Pending Federal Hemp Legislation Could Reshape The Legal Industry By Banning Some Products (Op-Ed)

*“The outcome of the debates around these provisions will determine the
future of hemp-derived products in the United States, and the economic
viability of the industry.”*

*By Lauren Estevez and Joanne Caceres, Dentons US Cannabis Group*

As Congress returns from recess this month, the hemp industry is closely
monitoring provisions that could fundamentally reshape the entire sector.

The 2018 Farm Bill removed hemp and its derivatives containing less than
0.3 percent delta-9-THC from the Controlled Substances Act. A so-called
“unintended consequence” was that it became possible to produce hemp
products that complied with the limit but had sufficient amounts of THC to
produce an intoxicating effect.

Sales of such products, including hemp beverages and edibles, have
increased significantly, encouraged by consumer demand for alternatives to
alcohol. Hemp beverage sales alone are expected to more than double over
the next four years, to reach $4.4 billion by 2029. All of this could
change under provisions contained in pending appropriations legislation.

Sens. Mitch McConnell (R-KY) and Rand Paul (R-KY) have been dueling over
various provisions that could dramatically change the hemp market, with
McConnell vowing to “close the Farm Bill loophole” responsible for the
intoxicating hemp market. In contrast, Paul is looking to “reach a
compromise” on key provisions that would further regulate the hemp industry
rather than upend it.

As current appropriations legislation makes its way through the legislative
process in the House and the Senate, these are the key provisions that
state regulators, consumers and the hemp industry should be watching. There
is also pending federal legislation that would regulate hemp products apart
from the Farm Bill.

*“Total” THC Concentration Calculation Effectively Prohibits Certain
Intoxicating Products*

One of the provisions that appeared in House and Senate versions of
agriculture appropriations legislation—before being removed from the Senate
version—would add other THC molecules to the calculation for the 0.3
percent delta-9-THC limit.

The 2018 Farm Bill defined legal hemp as “the plant Cannabis sativa L. and
any part of that plant…with a delta-9 tetrahydrocannabinol concentration of
not more than 0.3 percent on a dry weight basis.” In contrast, the current
bills account for “total tetrahydrocannabinol concentration (including
tetrahydrocannabinolic acid) of 0.3 percent in the plant on a dry weight
basis.”

This provision would bar certain products from the market which have low
delta-9-THC but have high concentrations of other intoxicating THCs (such
as THC-A, Delta-8 THC, THC-O, etc.). This would outlaw many hemp products
currently on the market, especially hemp flower products and vape products
with high THC-A, and cause disruption to many business owners, especially
smoke shops and gas stations, where such products thrive.

If enacted, it would require manufacturers to reformulate certain products
and invest in new testing procedures to ensure compliance with the narrower
definition for legal products.

*Excluding Synthetic Cannabinoids And Conversion Will Lower Supply and
Increase Input Costs*

The agriculture spending legislation also excludes synthetic cannabinoids
from the definition of legal hemp products. These provisions exclude
cannabinoids that are not naturally produced in the cannabis plant, and
those which are naturally occurring but which are produced “outside of the
plant.”

While synthetic THCs are currently illegal under the Controlled Substances
Act, there is legal uncertainty around naturally occurring THCs which are
created through chemical processes from the naturally extracted hemp
cannabinoids (frequently, naturally occurring CBD is converted to
delta-9-THC and other intoxicating cannabinoids).

A prohibition against converting CBD to THC would significantly impact the
cost to make these ingredients for intoxicating hemp products.
Manufacturers that currently rely on these converted cannabinoids would
need to discontinue certain product lines altogether or produce them with
naturally occurring cannabinoids at tighter margins.

