“CBD Madness” Sweeps Nebraska
Feb 22, 2019 11:32AM
By Sean McCarthy
Second fact of life in Nebraska: If you want to buy hemp seed oil for anything from a skin moisturizer to a pesto ingredient, you’re more than free to walk into any natural health market, and pick up a bottle without fear of legal action.
Somewhere between these two uses for the same plant lies the dilemma of CBD, or cannabidiol oil. The National Institutes of Health currently has dozens of studies on how CBD could be used to treat ailments and diseases like chronic pain, epilepsy, and schizophrenia. Though medical studies of CBD date back decades, as a business model, CBD is a relatively new venture. And this past winter, CBD businesses in Nebraska have encountered everything from curious patrons to arrests by law enforcement officials.
On Dec. 14, 2018, police in Scottsbluff arrested Heather Kaufman Beguin and her son Dreyson Beguin for selling CBD a day after they opened their store KB Natural Alternatives. The arrest came almost a month after Nebraska Attorney General Doug Peterson reissued a memorandum reminding that CBD “remains illegal to possess, manufacture, distribute, dispense, or possess with the intent to manufacture, distribute, or dispense” with two exceptions.
According to the CBD enforcement memo from the attorney general, the two exceptions for legal cannabidiol in Nebraska include:
1. The University of Nebraska Medical Center’s four-year study of CBD’s potential for treating epileptic seizures. The limited UNMC study was approved by the state’s legislature in 2015. Currently ongoing, the study will conclude by Oct. 1, 2019.
2. Cannabidiol products that are approved by the U.S. Food and Drug Administration, of which there is only one available on the market (Epidiolex). In June 2018, the FDA approved Epidiolex for two severe and rare forms of epilepsy (Lennox-Gastaut syndrome and Dravet syndrome). Patients in the UNMC study are receiving Epidiolex.
Closer to Omaha, the CBD American Shaman store in Bellevue was served a cease-and-desist order by Sarpy County Attorney Lee Polikov in December. CBD American Shaman also has locations in Omaha, Lincoln, and Council Bluffs. The stores sell oils as well as CBD-infused lip balm, skin cream, and various pet products (such as dog biscuits). The Council Bluffs shop enjoys the legal support of Iowa’s Medical Cannabidiol Act, which passed the Iowa Legislature and was signed into law by then-Gov. Terry Branstad in 2017.
About the same time as Polikov served the cease-and-desist order to the Bellevue CBD American Shaman store, Douglas County Attorney Don Kleine stated that law enforcement officers would not target businesses that sell CBD products in Douglas County. Kleine said local narcotics officers were more focused on combating the opioid and prescription drug epidemic, even though he acknowledged CBD was, by law, an illegal substance in Nebraska.
In January, other Nebraska counties’ law enforcement agencies started to follow Kleine’s lead. On Jan. 14, exactly a month after the Beguins’ arrest in Scottsbluff, the mother and son learned that Scotts Bluff County Attorney David Eubanks had filed paperwork to dismiss charges against them. Eubanks stated the Nebraska Legislature needed to better clarify the law regarding sale of CBD. Also in January, the cease-and-desist order for Bellevue’s CBD American Shaman passed without incident when the Sarpy County Attorney agreed to extend the grace period for the store.
Omaha business’ reactions have ranged from compliant to defiant of the state attorney general’s stance against CBD.
In December, Fresh Thyme Farmers Market, with three locations across Omaha, decided to pull all CBD products from its shelves (although they still sold hemp seed oil). By January, it was back on the shelves in Omaha. In an email, Jonathan Lawrence, the director of vitamins and body care at Fresh Thyme, says the Omaha stores resumed selling CBD products because of the passage of the 2018 U.S. Farm Bill and Don Kleine’s public statements about CBD enforcement. Responding to a phone call in early February, an employee at Fresh Thyme’s location in Lincoln said CBD products were available for sale on store shelves.
CBD American Shaman stores remained open in Lincoln and Omaha. At the 96th and L streets location, a response to Doug Peterson’s reissued memorandum is proudly displayed in a frame next to the door. The response, from Sean Pickett, a lawyer for CBD American Shaman, states that they are in their legal rights to sell their products in Nebraska.
Garrett Carbonell, owner of the CBD American Shaman location at 96th and L streets, says his business has been visited by Omaha police, but not for law enforcement purposes. Carbonell says officers have purchased some of their products for their spouses.
“Their stance was, ‘We could mess with you. We don’t want to. We don’t care. You’re basically selling Advil,’” Carbonell says.
In an email, Lt. Darci Tierney of the Omaha Police Department, stated OPD did not have a definitive policy when it came to addressing how to handle stores that sell CBD. Tierney says they are still working with the Attorney General’s office, the county attorney, and the City Prosecutor’s Office.
“Once we have that hashed out…we plan to announce to the media and local CBD businesses. We will coordinate efforts with all before any enforcement action is taken,” Tierney writes.
