In late October, the Sacramento County Board of Supervisors approved a new ordinance that bans the sale of chemically or synthetically altered hemp products that contain more than 0.3% THC.
The move came a month after a new ban on THC-containing hemp products went into effect in California, casting a shadow over the future of the state’s hemp industry.
The steps taken by political leaders in California are in keeping with recent efforts by officials in several states to try to enact greater regulation or control of the intoxicating hemp products industry.
Last week, Rootwurks held a webinar with Shawn Hauser, partner at cannabis law firm Vicente LLP, to discuss the latest developments in the THC-containing hemp market and the complicated regulatory environment the market faces.
Here are some key takeaways from the webinar.
Same plant, different THC level
While there is often much confusion surrounding what makes a plant cannabis as opposed to hemp, the truth is quite simple - they are the same plant. According to U.S. federal law, hemp is a variety of the Cannabis Sativa plant that has less than 0.3% concentration of THC.
“It’s a valid point of confusion for many people." The main distinction is THC content,” Hauser said.
No uniform definition for “intoxicating hemp product”
Typically when we discuss “intoxicating hemp products,” we mean ones that can produce a “high” when ingested. But that is not a universal standard.
“Frankly, intoxicating is a term that's kind of become colloquially used for hemp products that have enough potency to have a high, or a euphoric effect on the body. But it’s not a legally-defined term with respect to hemp and there is no uniform standard,” Hauser said.
The market may be bigger than you think
Though it may be relatively new, the intoxicating hemp products market is growing and could be worth billions in just a few more years.
“Reports estimate it to grow to about $3.5 billion (annually) by the end of 2028, and CBD (Cannabidiol) products alone could be worth $10.3 billion by 2028 if there is some sort of federal finished product regulatory framework” Hauser said.
She added that because states don’t register and track hemp product sales like they do for regulated cannabis, the market is likely to be significantly larger than what the data says.
She also stated that she believes that the hemp beverages market alone could be worth $1.5 billion by the end of 2030.
States are trying to find ways to regulate hemp products
In states like California, New Jersey, and Missouri, political leaders have received laundered initiatives to rein in the hemp products market, or at least put it under better regulation.
“The market has moved faster than the law. So states have really had to step in and regulate,” Hauser said, adding that the “more extreme approach” taken in California is “an example of states struggling to regulate the market.”
Ultimately, the end goal of all these measures is safety.
“At the end of the day, it's about consumer safety and which program has effective product safety regulations and age gates and marketing limitations,” Hauser said.
The solution is legalization
Markets can thrive in a vacuum, and the spread of hemp hemp products is a good example of what can happen in the absence of regulation. According to Hauser federal legalization and regulation is key.
“At the end of the day, the real solution and hopefully long-term where we're going is to legalize and regulate the whole plant,” Hauser said, adding that “right now, we've got two products that are legally treated differently but are really the same plant.”
Bonus: It can be easier to run a hemp company
In recent months, there have been reports about cannabis industry entrepreneurs who have decided to jump ship for the legal hemp market, possibly as part of a wider trend.
This is in large part because legal hemp is not considered a controlled substance under federal law, and companies in hemp do not face nearly the same restrictions as their counterparts in hemp.
“Cannabis companies generally have more robust seed-to-sale tracking and more robust testing and manufacturing standards as well as marketing, packaging, and labeling standards.”
States also don’t have an enforcement apparatus for hemp products as they do for marijuana regulations; Hemp companies can also sell products on an interstate basis and are not subject to the 280e tax code that states that companies that sell controlled substances cannot claim business expenses on their tax return.
“It is magnitudes more expensive for a marijuana business to operate and extremely difficult to be profitable,” Hauser said.
If you missed last week's webinar, you can still catch it here on demand. In addition, you can check out the Understanding USDA Hemp Regulations Course we offer on the Wurkshop. Developed by Cannabis Safety & Quality (CSQ), the course teaches learners how to navigate this complicated regulatory framework and how Good Agricultural Practices (GAP) for hemp and current Good Manufacturing Practices (cGMP) can produce safer and more compliant hemp products.
