hemp and cannabis plants
Facilities like this licensed California cannabis cultivation operation have seen immense changes in market conditions over the course of 2021 (Photo by Geoffrey Taylor)

By Geoffrey Taylor, MA, Hemp Contributor, Valley Ag Voice

Geoffrey Taylor
Geoffrey Taylor, MA, Valley Ag Voice contributor.

It has been a whirlwind year across the Hemp and Cannabis industries in California and with so much progress made in 2021, it is critical for operators to reflect on the successes of this year while preparing for the road ahead into 2022. From record-low flower prices in the Cannabis sector to increased regulation on the Hemp industry, changes across each industry have charted a path forward to a new way of operating in the years ahead. While all the changes across both industries drive operators to strategize for the future, the regulatory changes have helped to chart the path forward for both Hemp and Cannabis in the Golden State.

Reflecting on the variety of legislative and regulatory changes that took place over the course of 2021 and the growth and expansion of California’s Hemp and Cannabis industries as a result, one can safely assume the marketplace will continue to grow well into 2022 and beyond. One major development moving forward into 2022 will be the addition of cannabis to competitive categories at the California State Fair in Sacramento, like jellies, crafts, olive oil and photography, signaling a shift in the sociocultural acceptance of cannabis as a major agricultural commodity in the Golden State.

“With cannabis being added to statewide competitive categories at the California State Fair, we can see the importance that this crop holds to the state’s robust agricultural industry,” said Evan Meyers, a Humboldt County-based cannabis cultivator. “It’s almost unheard of to think that this category will be an exciting new attraction at a statewide event like this.”

For Hemp producers, manufacturers and retailers, 2022 holds significant promise after the passage of AB 45 in October 2021, allowing the regulated sale of hemp-derived CBD products in food and beverage, a significant hurdle that posed immense challenges for many producers in the food, beverage and cosmetic CBD product marketplace.

In addition to this regulatory shift at the state level, a recent series of responses to state regulators issued in November 2021 by the United States Drug Enforcement Agency, or DEA, signal a growing acceptance of hemp-derived cannabinoid isomers as exempt from enforcement efforts by the agency. The agency states that the only controlled substance regulated specifically under the 2018 Farm Bill, which expanded the national hemp production footprint by exponential numbers, is Delta-9 THC in concentrations lower than 0.3 percent when using laboratory analyses, therefore isomerized cannabinoids such as Hemp-derived Delta-8 and Delta-10 THC, THC-P and THC-O are exempt from federal enforcement as they are not named within the guiding regulations.

In contrast to the growing social and cultural acceptance of cannabis and hemp as having legitimate applications for medical and recreational usage, California cannabis producers experienced a record production year that resulted in a market crash for cannabis flower prices, resulting in many smaller or craft-focused sun grown flower growers to close shop. As many producers were faced with challenges associated with a price drop, an August 2021 lawsuit filed by Elliot Lewis, the CEO of Catalyst Cannabis Company in Long Beach, California, alleges the state’s regulatory system has allowed so-called licensed “burner distribution” operations to funnel immense amounts of this flower out of state by diverting the product away from the state’s track-and-trace Metrc database system that provides an accountability mechanism for all legally produced cannabis products from seed-to-sale. This alleged abuse of the state’s regulatory system, tracking database and licensing structure have allowed untold tons of legally California-grown flower to move beyond state borders, providing many struggling producers with a mechanism to stay afloat in the face of difficult times in the cultivation sector.

“These producers aren’t necessarily abusing the system just to make a quick buck, for most of them, it’s a matter of survival due to the burdens of heavy taxation and low legal market prices,” said Meyers. “They’re using these provisional licenses to move massive amounts of product off the system and out of state as a way to stay afloat in hopes that next year will be different. The only real way to fix this is to place a moratorium on future legal cultivation licenses and tighten up the reconciliation process within Metrc.”

No matter what 2022 holds for both the Hemp and Cannabis sectors, one thing is clear: 2021 was a whirlwind year of new regulatory changes, market ups-and-downs, growth and change in each respective industry and most importantly, a year for growing social and cultural acceptance of the plant in both hemp and cannabis forms. As 2022 is right around the corner, keep your eyes peeled for yet another exciting year for producers across the state.