Marijuana And Hemp Businesses At Odds Over Consumable Cannabinoid Ban In House Farm Bill

When a House committee approved an amendment to a large-scale agriculture bill last week that would effectively ban most consumable hemp products, it was met with an atypically mixed response from the cannabis industry. Even within trade associations that supported the amendment to the 2024 Farm Bill, such as the U.S. Cannabis Council (USCC), there’s been internal splintering.

Multi-state cannabis operators like Cresco Labs and Curaleaf—both members of USCC that typically find themselves aligned on federal reform issues—are at odds over the hemp amendment, for example.

Everyone generally seems to agree that marijuana and hemp should be regulated under a federal framework, but there’s disagreement over the measure adopted by the House Agriculture Committee, which calls for a ban on intoxicating hemp-derived cannabinoid products such as delta-8 THC and CBD products containing any quantifiable amount of THC.

Supporters of the amendment have described it as a fix to a “loophole” in the 2018 Farm Bill that federally legalized hemp and its constituents. Others have recognized the need to adopt regulations to reign in the cannabinoid market but say re-prohibiting cannabinoids is not the solution.

“Our position is, it’s the same plant and should be regulated the same way, period,” Jason Erkes, chief communications officer at Cresco Labs, told Marijuana Moment last week. “Especially when it comes to the synthetic products that aren’t tested and you don’t know where they came from and, inherently in the past, they’ve been dangerous.”

Erkes acknowledged that “there is a monetary aspect as well,” pointing to the high licensing, security, testing and tax burdens that state-legal marijuana businesses face, compared to certain hemp businesses that are selling intoxicating cannabinoid products without having to jump through those hoops.

“Here are these businesses that pop up—in many cases, they call themselves the same thing. It’ll say ‘cannabis dispensary’ on their door on the same street as a regulated dispensary where there’s no security, no safety, no lab-testing, and they don’t pay any taxes.”

There’s agreement about the need to resolve the problem. But the hemp industry and certain marijuana companies feel the amendment adopted in committee last week goes too far. If the agreed-upon solution is regulation, why start that conversation with prohibition?

“It’s too far. And it’s not going to address the consumer safety issue,” Shawn Hauser, a partner at the cannabis- and psychedelics-focus law firm Vicente LLP, told Marijuana Moment. We need to have a real discussion about legalizing and regulating the whole plant.”

“What we really need is stakeholders to come together—which as divisive as things are right now, hopefully that’s the result,” she said. “But it’s incumbent on Congress to give us a federal regulatory framework.”

Hauser serves on the board of USCC, which supported the amendment and even offered draft language that’s consistent with the measure that was adopted. But she’s not the only board member who’s come out against the amendment.

Boris Jordan of Curaleaf, another USCC member, said officials at his company “disagree” with the proposal, calling it “an attempt to roll back the Farm Bill.”

“We support hemp farmers, and we believe that hemp-derived products made within the guidelines of the Farm Bill should be available to adults with strict age gating and safety standards,” he said. “We believe there should be one regulatory framework for all cannabinoids, and that all legal players in the hemp-derived product market must adhere to the same safety and age restrictive standards in order to combat the dangers of the illicit market–just as in cannabis.”

The company’s position against the specific amendment may be partly informed by its recent entrance into the consumable hemp market, with a line of infused drinks that would likely be impacted by the proposed ban.

Again, there’s general consensus around the need for a regulatory framework. But in another example of the internal divide over the appropriateness of a stopgap hemp cannabinoid ban, the multi-state operator The Cannabist Company—which is also on the board of USCC—is backing the controversial amendment.

“The Cannabist Company strongly supports efforts to regulate intoxicating hemp products. Far too many unregulated, untested hemp-derived products are being sold in gas stations and bodegas across our nation, confusing consumers and providing access to teens,” Adam Goers, senior vice president of corporate affairs, told Marijuana Moment.

“We support legislative remedies that close the loophole and ensure that intoxicating products undergo rigorous testing, accurate labeling and strict age restrictions,” he said. “This is a matter of protecting public health and safety and it’s far past time that hemp-derived products be held to the same safety and regulatory standards as those within state-licensed cannabis programs.”

David Culver, USCC’s senior vice president of public affairs, told Marijuana Moment on Friday that “we all have the same goal, which is regulatory parity between cannabis and intoxicating hemp.”

“Not surprisingly, there are some differences of opinion over the best path for getting there, but we continue to advance toward that shared goal,” he said.

