Hemp Barons 0008: Hoban Law Group - Bob Hoban

Bob Hoban is the founder of the Hoban Law Group the "Nations Premier CannaBusiness Law Firm" gives Dan Humiston a Hemp update.   Bob has been representing Hemp companies for over a decade so he know the Hemp industry.   He gives a brief Hemp history, talks about where Hemp is today and a predictions of where the Hemp opportunities will be in the future.  Hemp Barons is a weekly show

produced by MJBulls Media.

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Dan Humiston:
Welcome to hemp Baron's. I'm Dan Humiston. And on today's show I'm in Denver with my good friend Bob Hoban who is the founder of the hope and lore group which is the world's premiere. Can a business law firm. You know Bob's been a lawyer for hemp companies for a long time. Long before hemp was the rage. and now he has offices throughout the United States and around the world so he really has his finger on the pulse of the hemp industry. We had a great talk to share a lot of good stuff about stuff that is happening now and some ideas about where he thinks the future will be. Let's join my conversation with Bob Hope and hope and law group. Hey Bob welcome to the show.

Bob Hoban:
Dan thanks for having me. Good to talk with you today.

Dan Humiston:
Well Bob Hoban is the president and founder of the nation's or I should say the world's premier. Can a business law firm. So Bob we've known each other for a long time but I'll tell you what the name of the show is hemp barons and Bob Hoban and for those of you that do not know Bob. Bob was hemp before hemp was cool.

Dan Humiston:
Welcome to the show.

Bob Hoban:
Thank you. That's definitely one way to put it and hemp is king right now.

Bob Hoban:
Well you can talk to us more about that. We've had a lot of guests on the show talking about how things have just really changed since the passing of the farm bill. I think I'd like to hear really from somebody that's really in the trenches. I mean you were there before the farm bill was passed and you're one of the driving forces behind getting the farm bill passed. Maybe just give us a little bit of background as to where you know how we got here and where specifically where we are right now.

Bob Hoban:
Sure. I got into the side of the cannabis industry our introduction was on the marijuana side opening some of the first dispensaries in the state of Colorado and Washington in Oregon and then down the road. And then the hemp opportunity came around as well as early as 2009 when a company called cannabis which is now CV scientists contacted us and began to seek some counsel on the legality of CBD or cannabinoid products that they were selling at that time which gained a lot of attention attraction. And there was question about legality. There was also a question about sounds funny but they were asking lawyers to help them devise their distribution strategy and we went down that road and see scientists the world's leading CBD companies. But back then they were looking for some guidance and we were happy to provide it. Hemp meds is police at that point and was a sister company. They're both based out of San Diego and they were the two leading and largest distributors of these products back at that point in time which seems like eons ago but it was less than 10 years ago is CBD illegal substance. Where is it derived from. What's it derived from. Is it in the Controlled Substances Act. How do you distribute it. How do you advise distributors of the legality. Those are some of the questions that we had to handle. We addressed them. Those companies have become wildly successful and because of that probably 30 of the top 50 brands worldwide remain our clients and rely on us heavily for not just regulatory guidance but corporate dominated activity and the like so that's that's how we got into it. It's extraordinarily exciting and I thought frankly that the CBD entry was saturated two years ago I couldn't believe it when people called me two or three years ago saying how do we get in this industry. My opinion back then was it's too late. Well if this demand is truly what it appears to be it's insatiable. We've seen now Carl's Junior is going to feature hemp based CBD burgers. We just thought you know that.

Dan Humiston:
I had lunch on a protein bar here. It's a big sign on the board. It said two dollars for a CBD shot and that's it. The protein bar in Denver this is everywhere. Now it's mainstream. So specifically what did the farm bill do that made it different.

Bob Hoban:
All right. So let's take it back to the first farm bill. So when I talked about CB scientist cannabis and I talked about hemp meds that was prior to the 2014 farm bill which really cracked the roof open of the CBD industry because what that did was it allowed states to enact programs whereby they participants could engage in research for scientific agricultural and market based research. So the state of Kentucky actually sued the federal government in that period of time and said How on earth can we do market based research without a market. And that cracked open the ability to create commercial for profit enterprises in this space and then Congress followed and paved the path and said you can transport this product to interstate commerce under that 2014 farm bill but there were some problems with that farm bill problems such that we are law firm on behalf of a number of great clients to the DEA and got a very favorable result that declared that TBD is not itself say a controlled substance not a hemp wasn't a controlled substance produced under that farm. But that farm bill was narrowly interpreted by the DEA and by other federal agencies to say oh this is for research purposes only. Well how can you have marketplace research without a market. That was the debate that began and that's what sustained the industry until later this year than 2018. We had the most unlikely source of the most significant cannabis reform in U.S. history was Mitch McConnell because of Kentucky's rich history with industrial hemp. They passed the 2018 farm bill which makes it absolutely clear unequivocally this is not a controlled substances and products therefrom are not controlled substances it's authorized different federal agencies that USDA in particular and the FDA in particular to govern these products. And that's where we are today. So when institutional capital major retailers so forth and so on saw this. They came in in a very very very big way. And that's the hot CBD industry that we see today.

