cannabis,” he said. “As product supply improves … then the price competition will be much more important.”

As for quality, Armstrong said legal cannabis has an advantage when it comes to consistency and safety. But illegal pot users frequently report that legal weed isn’t as potent as the best that’s available on the black market, he said.

Legal edibles are expected to become available toward the end of this year, he added, and the industry has been putting a lot of money into developing products that aren’t really available in the black market, such as cannabis drinks.

Some think these products will boost the legal market, but others aren’t convinced people will switch from drinking a beer to a weed cooler, Armstrong said.

Provincial governments, particularly in B.C. and Ontario, should focus on opening more stores, he said, and Health Canada needs to continue issuing licences to growers so they can scale up production.

Once the market is more competitive next year, governments need to reconsider their tax regimes, particularly the complicated excise tax, which differs by jurisdiction and creates challenges for industry, he added.

“On a more average $10-a-gram product, a $1 excise tax is a big chunk and if you want to compete with black market prices that are $5 or $6 a gram, it’s very difficult for the legal industry.”

A Michigan legislative committee approved a bill on Tuesday that would require labels on cannabis products to warn consumers about the risks of marijuana use during pregnancy and while breastfeeding. The Michigan House of Representatives’ Judiciary Committee voted 11-2 in favor of the measure, which will head next to the House floor for a vote by the full body.

Under the proposed legislation, all cannabis products would be required to be packaged with a label reading: “Warning: Use by pregnant or breastfeeding women, or by women planning to become pregnant, may result in fetal injury, preterm birth, low birth weight, or developmental problems for the child.”

Republican Rep. Daire Rendon, one of the bill’s sponsors, said that Michigan’s regulations should help inform and protect consumers who may be new to cannabis.

“This is a brand new product that’s going out … and a lot of people automatically think ‘Wow it’s legal, it’s going to be safe,’” said Rendon. “So we felt it was very important that people understand there are health implications for using products like this.”

Citing research that shows that smoke from both cigarettes and marijuana can increase the chance of developmental problems in infants and difficulties with learning and paying attention in older children, Reardon said that legislators decided to address marijuana’s impact on fetal development after hearing testimony from pediatricians.

Too Many Warnings?

But fellow Republican Rep. Beau LaFave said that while he doesn’t condone cannabis use by pregnant women, he voted against the bill to preserve the impact of consumer warning labels.

“Just because something’s unhealthy doesn’t mean the government needs to tell everybody about it or require that label be on it,” LaFave said. “If you warn everyone about everything, the warnings themselves become less helpful.”

Josh Hovey, a spokesman for the Michigan Cannabis Industry Association, said the trade group has decided to not take a position on the bill. Hovey said in an email that the cannabis industry “supports warning labels when they are backed by thorough scientific data and we don’t believe there is enough research available at this point. Since some degree of caution is reasonable, we are neutral on the bill.”

Michigan’s House Judiciary Committee also approved another bill on Tuesday that would require both medical marijuana dispensaries and recreational cannabis retailers to offer pamphlets on safety, including the potential risks of use by minors.

Before becoming law, both bills must be approved by the full House of Representatives as well as the Michigan state Senate, and be signed by Democratic Gov. Gretchen Whitmer. The two pieces of legislation are both supported by the Michigan Marijuana Regulatory Agency.

One of the main roadblocks to the growth of the global cannabis trade is the fear of prosecution hanging over banks, claims a new report.

The Cannabis Legal Report published by London-based Prohibition Partners, finds that medical cannabis now legal in 43 countries with an ever-increasing number of countries also allowing access to CBD products 

It says this  ‘significant’ shift in attitudes to cannabis has been driven by ‘a kaleidoscope of forces including widespread political upheaval, technological innovation and new societal norms’.

The report analyzes the current global status of cannabis legal and regulatory regimes with its major finding being the inability of banks to do business, particularly trade, with cannabis firms, without fear of prosecution. With cannabis federally outlawed multi-nationals are reluctant to enter the U.S. market, as they cannot carry out cross-state trade, it says. 

“Federally insured banks are forbidden from dealing with cannabis businesses, leading to problems all over the world where firms rely on either U.S. capital, allow U.S. dollars as a currency, or use the services of a lender based in the U.S.,” It says. 

The report highlights how a smooth passage into law for the SAFE Banking Act could open the global markets to the larger U.S. players. It says global regulation is failing to keep pace with legalization, and ‘international agreements are needed to give clarity to businesses and patients’. 

Daragh Anglim, Prohibition Partners‘ Managing Director, said: “Regulatory shifts and advances came thick and fast over the last 12 months, such as Thailand’s reform of previously conservative cannabis policies, Canada’s legalisation of adult-use cannabis and the UK’s implementation of a medical cannabis programme. 

“We feel that international regulatory bodies and institutions need to keep pace with global legislative change to offer the clarity that businesses and patients need.” Highlighting how a regulated environment can help business progress it cites Canada as the most active global merger and acquisition player with Canadian firms buying up ‘local’ producers.

It says: “The support and experience gleaned from working in a fully regulated adult market have enabled Canadian firms to penetrate strategically important foreign jurisdictions such as Germany, the largest European Union state.” 

It highlights how Germany’s medicinal market alone promises to be larger than Canada’s medicinal and recreational markets combined, ‘making it an essential outpost for ambitious firms’. 

The report also singles out countries such as the such as the Philippines and Thailand, with strict anti-drug laws, who are launching or advancing medicinal cannabis programmes, while liberal Western jurisdictions are inching toward adult recreational markets. It adds.