The 2018 Farm Bill legalized the production and sale of hemp and hemp-derived products in the U.S....
A family feud has erupted in the cannabis space and like any heated sibling rivalry, the actions of one bad apple or two have upended allegiances.
Hemp, long considered the industry-focused benign cousin of flowering cannabis plants that naturally produce the psychoactive compound delta 9 THC, has emerged as a key source for delta 8 and delta 10 THC.
And since they’re derived from hemp, which the federal government classifies as an agricultural crop—not a Schedule I controlled substance like flowering cannabis, the regulatory landscape is entirely different—and exceptionally lax in some spaces.
The likely only solution to the hemp-cannabis rift is regulatory alignment, but as with any dispute where both sides have amassed significant heft, getting there will be painful—if it’s achieved at all.
Affiliation with Cannabis Hurt Hemp
Cultivated for centuries for its strong fibers and food and medicinal purposes, hemp production in the U.S. thrived through much of the 19th century. Demand waned in the first part of the 20th century amid the rise of alternate fibers and growing animosity toward cannabis, and supply dried up almost completely with the passage of the Marihuana Tax Act in 1937.
Stringent taxing and licensing regulations in the act effectively dissuaded farmers from growing hemp for any purpose. Outside of World War II, when the government incentivized the production of hemp to secure a domestic source for rope fibers, this sentiment stuck until the passage of the Controlled Substances Act of 1970.
That law not only criminalized cannabis, labeling it as a Schedule I controlled substance along with heroin and cocaine, it also outlawed hemp, which had previously been viewed as distinct from cannabis due to the minimal amount of naturally occurring THC in its plants.
A 2004 court ruling reestablished the difference between cannabis and hemp, which cleared the way for state-overseen production in the 2014 Farm Bill. Four years later, the 2018 Farm Bill designated hemp as an agricultural commodity (as long as it contained less than 0.3% naturally occurring THC) and removed it from the controlled substances list.
Legal Status of CBD
Source: MyCannabis.com, https://www.mycannabis.com/the-legality-of-cbd-in-the-united-states-what-you-need-to-know/
That move freed hemp-derived cannabidiol (CBD) from DEA regulations, which helped boost CBD’s status as a therapeutic treatment with limited psychoactive effects. Although, the subsequent transfer of its oversight to the Food and Drug Administration (FDA) contributed to a lack of clarity on regulations, which has resulted in a blend of state-level regulations on CBD.
The ongoing murky regulatory outlook for CBD from the FDA could considerably weigh on the treatment’s growth potential, according to industry research firm the Brightfield Group. For example, the firm projected a drop in CBD sales to $3.4 billion in 2024 from $3.8 billion in 2023.
A THC Windfall
Enter hemp-derived THC.
Yes, industrial-grade hemp contains less than 0.3% THC by law, but that’s the naturally occurring delta 9 THC.
When run through a production process, hemp-derived CBD converts into synthetic THC: either delta 8 THC, which affects consumers similar to the delta 9 THC naturally occurring in indica plants, or delta 10, which affects consumers much like the delta 9 THC naturally occurring in sativa plants.
And yet, beyond the high, there’s little similar between delta 9 THC and its synthetic siblings.
The biggest difference? Hemp-derived THC is federally legal, which allows delta 8 THC and delta 10 THC to be sold across state lines and allows hemp farmers to participate in federal crop insurance programs.
Additionally:
- Testing and regulation for hemp products is left to individual states, which have implemented a wide variety of approaches to standards and rigor
- Lab testing and synthetic processes generally unknown and unregulated
- Some states that haven’t legalized cannabis also haven’t regulated hemp-derived products, opening a loophole for THC sales
- Labeling isn’t regulated, opening yet another potential loophole as delta 9 THC products may be sold as delta 8 THC products
- An absence of advertising regulations has also led to untrue claims that delta 10 THC can help treat cancer, multiple sclerosis, chronic pain, and anxiety
As for its impact on the marketplace, hemp-derived THC has taken off, with sales jumping nearly 14-fold between 2020-23, according to Brightfield Group.
Source: Brightfield Group via Cannabis Business Times, https://www.cannabisbusinesstimes.com/business-issues-benchmarks/cannabis-sales-trends/news/15686872/how-big-is-the-us-market-for-delta-8-thc-and-other-intoxicating-hemp-derived-cannabinoids
Federal Lawmakers Scrambling to Catch Up
The disconnects between the types of THC aren’t going unnoticed, especially given that the disparity in federal treatment has impacted the businesses of licensed cannabis operators operating within strict state guidelines and also upset consumer safety advocates.
At the state level, much like cannabis, hemp-derived THC legislation runs a spectrum, from a complete lack of regulation to outright prohibition.
Source: Brightfield Group via MJBiz Daily, https://mjbizdaily.com/map-of-us-delta-8-legalization-by-state/
The legal debate has bubbled up to the federal level, as well, with bills working through both houses of Congress.
The House is considering an amendment to the 2018 Farm Bill that distinguishes between industrial hemp and “hemp growth for cannabinoid extraction” and would essentially outlaw the latter.
The Senate recently saw the introduction of the Cannabinoid Safety and Regulation Act, which would regulate the production, testing, and labeling of so-called intoxicating hemp products as well as limit the marketing and sales of those products to adults 21 and over.
Consistent Regulation Needed
While the situation has sparked animosity on both sides of the cannabis/hemp divide, some multi-state cannabis operators have adopted an “if you can’t beat ‘em, join ‘em” approach. Curaleaf, Green Thumb Industries, Cookies, Jeeter, and 1906 are among the cannabis companies that have diversified into hemp-derived product lines, according to MJBizDaily.
Our stance?
It’s unfortunate the Farm Bill loophole was created in the first place, and in an ideal world both cannabis and hemp would co-exist under the same regulations.
In the absence of that, however, we believe the unregulated hemp market is dangerous as it allows the inevitable bad actors to take advantage of the loophole to flood markets with untested, unregulated, and unhealthy products.
Ultimately, while some players in that market may try to play by the rules, they’re overshadowed by the bad actors.
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Now that you’re up to speed on hemp, round out your knowledge on cannabis capital and the rescheduling process at the Education Page on our website. |
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