Ask Our Experts: Will the DEA Rules Spur Foreign CBD Production?
Q: Are the new DEA rules likely to create incentive for CBD companies to farm and process outside the U.S.?
By Trevor Yahn-Grode, Data Analyst, New Frontier Data
A: One of the uncontroversial elements from the DEA’s recent Interim Final Rule (IFR) is the removal of most import restrictions on CBD. In effect, the IFR has simultaneously made it harder to produce CBD domestically, and easier to import it from abroad.
No one yet knows whether the IFR will stand up to legal challenges, or to what degree it will be enforced should it do so. However, a worst-case scenario – the IFR’s being strictly enforced as currently written – would almost eliminate CBD production in the United States.
Meanwhile, other countries with close trading ties to the U.S. have been ramping up their production capacity for CBD in recent years, including Colombia, Uruguay, and Canada. As has been seen over the past four years, demand for CBD is growing stronger, and suggests little evidence of going away anytime soon. Therefore, should the DEA indeed attempt to enforce its IFR (therefore making it onerously difficult to produce CBD in the U.S.), it stands to reason that the industry will see a drastic increase in the importation of CBD products from abroad, most likely those countries both with relatively close geographical proximity and existing strong trading ties to the U.S.