Dan Humiston:
Oh yeah. We're hearing stories of CBS and Walgreens. I mean this is happening it's happening fast. Let's pump the brakes here for a second. I know it's not the same in every state at this point. You know this far better than I. Why everybody isn't in the same place.

Bob Hoban:
Yes. So let me start with the point you just raised about retail. So most of the retailers that you've mentioned that you read about their clients advised we were working with them for years to help them develop their strategy to be ready. And some of them settled on just allowing the sale capitals some room to go gone so far till now CBT and CBT related or cannabinoid related products to go into the marketplace. But remember if you're going to sell these products in mainstream you've got to go through the retailers and the retailers will dictate the policy. But remember that retail shelf space is already owned by somebody else. So can you create a CBT company and just hope to go out and be featured on the shelves of CBS or the like. There are some major challenges there because that shelf space is owned by neutral studio companies cosmetic companies companies that otherwise controlled the space. So those companies are positioned to be the leaders in this space because they already control the shelf space. So they're looking for contract manufacturer partners. So if I were going to go out and create a CBD company can I get on those shelves. Those are some questions that are challenges. Why haven't all states moved forward. Because right now until the FDA gives us guidance they haven't spoken as to what is the specific pathway. They've advised that there will be a pathway and that there is a pathway but they haven't specifically said what that pathway is to the marketplace. So some states some retailers some manufacturers they're waiting for that pathway to be given to them to be delineated by the FDA. And frankly the USDA before they go forward in a major way as I like to say it's United States of America.

Bob Hoban:
When has any U.S. based company ever waited for the U.S. government to tell them they could or could not do so. So that's how this industry has come out of a box and I don't say that flippantly like this company should do whatever they want. I say that because there are existing standards in the FDA under the Food Drug Cosmetic Act that applies to all foods and nutritional supplements. So all of these things are in place. And the good companies have been advised for years to follow those tenets and that's why their world leaders in this space but new companies coming to the mix are acting as if there's no standards in place. So states have been slow to react. Some states have said well we're not going to allow anything to happen until the FDA speaks for the FDA is probably not going to give us formal clarity until at least late in this year if not 2020 or beyond. It's going to be an evolving process and that's why a lot of states have laws but forward thinking states proud to say Colorado is the most forward looking state. And in the Hamptons or the CBD in the streets in that it has actually enacted guidelines for the production of CBD or other derivatives from hemp as a food and a supplement and has been a national leader in that respect. So good things are happening. It just hasn't happened to the point where most conservative institutional capital and institutional operators would just go into it with no holds barred and frankly that's the hesitation that the states have as well.

Dan Humiston:
I guess what you're saying is there are still some people on the sidelines on this one but not as many as there were at the end of last year when the farm bill was passed. That's correct.

Bob Hoban:
That's correct. And then it also begs the question Who are the major players in this industry who will be the major players in this industry. Is it cannabis based companies or companies that come from the cannabis or the cannabis financial world is a company that come from the AG world the food world the supplement world. This is a collision of multiple industries right now centered around cannabinoids from hemp and it's really unclear who the winners of that game are going to be because the cannabis industry feels like this is theirs. The supplement industry says all we've been doing this for decades this is ours and so forth and so on. That's going to be interesting to see how it shakes out.

Dan Humiston:
And to be part of that you talked about the FDA. They know that there are different thresholds based on how they classify this CBD right now as being classified as a supplement known as a drug.

Bob Hoban:
Well this is this is the thing that the FDA statement is that you're not allowed to sell cannabinoids in its products because they're just not approved products right now. They're not dietary ingredients meaning they're not considered food. They're not dietary supplements meaning they're not considered supplements. They're not considered drugs except for drugs that have been approved such as APA dialects and some others that might be in the pipeline. So the FDA position is that these products have not been approved. But here's the rub. You extract a desolate from an industrial hemp plant that contains cannabinoids and Turpin and the like so long as that THC level is not above that point three percent threshold. It's no different than what's always been in the marketplace. There have been hemp oils with those same constituent components in different ratios in the marketplace for decades and decades and decades and this is the same. Wrestling with within Europe with what's called the novel's foods concept how do you designate this. So the FDA says no. Even though it exists. But then they talk about the other side of the mouth. And the only enforcement that we've seen to date is enforcement based on claims. I can't go sell product and say that this cures breast cancer or that this will help with any sort of medical or physical condition because it hasn't been approved for that purpose. And unfortunately the CBD industry they want to take advantage of that they won't be able say this helps you with condition A B and C but no food no product no ingredient can do that unless they've gone through an FDA approval process.

