As Congress returns from recess this month, the hemp industry is closely monitoring provisions that could fundamentally reshape the entire sector.
The 2018 Farm Bill removed hemp and its derivatives containing less than 0.3 percent delta-9-THC from the Controlled Substances Act. A so-called “unintended consequence” was that it became possible to produce hemp products that complied with the limit but had sufficient amounts of THC to produce an intoxicating effect.
Sales of such products, including hemp beverages and edibles, have increased significantly, encouraged by consumer demand for alternatives to alcohol. Hemp beverage sales alone are expected to more than double over the next four years, to reach $4.4 billion by 2029. All of this could change under provisions contained in pending appropriations legislation.
Sens. Mitch McConnell (R-KY) and Rand Paul (R-KY) have been dueling over various provisions that could dramatically change the hemp market, with McConnell vowing to “close the Farm Bill loophole” responsible for the intoxicating hemp market. In contrast, Paul is looking to “reach a compromise” on key provisions that would further regulate the hemp industry rather than upend it.
As current appropriations legislation makes its way through the legislative process in the House and the Senate, these are the key provisions that state regulators, consumers and the hemp industry should be watching. There is also pending federal legislation that would regulate hemp products apart from the Farm Bill.
“Total” THC Concentration Calculation Effectively Prohibits Certain Intoxicating Products
One of the provisions that appeared in House and Senate versions of agriculture appropriations legislation—before being removed from the Senate version—would add other THC molecules to the calculation for the 0.3 percent delta-9-THC limit.
The 2018 Farm Bill defined legal hemp as “the plant Cannabis sativa L. and any part of that plant…with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” In contrast, the current bills account for “total tetrahydrocannabinol concentration (including tetrahydrocannabinolic acid) of 0.3 percent in the plant on a dry weight basis.”
This provision would bar certain products from the market which have low delta-9-THC but have high concentrations of other intoxicating THCs (such as THC-A, Delta-8 THC, THC-O, etc.). This would outlaw many hemp products currently on the market, especially hemp flower products and vape products with high THC-A, and cause disruption to many business owners, especially smoke shops and gas stations, where such products thrive.
If enacted, it would require manufacturers to reformulate certain products and invest in new testing procedures to ensure compliance with the narrower definition for legal products.
Excluding Synthetic Cannabinoids And Conversion Will Lower Supply and Increase Input Costs
The agriculture spending legislation also excludes synthetic cannabinoids from the definition of legal hemp products. These provisions exclude cannabinoids that are not naturally produced in the cannabis plant, and those which are naturally occurring but which are produced “outside of the plant.”
While synthetic THCs are currently illegal under the Controlled Substances Act, there is legal uncertainty around naturally occurring THCs which are created through chemical processes from the naturally extracted hemp cannabinoids (frequently, naturally occurring CBD is converted to delta-9-THC and other intoxicating cannabinoids).
A prohibition against converting CBD to THC would significantly impact the cost to make these ingredients for intoxicating hemp products. Manufacturers that currently rely on these converted cannabinoids would need to discontinue certain product lines altogether or produce them with naturally occurring cannabinoids at tighter margins.
Ban On “Quantifiable” THC Or Intoxicating Cannabinoids Would Push Intoxicating Hemp Products Back To Illicit Market And Inadvertently Harm The Non-Intoxicating Cannabinoid Wellness Market
The most controversial provision would limit the “legal limit” of THC concentration in hemp products from 0.3 percent to “no quantifiable” amount of THC, with quantifiable amount to be defined by the Department of Health and Human Services (HHS) in consultation with the U.S. Department of Agriculture (USDA).
The provision would create tremendous disruption for the hemp industry, state regulators and customers. As currently drafted, the definition of “no quantifiable amount” is ambiguous as to whether it means 0 percent or some other threshold. Certificates of analysis usually denote no “detectable amount” when testing is below a certain limit.
The definition of “quantifiable” is unknown. This rule could ensnare full spectrum and CBD products, which are neither intended nor designed to be intoxicating. The change would also conflict with the many state laws that allow for 0.3 percent and or have quantifiable limits like 2.5mg, 5 mg, or 10mg of THC per serving or package for legal hemp products.
Standalone Hemp Regulation Bills Like Griffith’s Proposed Approach
While additional regulation of hemp products is sorely needed, a regulatory approach focused on health and safety will ultimately be more effective than a prohibition bill.
Draft legislation from Rep. Morgan Griffith (R-VA) circulated in late August would allow for hemp product sales to adults aged 21 and over, and would require HHS to determine THC thresholds within 60 days of passage of the bill.
The legislation would require labels to contain a QR code linking to a certificate of analysis showing which cannabinoids the product contains and in what quantities, prevent hemp producers from adding alcohol and nicotine to their products and require tamper-proof packaging that does not appeal to youth.
In the event that HHS fails to establish THC thresholds within the required timeframe, the bill would automatically implement the following limits:
- Oral hemp products with non-intoxicating cannabinoids: Up to 10mg/serving and 50mg/package.
- Inhalable products: Up to 100mg/serving and 500mg/package.
- Topical products: Up to 100mg/serving and 500mg/package.
- Intoxicating cannabinoid products (e.g. items containing THC): Up to 0.2mg/serving and 1mg/package.
The restrictions in Griffith’s bill mirror many state regulations that are already in place, and the automatic THC thresholds that would be implemented allow for a larger variety of products than the restrictions in the appropriations bills. However, the proposed limits to intoxicating cannabinoid products suggested would effectively eliminate the legal hemp intoxicating product market.
Conclusion
The pending appropriations bills and other hemp legislation could dramatically reshape the hemp industry, with proposed provisions that could significantly tighten the regulatory landscape.
If Congress redefines THC limits to include all cannabinoids, excluding converted and synthetic cannabinoids, or potentially imposes a “no quantifiable” THC threshold, lawmakers are signaling a shift toward significant product restrictions for hemp producers.
These changes would not only disrupt current business models and product lines but also create substantial compliance challenges for manufacturers and state regulators.
The ambiguity surrounding key terms like “quantifiable” further complicates the path forward, raising questions about enforcement and conflicts with existing state laws.
All hemp products, whether intoxicating or not, would be impacted by these provisions if passed as drafted. Such stark changes to the law would likely push such products to the illicit market, making them less safe.
Instead, an approach similar to states like Minnesota, which allows low intoxicating dosages of up to 10mg, or less THC for beverages, as determined at the state level, would be a more suitable alternative for Congress to consider.
Now that Congress is returning from recess, the outcome of the debates around these provisions will determine the future of hemp-derived products in the United States, and the economic viability of the industry. Ultimately, any of this federal legislation would be a critical turning point for the industry, either fostering continued growth and regulatory clarity, or introducing new hurdles that could reshape the market for years to come.
Lauren Estevez is a Senior Managing Associate in the Dentons US Cannabis Group. Joanne Caceres is a Partner in the Dentons US Cannabis Group.