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California’s cannabis market is broken. Taxes are too high, local control has proved disastrous, the illegal market is growing and regulations are too burdensome. There are not enough retain licenses and too many cultivation licensees. Over the past few years, the situation has become so dire that many licensees have exited the industry, including some of the largest and most well-capitalized players in the state.

In this webinar, Griffen Thorne (Partner, Los Angeles) and Hirsh Jain of Ananda Strategy will discuss whether the California market is too far gone or whether it can be saved.

Specifically, Hirsh and Griffen will look at:

• The history and complexity of California’s cannabis regulatory system and how the state is proposing even more onerous requirements on licensees.
• California’s illegal market problems, breaking down California’s own data on enforcement efforts and the consequences of its lax enforcement policies.
• The high rates of taxation at the state and local levels, and the massive unpaid tax obligations of numerous licensees.
• How local control is suffocating retail expansion in California
• Many disputes among licensees regarding payment for goods.
• Some solutions that the state could employ to reduce the burden on licensees and promote the legal market.

Join us for this free webinar on June 26th at 12 PM Pacific.

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For years, people have tried to decipher the incredibly poorly worded (I can’t stress this enough) language in the 2018 Farm Bill and what it means for intoxicating hemp products like THCA products or delta-8. In the last week or so, there’s been a lot of bad news for the intoxicating hemp products industry. Let’s take a look.

So long for THCA products (again)

Last June, I published a post entitled “So Long for THCA Products” where I analyzed the murky legality of THCA products. I, as well as another colleague here at the firm, tend to think on balance that these products are not permitted under current federal law. We do acknowledge that there are arguments in both directions.

In my June 2023 post, I concluded that even if there are good arguments for THCA’s legality, practically speaking law enforcement was likely to consider THCA in calculating total THC, given the fact that THCA converts to THC upon application of heat.

Indeed, this is essentially the position that DEA took in June 2023 (you can find DEA’s letter on attorney Rod Kight’s blog here), when Terrence Boos, the Chief of DEA’s Drug & Chemical Evaluation  Section said “for the purposes of enforcing the [2018 Farm Bill’s] hemp definition, the [THC] level must account for any [THCA] in a substance.”

As of a few days ago, DEA reiterated this position in response to an inquiry by attorney Shane Pennington, even going so far as to note “cannabis-derived THCA does not meet the definition of hemp under the [Controlled Substances Act] because upon conversion for identification purposes as required by Congress, it is equivalent to [THC].”

Now, you may be thinking that’s the end of the road for THCA products. But, it bears mentioning that DEA’s interpretations are just that. A court could disagree and find THCA products to be lawful– although federal courts tend to give federal agencies a very broad degree of leeway. And here, I tend to think that federal courts would side with DEA.

I should also throw in that regardless of what federal law says, state laws are often much more restrictive and may completely bar THCA and other intoxicating hemp products. The point is that state law could be a pain even if federal law were to loosen up. And as we’ll discuss below, it doesn’t look like that will happen.

A new Farm Bill may ban intoxicating hemp products

It may be time to throw out everything you knew or thought you knew about intoxicating hemp products–including what I just wrote above (!)–because a new Farm Bill is coming, and it isn’t looking good for intoxicating hemp products.

Last week, a congressional committee approved an amendment to the new Farm Bill that would effectively ban intoxicating hemp products. I should point out that this is just a committee amendment. It is NOT the final Farm Bill, and it could be modified or scrapped altogether before the final Farm Bill is passed. That said, it’s a pretty good indication of what at least some of the key congressional legislators are thinking.

If passed, the amendment would exclude from the definition of “hemp” created by the 2018 Farm Bill:

• Marijuana seeds even if they had under 0.3% THC (you may be thinking this is already prohibited interestingly the issue is much more complicated, and you can read about it here);
• Hemp products with synthetically derived cannabinoids – which is a position DEA takes already; and
• Hemp products with “quantifiable amounts” of THC, THCA, or other cannabinoids with a similar effect to THC or THCA.

This last point is extremely vague. because the term “quantifiable amounts” is not defined and will be left to the USDA to define. It’s possible, though I think unlikely, that a low enough threshold could be set to end up barring even non-intoxicating CBD products. While I think that’s unlikely, I think there will be a LOT of pushback to this prong in particular as negotiations continue.

Conclusion

DEA is closing the gap on intoxicating hemp products and Congress could go several steps further. While there is still a lot left to be resolved prior to the 2024 Farm Bill being finalized, the future doesn’t look great for intoxicating hemp products. Either way, stay tuned to the Canna Law Blog for additional updates.

For more on this topic, check out the following: