As state lawmakers across the country try to wrap their arms around the hemp-derived cannabinoid (HDC) conundrum, some do so with a hug while others try to stranglehold this murky area of the cannabis industry.
Already this year, six states have passed new laws to regulate HDCs. This week, Georgia banned products with a total delta-9 concentration above the 0.3% federal limit as well as most hemp food products. Oregon and West Virginia enacted regulations not on the products, but on the manufacturers and retailers. South Dakota and Wyoming governors signed outright bans of all hemp-derived THC products above the federal legal limit for hemp. Utah, on the other hand, reversed a ban to allow products with serving-size limits, concentrates and, naturally, to collect taxes.
Meanwhile, bills are pending in a number of states, including California, Iowa, Mississippi, Missouri, Oklahoma and South Carolina. Also, Illinois and Ohio political leaders are also talking about HDC bans.
Hemp market relies on HDCs
The U.S. hemp market rebounded last year, according to the latest USDA Hemp Report, with a total value of $291 million, up 18% from 2022. Floral hemp grown in the open also increased by 18% to an estimated 8 million pounds, with a value of $241 million, an increase of 35% from the year before. In contrast, seed hemp grown in the open, while up 96% from the year before, represented only $2.91 million in value. Grain hemp grown in the open was down 36% in 2023 to $2.31 million, and fiber hemp dropped 59% to $2.31 million. Hemp grown under protection was valued at $32.9 million last year, including $25.8 million for flower and $6.25 million for seed.
Overall, the amount of acres planted in 2023 was approximately half of what it was in 2021.
So it’s no wonder that some states, including big-value hemp crop states such as Oregon, Washington and Minnesota, focus on regulations to strive for a fair and safe market. Other states, particularly those that don’t allow for legal cannabis, have banned HDCs.
But the 2018 U.S. Farm Act, which defines legal hemp as having no more than 0.3% delta-9 THC on a dry weight basis, has left room for wildly divergent legal interpretations. Two federal courts have come to differing opinions in preliminary injunction rulings which have been appealed to circuit courts. Meanwhile, lawsuits are playing out in state courts, such as Alaska, Georgia and Maryland, as most states have their own definition of legal hemp, which may include total THC, not just the delta-9 cannabinoid.
In a recent development, on Sept. 28, 2023, a Texas Court of Appeals in Austin upheld a district court’s temporary injunction on the Department of State Health Services’ attempt to classify delta 8-THC as a Schedule 1 controlled substance in 2021.
Then-Commissioner John Hellerstedt posted to the DSHS website in October 2021 that delta-8 THC was illegal. This decision was challenged by Sky Marketing Corp., Create a Cig Temple LLC, and consumers Darrell Surif and David Walden, claiming the department failed to follow the Administrative Procedure Act. They won a temporary injunction on enforcement of this rule in the 126th Judicial District Court in Travis County in November 2021.
In her ruling, District Court Judge Jan Soifer found that the business plaintiffs would “suffer imminent and irreparable harm such as brand erosion, reputational damage, including loss of customers’ goodwill, unsalvageable loss of nationwide customers, loss of market share, loss of marketing techniques, employee force reduction, revenue lost and costs incurred by not being able to manufacture, process, distribute, or sell hemp products that fall within the newly adopted definitions for ‘tetrahydrocannabinol’ and/or ‘Marihuana extract.’”
She also said in the injunction that without it Surif, Walden and similar customers “will have no effective treatment” for anxiety and other ailments.
On January 3, the state appealed the case (Texas Department of State Health Services, and Dr. Jennifer A. Shuford, in her Official Capacity as Commissioner of the Texas Department of State Health Services v. Sky Marketing Corp., d/b/a Hometown Hero; Create A Cig Temple, LLC; Darrell Surif; and David Walden) to the state Supreme Court.
Regardless, states are not waiting for the courts or Congress to clarify what they can do to regulate or ban HDCs. Currently, 40 states have some law on the books that control HDC production and sales, according to CRB Monitor News research.
New laws so far this year
Six bills were signed into law in the last couple months.
- Georgia — SB 494: On April 30, Gov. Brian Kemp signed a bill that limits total delta-9 THC concentration in consumable products to 0.3% and prohibits hemp food products other than gummies, oils and non-alcoholic drinks. It requires growers, processors, wholesalers and retailers of consumable HDC products to be licensed and products to be tested. It also prohibits the sale and possession of HDC products to people under age 21.
