Louisiana’s CBD Emergency Declaration Hurting Small Businesses

Mountain Pure Bottles

On June 27, the Louisiana Office of Alcohol and Tobacco Control (ATC) issued a declaration of emergency that effectively would make selling certain cannabidiol (CBD) products illegal. Less than a month earlier, Louisiana HB 491 had been signed into law, legalizing the cultivation of industrial hemp while also creating regulations for the sale of CBD oil. The new law also specified that inhalants (such as vape cartridges) as well as foods and beverages with CBD oil, would not be legal under the law, however, the law allowed until January of next year for retailers and manufacturers to sell off their inventory.

The declaration of emergency moved that deadline up to September and outlined strict punishments for violating the law. 

This “state of emergency” may seem perplexing, as CBD is not a drug known to cause addiction or serious illness. Though CBD oil is derived from hemp, a relative of the cannabis plant, industrial hemp contains very low amounts of Tetrahydrocannabinol (THC), the dominant psychoactive chemical within the cannabis plant. Under the current law, THC concentrations must be lower than .3 percent in industrial hemp plants and CBD products.

THC is both a stimulant and depressant and can produce a wide range of reactions when consumed or inhaled. CBD does not alter the user’s state of mind and is used medicinally for many different conditions, ranging from rheumatoid arthritis and chronic pain to headaches, insomnia, and anxiety. Unlike many over-the-counter medications, there are no known cases of overdosing from CBD oil.

Despite the lack of demonstrated risk to the community, the current regulatory guidelines control CBD in a manner similar to alcohol. In contrast to CBD and its more famous cousin, cannabis, alcohol-related causes kill approximately 88,000 people annually in the US, according to data from the Center for Disease Control and Prevention (CDC). 

The new regulations in Louisiana also call for background checks on hemp growers and CBD product manufacturers, as well as random-checks to ensure that the products do not contain over .3 percent THC. The emergency declaration goes even farther, specifying that applicants for retail and wholesalers of CBD products “be a person of good character and reputation” as determined by officials within the ATC. The declaration goes on to say that the applicant’s arrest record may be used in this determination, which could be used to discriminate against people of color and political dissidents with arrest records. 

The resulting barriers to entering the industry mirror that of the budding (sorry, couldn’t resist) cannabis industry, which has been criticized as being overly-white, while policing of low-level possession charges have historically been disproportionately focused on communities of color. 

Real ramifications

For some manufacturers, such as Heather Carter of Mountain Pure CBD, the emergency declaration is nothing short of a catastrophe for CBD businesses, many of which are small-scale and cannot afford the loss of revenue from the products they are now forbidden to sell. Carter also notes that the intense oversight structure creates an undue cost burden on the manufactures, and says that the Louisiana Sheriff’s Association has lobbied against the CBD industry’s legalization and expansion, resulting in the ATC’s large role in oversight.

While manufacturers have to pay a fee for licensing/quality control with the Department of Health (both to register each product and to conduct batch-testing), retailers have to undergo a permit application (including a recurring fee) from the ATC. For manufacturers with online retail, such as Mountain Pure, this creates an onerous fee structure where the business must pay multiple regulatory bodies on a recurring basis to conduct business. 

“How are some of these smaller retailers going to continue to operate?” asks Carter in a Facebook live stream. 

In the same video, Carter says that a staffer from Rep. Clay Schexnayder ‘s office confirmed that the emergency declaration does not reflect the intention of the hemp legislation. She claims Rep. Schexnayder was not completely in line with the severity of the ATC’s stance. Rep Schexnayder is an author of the legalization bill.

On the Mountain Pure facebook page, Carter calls for Louisiana constituents to contact their representatives to reverse the emergency declaration. You can find their suggested message to the legislature, as well as the contact for the representatives, on their page here.

While HB 491 can be amended in the future to reduce barriers to the CBD industry and expand the kinds of products that can be legally sold within the state, the ATC’s emergency declaration will have immediate effects on CBD product manufacturers and retailers, which will likely benefit more commonly manufactured over-the counter-drugs, produced by larger companies and often with more severe demonstrated side effects. For Louisiana to be truly “resilient”, its laws must support small and innovative businesses, rather than suppress them. 

Due to this concern for Louisiana based businesses and the CBD industry, businesses are coming together. The Louisiana Retailers Cannabis Association is a newly formed coalition of consumers, retailers, distributors and manufacturers of CBD, with the common goal of protecting these entities and moving Louisiana forward with a focus on legislation, regulation, and education.  They believe that this is the only way to truly move this industry in the right direction, but more importantly, they hope to be able to save some of these smaller businesses from having to shut down needlessly. 

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