To add to the confusion about the legality of CBD in Nebraska, the federal government effectively legalized industrial hemp (and hemp-based CBD) with the passage of the 2018 U.S. Farm Bill on Dec. 20. Its passage removed hemp-derived products from their former Schedule I status under the Controlled Substance Act. The bill was endorsed by Senate Majority Leader Mitch McConnell, who tweeted on Dec. 11, 2018, “At a time when farm income is down and growers are struggling, industrial hemp is a bright spot of agriculture’s future.”
While hemp and cannabis advocates hailed the farm bill, its passage didn’t quite resolve the dilemma about how to treat CBD from a law enforcement perspective. That is because CBD can be derived from both industrial hemp (a variety of cannabis sativa with little-to-no tetrahydrocannabinol, the psychoactive chemical compound known as THC) and the flowers from either cannabis sativa or cannabis indica that have been cultivated for high THC content (often referred to as “marijuana”). Federal and state laws have ruled that hemp-derived CBD must only contain .03 percent THC. The farm bill essentially gives each state the right to decide how it wants to handle the sale of CBD.
For brick-and-mortar stores like CBD American Shaman, that means doing business in a state where CBD is still considered illegal. The only other two states where CBD is illegal are Idaho and South Dakota. For non-brick-and-mortar stores operating in Nebraska, that leaves some wiggle room.
Gunhee Park, one of the founders of Populum, operates his web-based CBD business in downtown Omaha at 19th and Harney streets. It is in that location where Park handles marketing and customer service. The CBD itself is extracted from a farm in Colorado. It is then sent to Texas, where it is formulated. Finally, it is sent to Arizona, where it is packaged and shipped. Populum’s website shows pictures of their delivery boxes—which resemble those upscale shaving kits that are delivered weekly to customers in shave clubs.
“We don’t touch the product here at all,” Park says.
Park was born in South Korea, and grew up in Bundang, a district in the city of Seongnam. He moved to Omaha, where he attended Mount Michael Benedictine High School as a freshman. After graduating from Mount Michael, he went to Arizona State, where he earned a bachelor’s degree in supply chain management and computer information systems. Before starting Populum, he worked as an operating analyst intern at Goldman Sachs and as a senior analyst at Dell.
While Park was working in Austin at Dell, he became disillusioned with corporate life. At the time, Park was taking five to seven health supplements a day, including vitamins and magnesium pills. Park began taking CBD to treat his anxiety, and found it worked for him.
Park moved back to Omaha, where his wife, Sara, was studying to be a nurse anesthetist at Clarkson College. For business, Park says Omaha is advantageous because of the young talent in the city as well as the more affordable operating costs compared to cities like Austin or Denver. Because the CBD-focused market is relatively young, many businesses do not have the professional look of an established boutique store, Park says.
“The [other CBD stores’] websites were crappy. There’s no customer services. There was no return policy,” Park says.
That was where Park wanted to take Populum, which was founded in late 2016. Park says Populum offers customers a “no questions asked” 30-day return policy. On their website, customers can look up lab results, which display the purity of the CBD, the amount of THC, and the metallic compounds of the hemp extract.
When Populum first started, Park encountered the same financial difficulties that cannabis-based businesses face even in states where it is both medically and recreationally legal. The biggest hurdle was with payment processors like PayPal.
“They don’t want to touch hemp, because there’s this lack of awareness, and there’s this tendency to group hemp and psychoactive marijuana in the same bucket,” Park says.
To sidestep the financial barriers in the United States, Park says he found a financial institution in the United Kingdom willing to process payments. The only problem with that was Populum’s customers received alerts about an international transaction that showed up on their bank account.
“We would essentially have to call every customer and explain what our situation was,” Park says.
Park says Populum has since found a domestic payment processing company, and banks are becoming more receptive toward cannabis-based businesses. While his company fields fewer calls about financial transactions, he says people will routinely call with concerns about buying their product. Is it legal in their state? Can they get arrested?
“We formally state our stance that our products are 100 percent manufactured and formulated with compliance of the Agricultural Act of 2014,” Park says.
Even so, Park acknowledges that his company cannot know every state and local law. Park says it’s the customer’s responsibility to be aware of any possible local legal risks to owning their product.
When Omaha Magazine reached out to the Nebraska Attorney General’s office, Suzanne Gage, director of communications, recirculated Doug Peterson’s position on CBD:
“I continue to maintain that if there is medical evidence to support the use of cannabis for treatment purposes, then the appropriate method is to seek FDA approval. Any efforts to advance medical marijuana must be led by medical science and not the industry or politicians.”
Courtney Allen-Gentry, who goes by Nurse Courtney, believes there is enough scientific evidence to support the positive health benefits of CBD. A registered nurse with a Master of Science in nursing, Allen-Gentry is also a public health nurse, a board-certified advanced holistic nurse, and a board-certified health and wellness nurse coach.
“We have 40 years of research done on CBD,” Allen-Gentry says. “We’ve had more research on cannabis than on any other plant.” Contrary to her claim, however, lack of clinical research is often cited as justification for the illegal status of cannabis in Nebraska and at the federal level.
