As research broke over the past two weeks that cannabis products including CBD, cannabinoid acids and even synthetic cannabis compounds may prevent or treat COVID-19 infections, excitement among hemp entrepreneurs spread.

Interest in the seemingly stagnant hemp biomass, CBD and CBG markets soared to highs not seen in three years. Prices are on the rise again and hemp producers are fielding calls from a slew of interested parties hoping to cash in on the news.

Considering the ups and downs the hemp industry has struggled through since it became a legal commodity in December 2018, it’s easy to understand the enthusiasm.

It’s good to see positive COVID-19 headlines for once, especially when they are about cannabis.

But is it too early for hemp entrepreneurs to profit from research that hasn’t yet been tested in human clinical trials?

And what are the compliance and legal risks for cannabinoid product makers peddling products as COVID cures?

Researchers and industry leaders have urged caution among consumers and industry alike.

“Science is not the result of one or two studies. It’s a long process based on peer review and the opportunity for replication of results,” said Hemp Industries Association executive director Jody McGinness.

“As much as we are encouraged by studies that open up people’s eyes to the possibilities, we want to caution anybody against extrapolating from the results of early studies to any type of claims about the efficacy of cannabinoids.”

Industry ramping up anyway

For Bend, Oregon-based hemp producer Wesley Ray, Oregon State University’s study showing cannabinoid acids can prevent COVID-19 from entering human cells has validated his own work growing and processing CBDA and CBGA over the past few years.

Since news broke about the research, Ray and his partner Shannon Little have been inundated with calls and emails from retailers, formulators, distributors, recreational marijuana businesses, and even government entities, looking for raw material, crumble and tinctures to produce white label products and more.

“And then you have the bigger companies that are wanting to do some pretty crazy numbers (like) 25 kilos every two weeks,” Ray said.

He’s selling CBGa and CBDa crumbles in bulk for $2,900 per kilo or $5,000 per single kilo.

“The prices on that are obviously up. And if farmers are smart, they would hold back their biomass and not just liquidate it,” Ray said.

“I would put $20 a pound on my CBG biomass right now, just because I know how many pounds are going to go in to make a kilo and I know the input costs, and I don’t think the lab should be the only one making margins.”

Prices haven’t seemed to go up across the board yet in response to recent research results, but it’s still early and the interest is clear, according to Julie Lerner, the founder and CEO of Denver-based commodity selling platform PanXchange.

“There is no doubt that demand and inquiries are picking up for several processors in the country, but so far activity has been mostly directed toward CBDA and CBGA products,” Lerner told Hemp Industry Daily in an email.

“Demand has not yet picked up in biomass; our January prices are on par with December. However, a late-month rally pushed winterized crude prices up $5/kg this month.”

Compliance matters

The research findings supporting the role of cannabis in human health “moves the scientific conversation forward” and show the industry is one step closer to “unlocking the many benefits of cannabis,” said Asa Waldstein, principal of Boulder, Colorado-based Supplement Advisory Group, which advises herbal products and cannabis entrepreneurs on federal compliance.

That said, “it is a prohibited act to promote non-drug products as a cure for any disease or virus,” Waldstein cautioned in an email to Hemp Industry Daily.

“I urge companies to fight the urge to exploit this news to sell products.”

As has been the case with all other claims that have prompted the U.S. Food and Drug Administration and the U.S. Federal Trade Commission to sanction cannabis product manufacturers, anything on a commercial website or social media is considered marketing, he pointed out.

“Although unadvisable, if a company must risk posting about (cannabinoid and COVID research), they should ensure there is no mention of their product or company in the post or blog,” Waldstein said.

“This includes removing any shopping cart-linked call to actions and product pictures.”

Waldstein added that FDA and FTC authorities consider the “reasonable consumer takeaway,” which means if consumers think a company’s blog or post is about its products, the authorities do, too.

“I asked a top FTC official about ‘educational’ blogs on commercial websites. He responded, ‘What is the purpose of posting an educational blog on a commercial website, if not to sell products?’” Waldstein said.

“This further demonstrates the authority’s position when posting about disease therapies on a supplement site.”

And with the number of “cringe-worthy product claims” aiming to cash in on scientists’ research, companies promoting COVID research with links to products should consider FDA and FTC enforcement “a given,” Waldstein said.

Waldstein pointed to 25 COVID-related warning letters that the FTC sent earlier this month, showing the regulator’s “renewed dedication” to stopping companies from making misleading claims.

“The FDA/FTC makes examples of companies not following the rules, especially in areas they want to highlight,” he explained in an email.

“I predict we should see a batch of CBDA and COVID warning letters coming out in the next couple of months.”

Universities could push back, too

It’s not just government compliance companies need to consider.

Cannabis entrepreneurs that are openly promoting products in the name of university research may also be violating intellectual property laws provided to researchers, said Jay Noller, director of the Global Hemp Innovation Center at Oregon State University.

“There’s this presumption that because it was published, it’s theirs to use,” Noller told Hemp Industry Daily.

“International and U.S. patent law is such that to not check in with the publisher or that institution, we’ve seen that in other industries where the presumption leads to downstream reaches for violation of that IP.”

