Episode 113 – Hemp-Derived Cannabinoids in the U.S.



Advertisement: This podcast is brought to you by Mystic Labs Delta 8 THC. Enjoy the relaxing, blissful effects of delta-8 in tasty gummies, vapes, oils, and more. See why our science is magic at mysticlabsd8.com. That's mysticlabsd8.com.

Joe: On this episode of the "CPG & CBD University Podcast," the latest on the state of hemp-derived cannabinoids around the U.S., the latest on constantly evolving regulations and legislation regarding hemp-derived cannabinoid products, and what could be next. This is the "CPG & CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CPG & CBD University Podcast." Welcome back to our podcast, and a reminder to hit that Subscribe button wherever you get your podcast to get notifications of new episodes each week. And don't forget, you can always find video episodes of our podcast on the Global Widget YouTube channel and the YouTube channel of our brands. If you're a frequent listener or viewers, you know that we often provide regulatory and legal education from industry advocate and attorney, Rod Kight. And I'm excited to add to the rotations Rod partner in his law practice and a long-time cannabis industry insider, Philip Snow, joining me via Zoom for those of you watching on the video episode. Welcome, Philip, to the podcast.

Philip: Joe, thank you so much for having me. I'm happy to be here.

Joe: And as I mentioned, we'll be exploring the latest in hemp-derived cannabinoid regulations around the country, along with pending legislation. But before we get to all the good stuff, how about a little bit of background about yourself, how you got involved in the industry and what got you into this space?

Philip: Absolutely. So a little bit of background about myself, Joe. I have been a cannabis attorney for the last 11 years. I got my start out in Denver, Colorado, 2011, and helped with the Medical Marijuana Program in the state of Colorado getting its regulations up and off the ground and creating kind of the gold standard for medical marijuana regulations across the country there in Colorado. Then I helped draft Colorado's constitutional amendment for recreational marijuana use, was part of getting that passed back in 2012. Saw the program coming up and off the ground in 2014. And then have worked with a number of different states, you know, in new and emerging markets across the country, both on the medical and then adult-use or recreational marijuana side of things. In 2019, I relocated to the Southeast from Denver and currently reside in Greenville, South Carolina, where most of the world is focused on hemp and CBD down in this part of the country, and have been practicing hemp and CBD law since 2019, also with a little bit of a focus on the THC or medical or adult-use marijuana space as well.

Joe: And ever-changing regulations when it comes to the industry. In the start of 2022, we're certainly seeing some changes around the country go into effect. First off, there seems to be confusion in one state, you talked about Colorado, but let's talk about Kansas. What's going on in Kansas?

Philip: Well, you know, the interesting thing about Kansas, Joe, and this is something that we're starting to see as a trend across the country, is in early December of 2021, the Kansas attorney general issued an opinion regarding the legal status of delta-8-THC, essentially coming out and saying that delta-8-THC would be treated as a controlled substance in the state of Kansas provided the THC threshold exceeded 0.3%. And that includes all forms of THC, delta-8, delta-9, delta-10. Provided the product exceeds 0.3% total THC, then it's gonna be deemed a Schedule I controlled substance. In Kansas, we've already actually seen some law enforcement activities take place in that state for people that were in possession of these products, retailers, in fact, that had products that exceeded that 0.3% total THC threshold. So they've seen some enforcement actions taken against them, products have been confiscated in some instances. However, no charges have been pressed as of yet.

Joe: And meanwhile, let's go... Oh, go ahead.

Philip: I'm sorry. Like I said, this is a growing trend that we've seen across the country, where states' attorneys general have issued opinions regarding the legal status of certain cannabinoids, you know, including delta-8. And that's really created a lot of confusion for, you know, not only just consumers in the state, who are unsure as to what they could purchase or be in possession of, but also retailers, manufacturers, distributors. Because in some instances, while these attorney general have issued these opinions, no action or enforcement has been taken. So people are kind of left scratching their heads wondering, you know, whether or not the next shoe is gonna drop or, you know, what they really can and cannot do.

