They Built a Hemp Business in Good Faith. But Washington Is About to Crush It.

In the spring of 2022, Kristi and Eric Hagemann opened their hemp retail shop, Ananda Hemp, in downtown Olympia, Washington, selling products derived from legally grown hemp, including CBD oils and gummies. The couple spent over $100,000 to renovate the building and turn it into their dream business, navigating a complicated and contradictory set of state and federal regulations in good faith. The 2018 Farm Bill legalized hemp with less than 0.3 percent THC, creating a booming market for CBD and other hemp-derived products. Initially, the industry was a wild west, with little regulation beyond the THC threshold. By the time the Hagemanns opened Ananda Hemp, the Washington State Liquor and Cannabis Board (LCB) had started to crack down on hemp products containing other cannabinoids, such as Delta-8 THC, claiming they fell under the state's definition of marijuana, which is regulated like alcohol and restricted to licensed dispensaries. The LCB sent the Hagemanns a notice in early 2022, demanding they stop selling most of their products, as the agency considered anything with "intoxicating" cannabinoids to be marijuana, regardless of the federal hemp definition. In April 2023, the state legislature passed a new law, Substitute Senate Bill (SSB) 5367, which redefined all hemp products containing any detectable THC or other cannabinoids as marijuana, effectively banning their sale outside state-licensed dispensaries. The Hagemanns and other hemp retailers were given less than three months to sell their existing inventory before the law took effect on July 1, 2023. Kristi estimates this cost them about 80 percent of their business. The law also threatens their new venture, a hemp-infused seltzer called Chill Hemp, which they developed with a local brewery. Although the seltzer complies with federal hemp regulations, the LCB considers it a marijuana product, and the Hagemanns face an uphill battle to get it approved for sale in dispensaries. The LCB's strict interpretation stems from a single, obscure sentence in the 2018 Farm Bill that excludes hemp from the Controlled Substances Act but doesn't explicitly address other cannabinoids. Meanwhile, the U.S. Drug Enforcement Administration (DEA) has taken a more permissive stance, stating in a 2020 letter that hemp-derived products exceeding 0.3 percent Delta-9 THC are not controlled substances if they are derived from legal hemp. This federal-state conflict has left the Hagemanns in limbo, with their business at risk of being crushed by Washington's regulatory overreach. Kristi has become an advocate for the hemp industry, testifying before state lawmakers and joining a lawsuit against the LCB's rules, arguing they violate federal law. The couple feels betrayed, having followed the rules only to face a shifting regulatory landscape that threatens their livelihood. If the LCB's position prevails, it could set a precedent for other states to follow, potentially dismantling the hemp industry nationwide.