Phivida Holdings Inc. (“Phivida” or the “Company”) (CSE: VIDA) (OTCPK: PHVAF) reports that on June 28th the U.S. Senate officially passed the Agriculture Improvement Act of 2018 (i.e. the “Farm Bill”). The 2018 Farm Bill included a provision lifting the USA Industrial Hemp laws from a research and development pilot to a full agricultural commodity status – and effectively removed hemp derived CBD (cannabidiol), and all naturally occurring cannabinoids therein, from the controlled substance list.
Senate approval of the 2018 Farm Bill is the single most significant milestone in the history of the US CBD-Hemp industry to date, and provides Phivida, and its shareholders, with a significant opportunity for prospective growth.
The Farm Bill was authored by Majority Leader Mitch McConnell (R-KY) with Minority Leader Chuck Schumer (D-NY) acting as co-sponsor. Leading up to Senate approval, the US House of Representatives also passed the Billi, as did the Senate Agriculture Committee who voted in favour by a margin of 20-1.ii Senator Grassley’s (R-IA) proposal to remove cannabidiol from the definition of industrial hemp was denied, resulting in a sole opposition vote.
Earlier this year, another milestone court ruling also provided significant regulatory support for the US CBD-Hemp sector. In February 2018, the Supreme Court preceded over the HIA (Hemp Industry Association) vs. DEA (Drug Enforcement Agency) in a class-action suit concerning the issue of CBD extracted from hemp, and the legality of industrial hemp. In the final ruling the Supreme Court unequivocally determined that – when produced domestically under the Farm Bill – hemp (and its derivatives) are not a controlled substance.
The Supreme Court ruling also found the Farm Bill (as it relates to hemp) “pre-empts” the Controlled Substances Act. Congress has since exempted Farm Bill hemp from the Controlled Substances Act (CSA) giving the Farm Bill primary jurisdiction over the governance of the CBD-Hemp Oil industry in the USA.
The DEA further conceded it does not “seek to control cannabinoids,” and that only marijuana derived cannabinoids are governed under the Controlled Substances Act. In May of 2018, the DEA issued a formal directive to all federal agencies (e.g. US Customs and Border Patrol) stating that cannabinoids are not controlled substances unless derived from marijuana, and that the “mere presence of cannabinoids” in any product or derivative does not render it a controlled substance. The Supreme Court ruling also resulted in the mediation of a settlement in what is now the third successful HIA vs. DEA suit in over a decade.
When combined, the approval of the Farm Bill and the latest HIA vs. DEA ruling fully legitimizes a nascent CBD-Hemp industry that has been forecasted to grow, from US $202 million in 2016, to over US $2.1 billion by 2020.iii
Widely studied as a natural opiate replacement category, CBD Hemp Oil foods and supplements are now open to mainstream OTC retail pharmacy channels providing indirect exposure to a global pain management therapeutics market forecasted to reach 3.7% CAGR, from US $60.2 in 2016, to over US$83 billion by 2024.iv Senate approval also creates a safe harbor for US financial institutions to service the industrial hemp sector with banking services.
In Canada, federal legalization of medicinal cannabis was also approved this month. Bill C-45 (also known as The Cannabis Act) received Royal Assent and officially passed into law on June 21st by a margin of 52-29 with an effective date set for October 2018 and a mandate of legalizing cannabinoid infused edibles by 2019.v The Canadian legal cannabis market alone is anticipated to reach over CDN $22.8 million by 2024.vi
Canadian legalization is yet another major positive regulatory shift for Phivida. The evolution of the regulatory landscape in United States and Canada are significant leading indicators for Phivida’s entrance into widescale distribution via major retail channel partners across the USA, and through the ACMPR LP program in Canada.
Phivida CEO, Jim Bailey, applauds the US Senate approval of the 2018 Farm Bill, the HIA vs. DEA ruling as well as the recent Canadian Senate approval of recreational cannabis legalization.
“The US Senate approval of the Farm Bill opens Phivida brands to over 25,000 large format retail and national grocery, health food, pharmacy and specialty retail chains across the USA. This major regulatory shift provides a solid platform to springboard Phivida into full scale commercialization – with an early mover advantage. Phivida is now poised to be one of the first premium CBD brands to enter mainstream distribution in the USA, capturing a leadership share in the category, much like the success achieved in the early days at Redbull.” Bailey said.
Phivida is now aggressively pursuing the larger US marketplace, and expansion into Canada, the UK and Japan – for a total global consumer market of over 500 million potential customers.