Legislature shocks and confuses hemp industry

May 19, 2015 – MONTGOMERY, AL – All manner of hemp derived psychoactive cannabinoids are currently being marketed across the country. Starting on July 1 that is going to change for people in the state of Alabama after the Legislature passed and the Governor signed landmark legislation that will fundamentally alter where psychoactive hemp products are sold in the state of Alabama, how they are regulated, and even bans many of these products (legal in most states) from being sold in Alabama at all.

House Bill 445 (HB445) was sponsored by State Representative Andy Whitt (R-Harvest) and carried in the Senate by State Senator Tim Melson (R-Florence). HB445 is a transformative moment in time for the entire hemp industry. Effects of this legislation is being felt by cannabis manufacturers across the country.

On Monday the Alabama Gazette spoke at length with Jim Higdon – the President of Cornbread Hemp in Kentucky. Higdon's company sells gummies with psychoactive cannabinoids as well as cannabis infused beverages.

HB445 banned on-premises consumption of hemp beverages, thus the bars and restaurants that sell cannabis infused beverages now can't. It also banned direct to consumer sales – a large part of Higdon's business.

"The most concerning thing from our perspective is the ban on direct-to-consumer sales," Higdon said.

His company has numerous customers in Alabama.

"We've heard from them, continue to hear from them. It's like they don't know exactly what's going to happen, and frankly neither do we," Higdon told the Gazette. "We've never encountered anything like this before where we've been serving customers for a period of time without incident and only to have that relationship ended by the state government. I don't know what's gonna happen. I'm hopeful that a judge will see to it to understand that the ban on direct-to-consumer sales is a clear violation of the U.S."

HB445 was introduced in one form, and then lobbyists had an understanding of what it would look like in the version that came out of the House; but the version that came out of the Senate in the closing days of the legislative session and ultimately became law shocked many in the industry.

"I'm still a little confused as to how it all went down there at the end," Higdon said. "It was particularly surprising in the Alabama case of how substantial the bill changed between like the very last stages of the process before like between being engrossed and being enrolled there were substantial there at the finish line?"

"We've seen a lot of procedural tricks and parliamentary games this legislative session," Higdon continued. "We got a hot dose of it in Kentucky with shell bills. We had three shell bills thrown at us. So parliamentary tricks and this sort of thing is not surprising. It's just It shows that legislators are trying to pass legislation that they know won't stand scrutiny of a full committee vote. So they have to be cute to get what they want to pass through because it won't stand the scrutiny of regular order."

Higdon and the rest of the Hemp industry now have just six weeks to comply with the new law.

"It's a pretty fast turnaround," Higdon said. "Our beverages are just now beginning to be in distribution in the Birmingham area. So I'm going down, I'll be in Birmingham later this week, talking to distributors and retailers about our beverages in Alabama and so you know meeting folks in Alabama."

Higdon hope to get his product in grocery stores and standalone 21 and over vape/cannabis stores in the state; but knows that some customers will still have difficulty finding his products in Alabama.

"Serving the folks of Alabama is very important to us, but without direct-to-consumer"...."It's gonna be very difficult for us to do that."

Higdon said that he thinks that HB445 will be challenged in court.

"I would be certain that this bill in Alabama will be challenged in federal court," Higdon said. "I don't know who will the plaintiff be for that, but my hope is that a is filed before the effective date of July 1st to prevent it from taking effect. Because it's gonna cause a lot of concern for our Alabama customers, for our thousands of Alabama customers who don't know what they're gonna do."

Higdon said that he thought that it will be challenged under the interstate commerce clause of the U.S. Constitution.

"Wine direct-to-consumer has a Supreme Court case from 20 years ago," Higdon said. "It's very very clear. The Supreme Court said that a state cannot create rules that protect in-state interests while erecting barriers for out-of-state interests. It's a fundamental aspect of what makes America a country and not a series of balkanized provinces."

"And the principal nature of the Supreme Court case around wine direct to consumer from 20 years ago, a case called Granholm versus Held, says that a state cannot allow commerce for a product in the state and deny access from out-of-state operators out-of-state," said Higdon. "47 states allow wine direct-to-consumer and until Alabama instituted this direct-to-consumer ban, every state allowed to consumer hemp sales." "The ban on direct-to-consumer fundamentally bars out-of-state operators from selling into the state. "

"We want to be the exemplary brand in the state of Alabama that folks can trust," Higdon said. "That's the niche in this market that we're trying to connect with. We want to be the trustworthy brand from the South. And the people of Alabama are in a position to help us do that."

The bill kicks all psychoactive cannabinoids out of convenience stores and gas stations. Most of them also lost their vape sales business as well.

"We can't keep kicking around convenience stores because we don't like this or that," said Higdon. "If we don't keep convenience stores alive, we're not gonna have gas stations." "We have to protect what we got. And convenience stores are important, important part of the economy, important part of our communities, important part of travel in and around the state." "It's really unfortunate. Because they make good retail partners for us."

Cannabis sativa was cultivated by man right there at the beginnings of agriculture 12,000 years ago in East Asia. Basal cannabis split off from its wild cousins at this time as farmers took over the breeding and cultivation of the valuable plant species. Fabrics, ropes, and medicines were derived from the plant. Around 4,000 years ago hemp varieties bred for their fiber and marijuana (bred for its psychoactive properties) were bred as distinct lineages from basal cannabis. https://theheartysoul.com/ancient-origins-of-cannabis/

In 1937 Congress made marijuana illegal with passage of the Marijuana Tax Act. Hemp became illegal along with its distant cousin. In 2018 Congress, seeking more hemp fiber for paper, clothes, hardwood flooring, car panels, animal bedding etc., made hemp legal in the Farm Bill. Instead of cheaper flooring materials the nation got hemp flowers to produce cannabidiol oil (CBD). Chemists realized that extracting all manners of cannabinoids from the CBD was a simple matter in the lab. Industry capitalized on the loophole, and the modern-day nationwide legalization of over-the-counter psychoactive products was born. Alabama never passed recreational marijuana; but thanks to the Farm Bill stores across the state have been flooded with psychoactive products in drinks, gummies, pills, smokable products, oils, tinctures, etc.

HB445 was the Legislature's response to this unplanned legalization of cannabis.