*Ban On “Quantifiable” THC Or Intoxicating Cannabinoids Would Push
Intoxicating Hemp Products Back To Illicit Market And Inadvertently Harm
The Non-Intoxicating Cannabinoid Wellness Market*

The most controversial provision would limits the “legal limit” of THC
concentration in hemp products from 0.3 percent to “no quantifiable” amount
of THC, with quantifiable amount to be defined by the Department of Health
and Human Services (HHS) in consultation with the U.S. Department of
Agriculture (USDA).

The provision would create tremendous disruption for the hemp industry,
state regulators and customers. As currently drafted, the definition of “no
quantifiable amount” is ambiguous as to whether it means 0 percent or some
other threshold. Certificates of analysis usually denote no “detectable
amount” when testing is below a certain limit.

The definition of “quantifiable” is unknown. This rule could ensnare full
spectrum and CBD products, which are neither intended nor designed to be
intoxicating. The change would also conflict with the many state laws that
allow for 0.3 percent and or have quantifiable limits like 2.5mg, 5 mg, or
10mg of THC per serving or package for legal hemp products.

*Standalone Hemp Regulation Bills Like Griffith’s Proposed Approach*

While additional regulation of hemp products is sorely needed, a regulatory
approach focused on health and safety will ultimately be more effective
than a prohibition bill.

Draft legislation from Rep. Morgan Griffith (R-VA) circulated in late
August would allow for hemp product sales to adults aged 21 and over, and
would require HHS to determine THC thresholds within 60 days of passage of
the bill.

The legislation would require labels to contain a QR code linking to a
certificate of analysis showing which cannabinoids the product contains and
in what quantities, prevent hemp producers from adding alcohol and nicotine
to their products and require tamper-proof packaging that does not appeal
to youth.

In the event that HHS fails to establish THC thresholds within the required
timeframe, the bill would automatically implement the following limits:

- Oral hemp products with non-intoxicating cannabinoids: Up to
10mg/serving and 50mg/package.
- Inhalable products: Up to 100mg/serving and 500mg/package.
- Topical products: Up to 100mg/serving and 500mg/package.
- Intoxicating cannabinoid products (e.g. items containing THC): Up to
0.2mg/serving and 1mg/package.

The restrictions in Griffith’s bill mirror many state regulations that are
already in place, and the automatic THC thresholds that would be
implemented allow for a larger variety of products than the restrictions in
the appropriations bills. However, the proposed limits to intoxicating
cannabinoid products suggested would effectively eliminate the legal hemp
intoxicating product market.

*Conclusion*

The pending appropriations bills and other hemp legislation could
dramatically reshape the hemp industry, with proposed provisions that could
significantly tighten the regulatory landscape.

If Congress redefines THC limits to include all cannabinoids, excluding
converted and synthetic cannabinoids, or potentially imposes a “no
quantifiable” THC threshold, lawmakers are signaling a shift toward
significant product restrictions for hemp producers.

These changes would not only disrupt current business models and product
lines but also create substantial compliance challenges for manufacturers
and state regulators.

The ambiguity surrounding key terms like “quantifiable” further complicates
the path forward, raising questions about enforcement and conflicts with
existing state laws.

All hemp products, whether intoxicating or not, would be impacted by these
provisions if passed as drafted. Such stark changes to the law would likely
push such products to the illicit market, making them less safe.

Instead, an approach similar to states like Minnesota, which allows low
intoxicating dosages of up to 10mg, or less THC for beverages, as
determined at the state level, would be a more suitable alternative for
Congress to consider.

Now that Congress is returning from recess, the outcome of the debates
around these provisions will determine the future of hemp-derived products
in the United States, and the economic viability of the industry.
Ultimately, any of this federal legislation would be a critical turning
point for the industry, either fostering continued growth and regulatory
clarity, or introducing new hurdles that could reshape the market for years
to come.

*Lauren Estevez is a Senior Managing Associate in the Dentons US Cannabis
Group. Joanne Caceres is a Partner in the Dentons US Cannabis Group.*

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By Banning Some Products (Op-Ed) appeared first on Marijuana Moment.