Joe: And meanwhile, on that note, let's head further west to Oregon. And it seems like the industry's a little concerned to some of the changes there.

Philip: You know, Oregon has put out its new hemp rules. And one of the things, and I've actually worked with the Oregon Liquor Control Commission a number of years back, but the Oregon Liquor Control Commission is the regulating body responsible for governing the state's Medical Marijuana Program, its adult-use Marijuana Program, and now it's taken some hemp-derived products, you know, under its purview as well. And with the recent passage of some of its laws, it specifically deals with adult-use cannabis items. Those are industrial hemp commodities that contain 0.5 milligrams or more of any combination of total delta-9-THC or any other THC acid, including delta-8 as well, and any other cannabinoids that are advertised by the manufacturer as having any sort of an intoxicating effect. So that's one of the ways that they define adult-use cannabis items.

Another way they define them is by stating that it contains any quantity of artificially derived cannabinoids. And they define artificially derived cannabinoids as a chemical substance that is created by a chemical reaction that changes the molecular structure of any chemical substance divided from the plant cannabis family. Finally, it goes on to define an adult-use cannabis item, how it's being tested. And it says the testing done in accordance with Oregon statutes must have been performed, you know, with a verifiable testing method. So this has, you know, kind of created a big issue because what these rules ultimately state is if you have one of these adult-use cannabis items, basically they say that it can be qualified as two different things. It can be... Excuse me, I'm getting a little bit ahead of myself here. The products cannot be sold or delivered to people under the age of 21. And, you know, that could be a big issue for, you know, delta-8, obviously, in Oregon.

And one of the things the Oregon Liquor Control Commission is mandating is that these products, you know, if they are to be sold, they have to be sold by state-licensed dispensaries. They have to be sold...you know, put behind a counter. You know, if they're selling it to someone under the age of 21, that person has to have a valid Medical Marijuana Registry card, essentially providing a reason as to why they should be purchasing that product, or someone has to be registered under the state's Medical Marijuana Program. So, you know, they're kind of trying to really chill the fervor, so to speak, on these intoxicating cannabinoids.

And in addition to limiting the sale and distribution of these products to adults, these rules also restrict the activities outside of the recreational market to adult-use cannabis products that do not exceed specific maximum amounts of THC by more than 10%. Now, while this all sounds, you know, very doom and gloom, it's important to note that these regulations don't go into effect until July 1st of this year. So there's a little bit of a window for this to kind of continue, however, come July 1st, you know, they're gonna be putting the lid on and they're gonna be putting it on very tightly.

So that's kind of what I would say about Oregon, Joe. It's caused kind of a lot of consternation in the industry because Oregon has always been thought of as, you know, one of the other gold-standard programs across the country typically on the cutting edge of things. And if my personal opinion is worth anything on this podcast, I would say that in a lot of the states across the country that have existing medical marijuana programs or adult-use marijuana programs, a lot of those states have enacted similar types of legislation regarding these intoxicating cannabinoids, such as delta-8, delta-10, other types of things like that, because the medical and adult-use companies don't want these products to be sold with little to no restriction.

If I was a medical or adult-use marijuana company and I had to jump through several different series of hoops in order to operate my business, and someone can buy a delta-8 cartridge at the gas station with little to no oversight over that product, what they did is they banded together and got their lobbyists and, you know, tried to change things legislatively. So a lot of these states across the country that have restrictions on delta-8, I would argue that they come primarily from the marijuana or THC space.

Joe: And so we talked about that for July. What else should listeners and viewers be aware of that may be on the horizon?

Philip: As it relates to Oregon, or as it relates to other topics around the country, Joe?

Joe: Anywhere.

Philip: Anywhere?

Joe: Yeah, anywhere.

