Know Your Source: Purchasing CBD Products for Resale
Updated: Jun 18, 2019
With applications for licenses to grow and process industrial hemp in Wisconsin increasing six-fold over last year, the CBD craze seems to be gaining steam in the badger state.
The Wisconsin Department of Agriculture, Trade, and Consumer Protection has been pumping out guidelines on how to legally purchase industrial hemp seed, including which varieties are approved to grow, reputable sources to purchase from, and how to transport and sell hemp and hemp-derived products out of state (hemp is the plant from which CBD is derived). This is great if you are planning on growing or processing hemp products… but what about if you’re simply hoping to add CBD products to your shelves?
Guidance on how to purchase CBD products for retail hasn’t yet caught up in this respect, but one thing is clear: you should know your source.
Retailers are only immune from liability under Wisconsin law if the purchased CBD products were certified through the Industrial Hemp Pilot Program and the retailer had no reason to believe that the certification was incorrect.
The Wisconsin Department of Agriculture, Trade, and Consumer Protection has also informed us that it is the licensed processor’s responsibility for ensuring that the CBD product conforms to all laws and regulations. This gives wholesalers and retailers a safe harbor from penalties for selling CBD products that exceed the allowable levels of THC (no more than 0.3% on a dry weight basis), but only if the product was purchased through a licensed supplier.
Wisconsin’s Industrial Hemp Pilot Program was established under a 2014 federal law (the 2014 Farm Bill) that allowed states to establish programs and regulate the cultivation and processing of industrial hemp. The Wisconsin program allows CBD products to be purchased from in-state suppliers or out-of-state suppliers. Regardless of the state of origin, the products need to come from a licensed source. Lastly, the hemp pilot program doesn’t supplant any other state or federal licensing and approval requirements. Most importantly, prospective retailers must obtain a seller’s permit from the Wisconsin Department of Revenue.
To be sure, part of the reason why there hasn’t been as much guidance on purchasing CBD products for retail is because there is simply no way to compile a comprehensive database of all of the approved processors from every state. Until state regulatory agencies can catch up with the rapidly growing CBD industry, the current status seems to be “buyer beware”.