Bob Hoban:
So the FDA is saying don't make claims and you can't do this. But they're also not enforcing. That's not a reason to do it. The lack of enforcement but it's also telling about how this is going to be perceived. You know one of the most interesting things that I see is that there's there's hundreds of patents out there held by pharmaceutical companies and entrepreneurs and otherwise. And those patents. I think you're going to shape where this industry goes. For example if you look at a patent that might be held by a pharmaceutical company for a drug that same pattern might apply to an over-the-counter food or supplement because it might be very general. So what's that patent holder going to do. It's going to try to participate in both the drug side and the food and the supplement side. It's not going to try to shut down its competition. It's going to go to its competition and say if you don't make a deal with me for a royalty interest on every unit you sell we will shut you down or at least try to through the legal process. So the system is set up to allow all of these lines to exist at the same time. And guess what the FDA knows. So that's one of the reasons I think that you've seen this slow play.

Dan Humiston:
Well you mentioned a minute ago stuff that's going on in the UK and I didn't mention this at the beginning of our podcast. But you've got 15 offices outside of the United States. And is that just because the same explosion is happening here is happening all over the world.

Bob Hoban:
Yeah but even more so in Europe in particular because Europe Japan Latin America these governments these laws in other countries a carve a very very clear pathway to allow these products into the market based on a country by country basis. So you've seen tremendous development in those places. And one of the reasons we built offices outside of the US is not only to provide legal services but we've literally created and built the global cannabis supply chain in large part through our clients who are working with government partners and through understanding the pathways that do exist for these products right now and connecting a lot of what we do is connect a supplier in Colombia with a buyer in Poland who wants to manufacture products and distribute them in Germany and Czech Republic. That is something we deal with every day. And that's where the most exciting things to be a part of. Literally on the ground pioneering the creation of a global supply chain for hemp which is what we've also done in part with the high THC or the marijuana oil or it's. But it's a far more limited and controlled marketplace.

Dan Humiston:
Well with that vantage point look into the Bob Hoban and crystal ball and tell us where the great opportunities are going to be in hemp in the next couple of years.

Bob Hoban:
So this is where I might differ from a lot of the people that are so so-called bullish on hemp. I think that the opportunities are going to equalize for the different sectors of the hemp plant growing by that good. Now everybody is looking at cannabinoids and technology to extract and or formulate cannabinoids and cannabinoid products. And while I believe that that's going to be a robust and stable market there's going to be some challenges both from a regulatory perspective and from a supply chain perspective over the next several years. And then frankly there's going to be so much CBD for example produced in the US that's going to cause the market to just fall apart. The price is going to drop through the floor and that's going to leave a lot of people that have invested large sums into production facilities and distribution channels to lose a great deal of their investment or at least their upside on their investment. But that's also going to cause an equalization among some of the other great things that this plant could do. When we look at the 50000 so-called uses of the industrial hemp plants some of the top things that are readily available with scale technology are fuels and our plastics. And another interesting component is the grain market the Canadian hemp marketplace has controlled hemp seed hemp green if you will for primarily oils and just straight hemp seed production. They've been world leaders in that marketplace and the U.S. based marketplace with its zero to almost one hundred thousand acres in less than four years and we're going to probably double that in 2019 is gonna put the US in a prime position to seize a large share of that green market production.

Bob Hoban:
So the green from the seed the fibers putting fiber into the marketplace for US based manufacturers of automobiles and door panels such as Ford and the like. Those things are happening right now. Innovation officers are looking at ways. Use what's called bio char from the head to produce grafting which is a super capacitor conductor. You've got companies that produce ethanol and fuels looking very very deeply. Some large oil producers are clients of ours and they've come to us to help them devise their strategy. So how can we make a biofuel based on industrial hemp components because it lends itself so readily to that and then plastics. That's where I would invest if I was looking to invest in the hemp industry. I would look at a plant holistically. I would invest in farming applications that look at the plant from a supply chain perspective not just a CBD or a high cannabinoid perspective. And that's where I see things going. And I think that that's going to lend itself very well to the capital that comes into it to be more AG words short of traditional industrial based versus what we're seeing right now which is largely tied to the cannabis financial elements driven by CBD production.

Dan Humiston:
Well you heard it folks right from Bob Hoban into crystal ball. That was that was it. That was it. Well put it down market.

Dan Humiston:
Bob said it today. We've been speaking with Bob Hoban who is the founder of the open law firm. And as I said earlier one of the pioneers in the hemp industry was before hemp was cool Bob was knee deep in the hemp industry. I have all Bob's information on our Web site. And if anybody needs any information I'm sure somebody at Bob's firm is there we'll be there to help you even if you're another country. So Bob it's always great to have you on the show. I'm sure we'll be talking again soon. But any closing mark for our listeners.

Bob Hoban:
No I appreciate the time and it's always good to talk with you Dan and at the end of the day for those folks that are looking at the hemp industry. I would pump the brakes. I'd tap the brakes. You don't have to pump the brakes hard but as you look at investment and opportunities have the brakes and prepare for what tomorrow brings. Not necessarily what today brings. That's just good business advice overall. But it's particularly useful in an industry.

Dan Humiston:
Well I appreciate that Bob and I appreciate you being on the show. Let's stay in touch. Good luck. Sounds good.

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