Philip: So I think that, you know, we are right back into, you know, peak legislative sessions. So we are seeing a lot of different things across the country, and I'll highlight a few special kind of areas right now. I know we touched on Kansas and Oregon. Recently, in Oklahoma, Oklahoma enacted Senate Bill 1338, which essentially treats delta-8-THC like hemp. And this new piece of legislation adds delta-8 to Oklahoma's definition of hemp, it removes hemp from the definition of marijuana, and it includes delta-8-THC within that exemption from the definition of marijuana. So this is, you know, what I would call a very progressive approach, a way of, you know, kind of recognizing that there is a market for delta-8 and that people do wanna purchase it. So that's, you know, kind of one approach. And then I'm gonna talk about two other states that, you know, take different approaches.

South Dakota, completely contrasting to what Oklahoma has done, South Dakota is looking to criminalize delta-8-THC. And this is the result of House Bill 1054, and this criminalizes isomerization of cannabinoid to make any isomers of THC, or CBD, or any other cannabinoid. And the possession or sale of any of these materials, including the processing of these materials, would then be criminalized. So South Dakota is, you know, much like Oregon or some other states, you know, they're legislatively trying to put a big lid on, you know, delta-8 and/or the manufacturing of other cannabinoids in the state.

Now, a third state that we could look at is Tennessee. And Tennessee kind of acts as something of a balance between Oklahoma and South Dakota. Tennessee limits the sale of delta-8 products to adults and subjects those sales to the same restrictions that you would see with kind of a tobacco-type product. So they are, you know, gonna make sure that those products are only sold from behind the counter. They're only gonna be sold to people of a certain age, which I think is, you know, a responsible way of regulating this. Ultimately, I believe that we will probably see three different approaches to delta-8 or other novel and/or intoxicating cannabinoids first. I think we have three good examples here.

You know, Oklahoma essentially said, "We're gonna, you know, legalize it, and we're not gonna do anything about it other than make sure that it's sold responsibly." South Dakota completely trying to go the prohibitionist mentality. And as anybody in the cannabis industry knows, prohibition is a failed concept. So it'll be interesting to see how that shakes out. But then you see Tennessee that's trying to strike a balance. So I think, ultimately, the sale of these products will either be sold to people over the age of 21 only and regulated behind the counter. They will be entirely outlawed in a state. Or they will be complete green-lit for sales. So these are three good examples that we have here today.

And then on kind of the, you know, flip side of things, as I mentioned, we are in the peak legislative session right now. So different states across the country are doing exactly what you said at the very beginning of the podcast and creating these ever-changing, ongoing regulations. So it's very important to, you know, try to stay current to, you know, work with good people in the industry that are up to date on this information so they can help you navigate these waters that are constantly changing.

And then one final state that I would talk about, you know, regarding certain legislative-specific actions that have happened recently is the state of Mississippi recently passed through its House and Senate a bill that would allow for Medical Marijuana Program sales to be taking place in Mississippi. Now, that bill is on the desk of the governor in Mississippi, and it remains to be seen, you know, whether it will be signed. However, I do think it has a strong chance of passing down there.

And then, you know, much like the rest of the country, we have medical or adult-use bills that are being considered. I'm gonna rattle off a number of states here, so try to keep up, everybody. But we are looking at Rhode Island, Maryland, Ohio, Pennsylvania, Minnesota, Kansas, New Hampshire, Delaware, South Carolina, North Carolina, and Hawaii. Those are all states that are, you know, potentially going to enact medical and/or adult-use marijuana programs via the legislature. So if you live in one of those states or if you're interested in one of those states, you know, pay close attention to what's happening on Capitol Hill.

Joe: And we've talked about this in past episodes, and nothing's changed with the FDA, so that's why we see these changes from state to state. But at the federal level, one thing have seen in the first month here of 2022, the FDA, for example, no action, as we talked about, but just signed off on human CBD trials to treat opioid addiction. So if they're not getting in on the regulation side but they're signing off on human trials, is there something maybe to read in between the lines there as to what could happen?