Aaron Smith, executive director of the National Cannabis Industry Association (NCIA), a separate industry trade group, told Marijuana Moment the amendment is “short-sighted because, for one, these products are here to stay, so it’s either regulate them or we’re going see them just go into a criminal market.”

“Yet I understand this is an unacceptable situation that we have unregulated products that are being sold alongside the regulated industry. We’re just saying that the solution isn’t prohibition,” he said. “The solution is regulations that apply equally to marijuana and hemp-derived cannabinoid products.”

Another cannabis association that did support the passage of the Farm Bill amendment is the American Trade Association of Cannabis and Hemp (ATACH), though its president Michael Bronstein said it should serve as a “wake up call” for Congress to enact comprehensive regulations.

“The Farm Bill, which is authorized every five years, is an imperfect vehicle for meaningful legalization and going forward the call must be for sensible regulation,” he said.

But in the interim, if the hemp-based cannabinoid ban is ultimately implemented, it would threaten an already vulnerable industry that has endured precarious economic conditions over the past six years. While people who support the amendment have focused on unregulated, intoxicating products that are sold at gas stations without age-gating, the way it’s drafted would likely spell doom for the expansive CBD market as well, affecting legitimate hemp businesses.

Wine & Spirits Wholesalers of America (WSWA) Executive Vice President of Government Affairs Dawson Hobbs said the “attempt to ban intoxicating hemp products is merely doubling down on the failed federal policy of prohibition.”

States have successfully regulated the alcohol market for their citizens for nearly 90 years — they should retain the authority to regulate cannabis and hemp-intoxicating products. WSWA is committed to advancing regulation:https://t.co/NKYy5CbRMz#FarmBill #CannabisNews pic.twitter.com/wwW32BlxAX

— Michael Bilello (@BilelloPR) May 24, 2024

“The right path is to empower states to regulate these intoxicating hemp products and create a process to protect public safety by identifying naturally occurring cannabinoids and eliminating synthetic derivatives,” they said.

Meanwhile, the legislation that advanced through the House Agriculture Committee last week also contains provisions that would reduce regulatory barriers for certain hemp farmers and scale-back a ban on industry participation by people with prior drug felony convictions.

Specifically, it would make it so the U.S. Department of Agriculture (USDA), states and tribal entities could choose to eliminate a policy that prevents people with felony drug convictions in the past 10 years from being licensed to produce industrial hemp.

However, advocates had hoped to see more expansive language, such as what was described in Senate Democrats’ recent summary of their forthcoming Farm Bill draft. Under that plan, there would be a mandate to eliminate the ban, rather than simply authorizing it, and it would cover all hemp producers, not just those growing it for non-extraction purposes.

That said, the Senate Agriculture Committee has not yet released the draft text of their bill, so it remains to be seen if the summary description matches what will ultimately be released. Bipartisan House lawmakers filed standalone legislation last year that would broadly lift the felony ban for would-be hemp producers.

Lawmakers and stakeholders have also been eyeing a number of other proposals that could be incorporated into the Farm Bill—and which could come up as proposed amendments as the proposal moves through the legislative process—including measures to free up hemp businesses to legally market products like CBD as dietary supplements or in the food supply.

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Meanwhile, the hemp market started to rebound in 2023 after suffering significant losses the prior year, the latest annual industry report from the U.S. Department of Agriculture (USDA) that was released last month found.

The data is the result of a survey that USDA mailed to thousands of hemp farmers across the U.S. in January. The first version of the department’s hemp report was released in early 2022, setting a “benchmark” to compare to as the industry matures.

Bipartisan lawmakers and industry stakeholders have sharply criticized FDA for declining to enact regulations for hemp-derived CBD, which they say is largely responsible for the economic stagnation.

To that end, FDA Commissioner Robert Califf testified before the House Oversight and Accountability Committee last month, where he faced questions about the agency’s position that it needed additional congressional authorization to regulate the non-intoxicating cannabinoid.

USDA is also reportedly revoking hemp licenses for farmers who are simultaneously growing marijuana under state-approved programs, underscoring yet another policy conflict stemming from the ongoing federal prohibition of some forms of the cannabis plant.

For the time being, the hemp industry continues to face unique regulatory hurdles that stakeholders blame for the crop’s value plummeting in the short years since its legalization. Despite the economic conditions, however, a recent report found that the hemp market in 2022 was larger than all state marijuana markets, and it roughly equaled sales for craft beer nationally.

Meanwhile, internally at USDA, food safety workers are being encouraged to exercise caution and avoid cannabis products, including federally legal CBD, as the agency observes an “uptick” in positive THC tests amid “confusion” as more states enact legalization.

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