Even in cases of publicly financed research, scientists and universities have IP rights on findings that can produce results such as inventions, scholarly publications, new plant varieties, confidential information and more – even if they are proof-of-concept or laboratory-scale prototypes that require additional research and development before they can be commercialized.

Hemp entrepreneurs therefore need to do due diligence that they aren’t violating prior IP, Noller said.

Perhaps because the makers of the only CBD drug sanctioned by the FDA, Epidiolex, aren’t in headlines suing over-the-counter CBD makers, some cannabis operators may assume they are safe to market their own CBD products.

But that’s a risky assumption, Noller said, pointing out that such cases can take years to build, as in the seven-year patent battle over smart phones between Apple and Samsung.

Further, cannabis companies should consider that investment in research could yield faster industry development than investments in marketing, Noller said.

“We saw that for three years: branding, marketing. And then you have one science paper come out on a very, very limited budget. …That’s how it’s going to work.”

“So I think we’ve we’ve been able to demonstrate, if not shame, the industry into its disproportionate attention to fantasy versus reality, and that’s truth in science.”

Laura Drotleff can be reached at laura.drotleff@hempindustrydaily.com

No part of the global economy has escaped the COVID-19 pandemic, which has claimed more than 2.5 million lives around the world and sickened countless more.

But few industries were in the kind of infancy the hemp industry was in when the World Health Organization declared the virus a global pandemic on March 11, 2020.

The resulting lockdowns, travel bans, economic collapse and distancing requirements hit just as many farmers were about to plant their first-ever legal hemp crops. Hemp acreage plummeted.

Nascent extractors and hemp processors saw equipment delayed by manufacturing shutdowns. Those that managed to find equipment couldn’t open for business because of mandatory stay-at-home orders.

And while many marijuana retailers were deemed “essential” businesses, depending on the state, hemp-specific retailers were generally closed.

CBD brands that had scrambled to get on shelves of mass-market retailers such as department stores had to immediately pivot to online-only sales.

Market analysts at the Brightfield Group, a Chicago-based data research firm, declared 2020 an “extinction event” for CBD brands, with 50% or more of an estimated 3,000 brands closing.

But the hemp industry didn’t fold up shop because of the challenges. Some companies successfully adapted business plans; others made new ones to adapt.

Hemp Industry Daily caught up (virtually, natch) with some hemp entrepreneurs to reflect on how the industry has reacted to the pandemic and get their predictions for what’s next.

Time to focus

The shutdowns and disease challenged all businesses, of course.

But some hemp entrepreneurs say the unexpected halt to business gave them time to breathe and refine business plans in a go-go young industry.

“It gave me an opportunity to pause,” said Larisa Bolivar, founder and CEO of Colorado-based Bolivar Hemp Co.

She developed a cosmetics line, bought property in Oklahoma to start a new cultivation site and even finished a book she had been working on for years.

“We were all feeling that same rush – you know,  we’ve got to get to market, we’ve got to be No. 1,” she said. “But that’s not always good for launching a business.

“You really have to be strategic. Now, we have room to grow and we have plenty of time. I think COVID kind of reset that clock for everyone.”

One entrepreneur even started a new business, with locations on two continents.

Wendi Young set up an extraction company with locations in Colorado and Belfast, Ireland, while overcoming closed borders and shutdowns across jurisdictions.

Young said she was inspired in part by having to take time off to care for a sick relative.

“There was just a lot of time to really start thinking about, you know, what you want (and) what you want to accomplish,” she said.

Other entrepreneurs found new resilience from their own employees.

“We really saw our team come together in a very big way. Just looking at seeing how people are taking care of each other – I think that was such a big, monumental outcome of COVID,” said Priyanka Sharma, co-CEO of Kazmira, a hemp-derived cannabinoid extraction company based in Colorado.

“It was nice to be able to step back from your own process, see what could be changed with what you were doing over time. … When you’re so in the weeds, you don’t get to step back and see where you can make changes.”

Next normal

So, which changes from the COVID-19 pandemic will stick with the hemp industry?

Andrew Bish, chief operating officer of Bish Enterprises, a harvest-equipment manufacturer in Nebraska, said the pandemic has sparked market attention on non-flower uses for the plant.

“We’re seeing a dramatic upswing in the grain and fiber markets,” Bish said.

“I do think some of that increased demand in grain is coming from people eating at home and looking for more plant-based options, which is really exciting.”

In addition to opening new market demand, the pandemic gave operators an opportunity to close underperforming lines.

“It was a good opportunity to think about really what our primary goals were in the industry,” said Margaret Richardson, chief compliance officer and legal officer at Global Widget, a CBD manufacturer in Orlando, Florida.

“We could think about, in terms of product offerings, really what we wanted to offer.

“It gave us a chance to trim some of the products that weren’t as successful and refocus on formulation. … We came out on the other side, I think, stronger.”

The full discussion on COVID-19 impacts to the hemp industry can be seen below.

And share your insights and predictions live Thursday with Hemp Industry Daily editor Kristen Nichols at 4 p.m. ET/1 p.m. PT on Clubhouse.