Philip: I think there is something to be read there, Joe. Quite frankly, I think the FDA is, you know, as we all know, taking its sweet time in coming up with regulations regarding CBD. But I think this is a great step in the right direction. And I believe the name of the company that they authorized this investigational drug distinction to was by the name of Ananda Scientific. And as you mentioned, it was designed to reduce opioid addiction. And the idea behind it is we're gonna use something that is non-addictive to help curb these addictive behaviors in people that are struggling with opioid addiction.

The interesting thing about this study as well is it's also funded by the National Institute on Drug Abuse. So I think you're seeing two pretty big players potentially recognizing the value or the benefit of CBD and/or, you know, its ability to help people fight, you know, certain ailments or addictions that they're dealing with. So I think it is a sign of good things to come, Joe. But as you well know, we're all gonna have to sit on the sidelines and wait and see.

Joe: And speaking of the federal level, there are some hemp bills that may be worth watching in 2022. What are some of the key ones?

Philip: A few that I would like to talk about, you know, one of them is the CBD Product Safety and Standardization Act of 2021. And what this really does is it establishes federal standards and requires the FDA to actually regulate CBD in food and beverages. So this would be a very big step forward by giving the FDA that authority and, you know, hopefully, removing any sort of stigma or scrutiny that they might have surrounding regulating CBD. So if this is passed, the FDA would issue regulations specifying the amount of CBD that can be included per serving. It would also talk about labeling and packaging requirements and conditions of intended use.

Now, what we see, and as you very well pointed out, is states across the country are trying to do just that. And, you know, the states being the laboratories of democracy, they're coming up with their own standards for packaging and for labeling and all of these other things. However, you could say that, you know, one state across the border is wildly different than the next state. And in certain states, different types of products aren't even available to be distributed. So what this would actually do, I think, is create a very uniform way of, you know, regulating CBD products and allowing consumers to see that while the federal government has gotten behind this, you know, maybe it's not as scary as we thought or maybe it's not the marijuana that everybody made it out to be. So I think it could be a really good step forward with that one, Joe.

The next one that I wanna mention is the Hemp Economic Mobilization Plan. And this was put together by Senator Paul out of Kentucky, who, as he said, feels the need to change the hemp industry or save the hemp industry, better said. And what this program would actually do is it would amend the definition of hemp on the federal level from 0.3% delta-9-THC to be 1%. So that 0.7% change would be quite a bump up, allowing farmers the ability to grow crops that may have tested positive in the past or out of an error or oversight on their part. You know, this wouldn't put those farmers, you know, in hot water. This wouldn't put them or their businesses in jeopardy. So raising that, you know, threshold level would potentially be a really good thing for the industry.

One of the other things that we see is the requiring of testing hemp-derived products rather than testing plant material. In a lot of instances, people will test their crops subject to USDA guidelines or relevant state hemp production plan guidelines, and those crops might test negative, meaning that they are legal or have nothing illegal surrounding their production. And then those products could then, you know, test positive for elevated concentrations of THC. So what this does is it removes the onus of testing the plants and actually puts it on the manufacturer, which ultimately is responsible for putting those products in the hands of consumers. So it would, in my opinion, make sense to have those end products be tested as well.

Another thing that Senator Paul's bill is seeking to do is requiring the inclusion of a seed certificate copy when transporting hemp to facilities to certify that the hemp was grown at that 1% threshold. Now in a lot of states across the country, they already require transportation manifests for hemp when it's being transported within that state detailing where the product came from, where it's going, you know, who is the licensed or permitted entity that cultivated it, you know, who is the licensed or permitted entity that will be receiving it. You know, all of those things are included in some of the states across the country. What this does is it mandates it on a federal level, you know, stating that this absolutely has to be done. And it would provide a little bit of protection for the people that are transporting, you know, that product, particularly with that verification that the seed was at a 1% threshold. This gives them a little bit of, you know, insulation or protection from any liability that they might come up against.

