Common Agricultural Policy and CBD – what does the new 0,3 % THC threshold mean?
In late 2021, the European Council and the European Parliament adopted a new Common Agricultural Policy (“CAP”), which included the significant change, namely, that the permitted THC level in hemp products will be raised from 0,2% to 0,3% in January 2023.
We are now already deep into the year 2023 and the changes to the Common Agricultural Policy should already be in place across the EU member states. Many of you might be asking yourself, how does this affect the CBD market or even your own CBD business?
We at Essentia Pura want to make the CBD and hemp regulation understandable to all, this is why we strive to prepare concise overviews of CBD regulation all around the world and to keep you up to date with any new developments in the CBD world.
If you are interested in learning more about the Common Agricultural Policy and its effects on CBD business, please read on.
A brief overview of Common Agricultural Policy
We must first clear out what exactly changed in the EU and to do this we should briefly explain what the Common Agricultural Policy actually is.
The CAP is one of the pillars of the modern European Union and its single market as it was established already in 1962. In brief, it is a comprehensive system dealing with the issues of agricultural production in the European Union. Essentially, it is a policy system that provides direct payments and different subsidies to EU farmers in order to make them competitive in the global food market.
This of course means that the EU authorities, together with the governments of the EU member states can choose which agricultural products to subsidize and which will have to compete on the global food market without any help from the authorities.
The Common Agricultural Policy thus has two sides. One aspect of the CAP is that it helps the EU food market to stay viable in the face of cheaper products from outside of the EU and thus encourage people to continue farming their land.
On the other hand the CAP steers the production of agricultural products towards crops the EU and member states authorities prioritize for various reasons.
The EU defined five goals of the common agricultural policy:
- to increase productivity, by promoting technical progress and ensuring the optimum use of the factors of production, in particular labour;
- to ensure a fair standard of living for the agricultural Community;
- to stabilize markets;
- to secure availability of supplies;
- to provide consumers with food at reasonable prices.
Cannabis and CAP
This is where the cannabis plant, also known by its latin name: Cannabis Sativa enters the story. Through the last couple of decades, governments faced many issues regulating cannabis, as it has a rich tradition in Europe and it is used in many aspects of everyday life.
For example, cannabis is widely used in the textile and construction industry, as well as for food and feed. The European Union also recognized the tremendous environmental potential of the cannabis plant. The ability of cannabis to sequester CO2 may be of great importance in the fight against climate change.
Nonetheless, the cannabis plant may also be used as a drug – for people to feel intoxicated or high. The plant contains numerous different compounds, which are also known as cannabinoids that have various effects on the human body. One of the most famous cannabinoids is also CBD, which as the new scientific research shows, might have various benefits for humans, such as skin benefits, relaxation, etc.
On the other hand, the cannabinoid that gets people high is tetrahydrocannabinol or better known as THC. However, as discussed above, despite being used as a drug, the cannabis plant still has numerous beneficial uses and its complete ban would cause harm to the economy and to the community. If you are interested you can read more about the difference between THC and CBD here.
This notorious trait of THC is the main reason most governments around the world started differentiating between hemp and marijuana.
Hemp is the type of cannabis plant that has a very low content of THC, but is still rich in various other cannabinoids, while marijuana is the type of cannabis plant that is rich in THC and is used in getting high and thus prohibited.
This differentiation was also introduced by the EU when drafting the Common Agricultural Policy. The EU recognized that hemp has multiple beneficial aspects, but was not prepared to legalize marijuana and thus decided to allow the EU member states to treat it as a narcotic drug.
The EU authorities chose a middle path and set a limit that only hemp plants with less than 0,2 % THC content were eligible for direct payments and other agricultural subsidies, while allowing the member states to set a different threshold.
However, in the face of the rapidly growing hemp and CBD market and the scientific discoveries of many different benefits cannabinoids may have, the EU was forced to reconsider its position in 2022.
Common Agricultural Policy 2023 – 2027 and its effects on hemp
As just explained, the common agricultural policy set the threshold for eligibility of EU direct payments and other agricultural subsidies at 0,2% THC level. This changed on 1 January 2023, when the threshold was increased by 0,1% to 0,3% of THC content in hemp. This means that now farmers may grow hemp with up to 0,3% of THC content and still be eligible for EU direct payments and other subsidies. Note that, if you want to grow hemp you still have to follow particular national laws and some of those laws require previous governmental authorization in order to grow hemp.
This move was widely applauded by the EU hemp community, while also recognizing some of its shortcomings.
Lrenza Romanese, Managing Director of the European Industrial Hemp Association said: “I am proud of what has been achieved today. We worked hard to ensure that hemp had the recognition it deserves in the Common Agricultural Policy. I would say that this small step reflects that EU legislators are closer to fully acknowledging and recognising the existence of a legitimate European hemp sector. However, as I have said other times, this is not it. We need to keep working together, as there are still other areas where hemp deserves to be better regulated, but we are on the right track.”
What does the change mean for the CBD and hemp sector?
The change was greeted with great enthusiasm across the hemp and CBD sectors, as it could now allow a greater variety of hemp to be used in CBD production.
Due to the stringent limitations for hemp production in most countries this meant that CBD and hemp producers were far more limited than their counterparts in the United States. The EU hemp farmers only had access to direct payments and subsidies if they used one of the 75 eligible types of hemp. This might also be the reason why the European hemp and CBD market lags behind the US market – however this might change in the next couple of years. With the increased THC threshold of 0,3%, the EU farmers may have more than 500 types of hemp available to them – this could be the push the EU hemp market needs to become more competitive.
Another great benefit of the change is that the amount of CBD in hemp raises with the amount of THC in the cannabis plant, which means that better CBD products and isolates can be produced from hemp with a higher THC content. While an increase from 0,2% to 0,3% might not seem like a lot, even marginal increases may produce great results.
Nonetheless, we would urge you to be careful. Hemp is still a tightly regulated plant and the differentiation between what is legal and what is illegal is not always clear, while the consequences for you and your business may be grave.
The new EU Common Agricultural Policy is in place from 1 January 2023 onwards, however not all EU member states have enacted national laws or regulations that would implement the change and that would thus grant farmers the right to plant hemp with 0,3% THC content or that would allow hemp plants with less than 0,3% THC content to be used in production.
While it is expected that the member states would implement the change, you should always consult component authorities in your country to make sure that what you are doing is completely legal. Otherwise you might end up in complex legal proceedings which may take months or years to finalize all the while your business will face great uncertainty and regulatory scrutiny.
We can safely say that great changes are underway in the EU hemp and CBD market. This is why we believe that the CBD market has the necessary conditions to further develop and continue its tremendous growth streak.
Alongside the change in the EU Common Agricultural Policy, the EU also change its cosmetics regulation to further liberalize the CBD cosmetics market. The CBD community is still awaiting the EU novel foods decision regarding CBD, however, with the science on the side of the CBD business, there is not much to worry about.
Disclaimer: The laws and regulations on this topic are always changing, which means that any information on this topic can quickly become outdated. Moreover, we at Essentia Pura do not guarantee the accuracy of the data, as this article is for informational purposes only. However, it should give you a good overview of the current state in the EU and act as a solid starting point for more thorough research. We cannot stress enough the importance of thorough and correct knowledge on this subject for CBD sellers as well as customers.
Last updated in February 2023