Jul 08

Why Do We Want Regulations in the Cannabis Industry?


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The cannabis industry is a bit of a Wild West. Its existence as a Schedule 1 substance has made research into the medical benefits nearly impossible to undertake until recently and there are next to no uniform standards for the production of hemp and hemp-derived products. The FDA has purposefully neglected to impose regulations, preferring to delegate to the DEA, and this has caused numerous issues in the industry, most notably with quality control and consistency. 

Federal vs State Regulations

More than ever before, Americans are supportive of legalizing marijuana and reforming cannabis laws. Due to cannabis’ legal status, there is no industry-specific regulation at the federal level; however, government organizations are involved in ensuring that safe products reach consumers. States that have authorized the sale of marijuana for medical or recreational purposes have established state-based regulatory frameworks.

This lack of framework at the federal level has created a bit of a mess for hemp producers and labs that operate in one state but sell nationwide. 

Since the Agricultural Improvement Act of 2018 was passed, the subspecies of cannabis known as hemp has been recognized by federal law as a lawful agricultural product (the 2018 Farm Bill). The 2018 Farm Bill specifies that the federal definition of industrial hemp requires it to have a concentration of delta-9 tetrahydrocannabinol (delta-9 THC) of no more than 0.3 percent on a dry weight basis.


If these criteria are satisfied, Section 280E of the U.S. Internal Revenue Code, which prohibits companies that traffic in illicit drugs from deducting regular business expenses other than the cost of items sold, is no longer applicable to hemp-related firms. Additionally, potential money-laundering accusations are no longer a concern for funding sources like federally chartered banks.

Despite the fact that these loosened regulations have a considerable impact on hemp cultivation, marijuana, which is frequently used as a psychotropic drug, is nevertheless classified by federal law as a Schedule 1 substance, along with heroin and LSD. As a result, even in jurisdictions where marijuana usage for recreational purposes is legal, cannabis-related enterprises may have legal challenges when financing, producing, transporting, and selling cannabis products.

State-level regulations of marijuana have become more lenient in comparison to federal marijuana restrictions. In many states, having a small amount of marijuana in your possession or using it recreationally is no longer a crime.

Financial institutions that assist marijuana companies, however, run the risk of violating the Controlled Substances Act as well as being deemed money launderers under the Bank Secrecy Act (BSA) of 1970. Given this risk, brokers and banks will often refuse to work with cannabis companies, making it difficult to secure R&D funding to improve production processes. 

The lack of federal regulation also opens up different operations to unique risks. Cannabis that may be considered “safe and ingestible” in Washington State, for example, may not be sellable in Alaska. 

Barriers in Research 

Due to the lack of federal regulation, the amount of research conducted in the United States on the health impacts of cannabis and cannabinoid use has been constrained, depriving patients, medical professionals, and policymakers of the data they require to make informed choices about the use of cannabis and cannabinoids. There is a risk to the public’s health because there is a paucity of data supporting claims about how cannabis and cannabinoids affect health.

The obstacles to such studies must first be recognized and removed in order to encourage research on cannabis and cannabinoids. An NCIH committee noted a number of impediments to conducting basic, clinical, and population health research on cannabis and cannabinoids. This includes funding constraints, laws and regulations that restrict access to cannabis products used by an increasing number of consumers and patients in state-regulated markets, and policies that prohibit the use of cannabis products.

Complicating matters, a number of different organizations may be involved in the review process for a study involving cannabis or cannabinoids, including the National Institute on Drug Abuse (NIDA), the U.S. Food and Drug Administration (FDA), the U.S. Drug Enforcement Administration (DEA), institutional review boards, state offices or departments, state boards of medical examiners, the researcher’s home institution, and potential funders.

In some states, in order to conduct clinical trials or any other activity involving Schedule 1 substances, researchers conducting clinical research on cannabis or cannabinoid products must also apply for and receive a controlled substance certificate from a state board of medical examiners or a controlled substance registration from a department of the state government.

It takes a number of approvals from various federal, state, or local agencies, institutions, or organizations for basic and clinical researchers to obtain cannabis or cannabinoids from NIDA for research purposes, including initiatives to assess the value of cannabis or cannabinoids for treating a medical condition or fulfilling a therapeutic end need. Researchers may find this approach intimidating. Numerous cannabis researchers have reportedly been deterred from conducting further studies or asking for grant money due to the significant layers of bureaucracy that result from cannabis’ Schedule 1 classification.

The data is clear: cannabis can be a useful medicine, and it has the potential to become a major part of the American economy. But right now, the industry is operating in a legal gray area.

The FDA’s role in this field is crucial—they need to step up and clarify their position on marketing regulations for cannabis products so that patients and companies can have confidence in what they’re doing. They also need to create uniform federal regulations for research so that innovation can continue at its best pace.

We believe that Abundant Labs is taking the right approach, focusing on science-driven research with a focus on data collection. For more information on our labs, equipment, and analytics, visit our website. 

These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease.