CBD Business

The Uncertain Legality of Opening a CBD Business

You may know that it is legal to grow, process and sell cannabidiol (CBD) in Wisconsin, but the line of legality is more murky than you would expect.

The cannabis plant is divided into two categories, indica and sativa; while both species contain CBD, only one strand of sativa diversity is what we call hemp. Hemp is legal in Wisconsin under a pilot program, as long as it contains CBD with only small amounts of tetrahydrocannabinol (THC), the psychoactive component of cannabis. Therefore, all CBD derived from any cannabis plant other than certified hemp is illegal.

“Under current Wisconsin law, the CBD itself is not legal because it falls under the definition of marijuana, [but] CBD I can be legal under federal and Wisconsin law when obtained from certified industrial hemp, ”explain attorneys at Gimbel, Reilly, Guerin & Brown, a Milwaukee law firm that helps entrepreneurs start CBD businesses. “Not all CBDs are hemp CBDs and not all CBDs derived from hemp are legal CBDs.

Confusing CBD legislation

The law exists in such a gray area that the Wisconsin government itself is struggling to uphold it. Months after the then governor. Scott Walker officially legalized the production and processing of hemp in Wisconsin, and law enforcement still did not know how to deal with the CBD. Many Wisconsin companies had already begun investing in it when then-Attorney General Brad Schimmel released a note stating that “except in very limited circumstances. [such as a doctor’s certification], the production of cannabidiol is illegal. ” A few weeks later, the Wisconsin Department of Justice (DOJ) stepped down and declared that CBD, produced and sold under the hemp pilot program, was still legal.

“These are new laws and their application is unclear and confusing. In this way, a person who intends to engage in this business must act very cautiously to comply with the law and avoid criminal consequences, “said lawyers Jason Luczak, Briana Meyer and Raymond Dal’Osto. They care about the safety of their customers, as it can be extremely risky not to follow the law to the letter when it comes to working with cannabis-related products.

Last year, a Milwaukee business owner was sentenced to pay $ 4.5 million to sell synthetic cannabis products. The decision had to be made through a civil court, as the formula of the products sold was not illegal; Instead, the Ministry of Justice is prosecuting businesses for violating consumer protection laws.

A potential CBD business owner could be fined, imprisoned, and suffer “significant civil consequences” if they approach the problem wrong, Gimbel, Reilly, Guerin & Brown explain. In addition, there is no “cookie outline” to open such a business, as the product may be legal. or illegal depending on its type, origin and chemical components. For this reason, it may be necessary to have the opinion of an expert before you start growing or selling products containing CBD.

After making sure that a particular business model does not pose a legal risk, Wisconsin law allows anyone to grow and sell hemp “to the greatest extent permitted by federal law,” as long as it follows a strict federal definition and contains less of 0.3% THC. To do this, you need a lifetime license to grow or process hemp, followed by annual registrations that cost several hundred dollars each.

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