Some of the ailments and diseases Allen-Gentry has used CBD to treat include neuropathic pain, neurological ailments, and alcohol detox. For people who are first discovering CBD, she urges them to pay close attention to the cost per milligram of CBD. For example, she points to a small bottle that costs $66.50 for 1 fluid ounce of CBD at a strength of 250 milligrams. That comes out to 27 cents per milligram.
“If you need 800 mg in a day to treat your condition [like schizophrenia], how are you going to do it at 27 cents? That’s $216 a day. How are you going to do it?” Allen-Gentry asks.
Allen-Gentry says one of the most effective (and less costly) alternatives to the popular CBD oils is to buy a 99 percent pure CBD isolate (a powdered form of CBD) online, and combine it with a full-spectrum hemp oil that can be purchased in most grocery stores. The full-spectrum hemp oil is still legal under Nebraska law.
While Allen-Gentry is a staunch supporter of CBD’s healing properties, she urges customers to remain skeptical of the labeling on some CBD products. She cites a 2017 study in the Journal of American Medical Association that tested 84 CBD products. Of those tested, 26 percent contained less CBD than was advertised on their labels. In addition, the study cautioned that some products underreported the amount of THC in their product, which could lead to a drug test that comes up positive for THC.
As of now, even some of the most vocal advocates of cannabis acknowledge that CBD is illegal in Nebraska (excluding Epidiolex), according to state law. The only way to change this is through the legislature or the ballot box in 2020. State Sens. Anna Wishart and Adam Morfeld have organized a campaign committee (Nebraskans for Sensible Marijuana Laws) for an amendment to the state’s constitution that would give Nebraskans the right to use cannabis for medical purposes. In addition, Wishart has proposed a separate initiative, LB110. Titled the “Adopt the Medical Cannabis Act,” the bill would legalize cannabis for medical use in Nebraska.
The proposed legislation, LB110, would implement a regulatory system to provide access to cannabis for medical purposes, whereas the ballot initiative would simply establish a constitutional right to access the plant (and the legislature would have to put in place regulations that don’t inhibit that constitutional right, if passed).
For Bill Hawkins, an herbalist and a farmer, neither LB110 nor the ballot initiative go far enough. Hawkins, known to many as Farmer Bill, represents the nonprofit organization Nebraska Hemp Company. They have circulated their own petition seeking to amend the Nebraska Constitution to allow anyone in Nebraska over the age of 21 the right to use cannabis, either medicinally or recreationally. Hawkins stressed nothing in the petition allows a person to “engage in a conduct that endangers others.” In addition, the proposed amendment would make any existing law that conflicts with the amendment “null and void,” thus effectively decriminalizing cannabis.
So far, no state senator has signed onto the petition, which is known as The Nebraska Cannabis Initiative. Hawkins says the petition is drafted by attorneys both in and out of Nebraska, as well as other cannabis activists. He estimates it would cost about a million dollars to get the petition on the ballot. He based this cost on the amount that was spent to get the petition to reinstate the death penalty on the 2016 ballot. Hawkins says it will cost about $300,000 to collect the signatures needed to put the initiative to voters. The other $700,000 would be used on voter outreach like direct mail and television ads.
Hawkins cites how more seniors are turning to cannabis as an alternative to the opioid epidemic as a reason why he believes the petition could pass in Nebraska. In addition, he says Nebraska is in a unique agricultural position to have his petition pass, pointing out that 90 percent of the state’s land mass is tillable.
“My petition—the people’s petition—it allows for any Nebraska business person to take part in this cannabis economy,” Hawkins says, adding that his bill would end the prohibition of cannabis in Nebraska.
Additional legislative efforts in 2019 are focused on legalization of commercial hemp in Nebraska (and could legalize CBD derived from hemp in the state). The bills include LB457 (the “Define and Redefine Terms Relating to Industrial Hemp under the Uniform Controlled Substances Act,” introduced Jan. 18 by Sen. Steve Lathrop of Omaha) and LB657 (the “Adopt the Nebraska Hemp Act,” introduced Jan. 23 by Sen. Justin Wayne of Omaha).
“It’s a fast-evolving and important topic. There are a lot of moving parts,” Hawkins says. “It’s history for Nebraska.”
Visit nebraskalegislature.gov for more information about LB110, LB457, and LB657. On Facebook, search for @nebraskamj for Sens. Wishart and Morfeld’s ballot initiative, and search for @nci2020 for the Nebraska Hemp Company’s “Nebraska Cannabis Initiative.”This article was printed in the March/April edition of Omaha Magazine. To receive the magazine, click here to subscribe.
Read additional Nebraskan perspectives on the medical use of cannabis (from which CBD is derived) in this online exclusive content, "2019 Medical Cannabis Op-Eds: From the Governor, a Colonel, and a Drug Dealer," and learn more about the medical side of CBD from an interview with a Nebraska mother whose son takes CBD for his severe seizures, "Legal CBD, Medical Cannabis, and in Between."