- Oregon — HB 4121: Legislation that places a moratorium on cannabis business licenses also places regulations on HDCs. It requires registration of HDC products through the Oregon Liquor and Cannabis Commission and specifies labeling requirements. It was signed by the governor March 20.
- South Dakota — HB 1125: On March 19, Gov. Kristi Noem signed a ban on the chemical modification or conversion of hemp, as well as the sale and distribution of these products.
- Utah — HB 52: On March 12, Gov. Spencer Cox signed a bill that repealed a law he signed last year that banned HDC products containing THC. This bill now allows THC to be up to 10% of total cannabinoid content or 5 mg per serving. It also requires processor licenses and retailer permits.
- West Virginia — SB 679: The state now requires permits for producing, manufacturing and selling HDCs. Importers from other states will need to get a business registration certificate. The governor signed the bill into law March 27.
- Wyoming — SB 32: One of a handful of states that hasn’t legalized cannabis in any form, Wyoming banned all hemp products with any THC above 0.3% dry weight post-decarboxylation, with the governor’s signature on March 7.
Five states have bills pending
Currently unregulated, Mississippi seeks to severely restrict the amount of THC in consumable products, and Florida would ban delta-8 THC. Meanwhile, Illinois, Missouri and Oklahoma have bills to regulate HDCs.
- Florida — SB 1698: Both houses of the state legislature approved a bill that would limit delta-9 THC to 5 mg per serving, but it would ban any other hemp derivatives, such as delta-8. It also prohibits packaging that would target children. As of April 26, it had not yet been delivered to the governor.
- Illinois — SB 3926: The Hemp Consumer Protections Act would require retailer and processor licenses; create an intoxicating HDC committee to recommend regulations and sets THC limits in products. It’s been waiting for committee assignments since April 10.
- Mississippi — HB 1676: This bill would severely restrict THC in consumable hemp products by setting a 0.5 mg THC per serving limit and establish other regulations. It passed both houses and is currently in conference committee to resolve Senate amendments.
- Missouri — SB 984/HB 1781: The Intoxicating Cannabinoid Control Act would regulate HDCs as marijuana under the Department of Health and Senior Services. It’s still being heard by committees.
- Oklahoma — SB 1422: This bill would create the Industrial Hemp Task Force to provide the legislature and the governor with information and recommendations on industrial hemp production and processing, including regulations and THC limits. It’s passed the Senate and is now in House committees.
Other HDC bills to watch
In South Carolina, HDCs have been considered illegal after Attorney General Alan Wilson’s office issued an opinion on Oct. 4, 2021, stating that South Carolina’s Hemp Farming Act did not legalize THC greater than 0.3% dry weight as defined by federal law. Wilson was supporting the opinion of the South Carolina Law Enforcement Division (SLED).
“In summary, our Office agrees with SLED’s essential analysis that the Hemp Farming Act did not legalize THC except as defined in lawful hemp,” wrote Assistant Attorney General David S. Jones in the opinion. “If the General Assembly intended to undertake legalization of THC on the scale that the industry posits, they would have done so expressly and unambiguously.”
In response, the House introduced a bill, H 423, that would allow for regulated sales of HDC products. It would require producers and retailers to be licensed, products to be tested, a 5% sales tax and other regulations. However, the bill has been sitting in the Committee on Medical, Military, Public and Municipal Affairs since February.
In Iowa, smokable hemp products are illegal, but edible products are legal. Legislation sent to the governor on April 23 would cap THC in consumable hemp products to 4 mg per serving and 10 mg per container, and require retailers to be registered. HF 2605 would also restrict sales to customers age 21 and older and prohibit THC in beverages.
California is another state where inhalable hemp products are illegal but HDCs in food, beverages, dietary supplements and cosmetic products are allowed, according to the Department of Cannabis Control. A bill that would require intoxicating hemp products to be sold in licensed dispensaries, under a myriad of rules, passed the Assembly Committee on Judiciary on April 14. AB 2223 would also ban synthetic cannabinoids and would allow law enforcement to seize hemp products.
In Louisiana, HB 952 passed the house on April 24. It would limit THC in consumable hemp products to 8 mg per serving and prohibit sales to those under age 21.
Meanwhile, in Nebraska, a bill that would have taxed HDC product sales at 25% (originally written at 100%) and another that would have banned cannabinoids, including CBD, died with the end of the state’s legislative session.