And then finally, the last thing that this bill does is it tries to create a level of transparency by defining a margin of error for hemp testing. You know, the USDA stipulates that testing facilities have to mention their relevant margins of error. However, no number has been put on that, or no acceptable number has been put on that. And if you have product that is tested at one facility with a much higher margin of error versus the same product that's tested at another facility, you know, you could have differing results and then you would be questioning, you know, who gave you the accurate results. So it does provide, you know, a level of transparency and uniformity on the federal level that I think the industry desperately needs.

Joe: And in case if most people don't realize, we have midterm elections. So, I mean, any of these play into, hey, if nothing's passed by November, what can happen with these?

Philip: I think it will be, you know, very important to kind of watch these different states as they progress through their legislative sessions, Joe, because having been part of getting a ballot initiative, you know, on the actual ballot, that takes considerable effort. You know, in probably a lot of instances, you know, signatures of over 100,000 people just to get something on the ballot. So I think that we would probably know which states are going to do that within the next two or three months just because those efforts would have to mobilize and they would have to mobilize very, very quickly. But I think in states across the country that don't pass anything where there is more than a healthy appetite for medical or adult-use marijuana program, I think people that are looking to get elected later on this year might add that to their campaign platforms, as it's a way to appeal to a different voter base than maybe they would have in the past.

And on top of that, you know, particularly that it's a midterm election, generally, we see less voter turnout from younger individuals in non-presidential election years. So that could be a good way to, you know, kind of get out the younger vote or get out that more liberal or progressive vote, you know, later on during the midterm elections should nothing happen. Because I think that that can put some pretty good political pressure on, you know, more conservative running mates because they might not be getting that younger vote because of their archaic views on cannabis.

Joe: Outside of legislation, what else should we expect maybe to hear more about in the coming months in the industry here in the U.S.? Will we maybe see more of these type of medical-benefit-type studies to maybe help the FDA do something?

Philip: You know, I think we've already started to see that, Joe. You know, recently, we have seen a few studies that have come out of Oregon regarding the ability to potentially fight off COVID-19 infections. And I'm not saying that this will treat, cure, mitigate, or prevent any fun diseases or anything like that, but researchers in Oregon have shown that THCA, CBDA, as well as CBGA have all been able to stop cells from being infected with COVID-19. Now keep in mind, these are applications that were done, you know, in a lab, in a Petri dish. This doesn't mean that you can go out and smoke CBD flower, you know, in order to protect yourself from COVID-19.

But I think there are some really interesting studies that are being done right now that might, you know, help tip that needle over to where people could say, "Hey, maybe there are more medical benefits that we haven't even thought about." It's such a dynamic plant. There are so many different things to explore. And, you know, certainly, on the hemp side of things, we have the luxury of it being federally legal, so, you know, a little bit easier access to studies. So I think that those will only continue as time wears on.

Joe: Well, Philip, certainly a lot to keep the pulse on here in the coming months, and great to have you on the podcast, lots of great education and information. And with everything going on, we'll definitely have you back on soon to update our listeners and viewers on some of the things in motion and what's gone on since this episode. So thank you again for taking time out of your day to join me.

Philip: Absolutely. Happy to be here.

Joe: Cannabis industry insider and attorney, Philip Snow, my guest on this episode of the "CPG & CBD University Podcast." Don't forget to hit that Subscribe button to get notifications of new episodes each week. You can also catch full video episodes on our YouTube channels. And check out the description for this podcast episode. We'll have a couple of additional links in there to Philip's work, where you can find out more information and stay on top of all the updates in the industry until we record our next episode. Thanks again, Philip.

Philip: Thank you, Joe. Have a great day.

Joe: I'm Joe Agostinelli, host of the "CPG & CBD University Podcast," thank you for tuning in.

Disclaimer: These statements have not been evaluated by the Food and Drug Administration. CBD products are not intended to treat, cure, or prevent any disease, or condition. Consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This podcast is not intended to provide legal advice regarding the legal status of CBD and CBD products.