Last week, Congress passed a major federal funding bill designed to reopen the government; but tucked inside the legislation is a sweeping change to federal hemp policy that could upend a multibillion-dollar industry and reshape how products derived from the hemp plant are regulated.
The bill included a provision aimed squarely at closing what many call the “hemp loophole.” Under the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), hemp – defined as cannabis plants containing up to 0.3 % delta-9 tetrahydrocannabinol (THC) by dry weight – was removed from the federal Controlled Substances Act, opening the door for a booming hemp-derived product market. Although the intent of the Farm Bill was to support hemp agriculture, manufacturers have used that framework to produce and sell “hemp-derived” products that some say exploit the 0.3% threshold by using other cannabinoids (like delta-8 THC) or by concentrating the legally allowed THC into ingestible forms. The new legislation aims to shut that down.
Some of the key changes include:
- The new rule would bar the unregulated sale of “intoxicating hemp-based or hemp-derived products, including Delta-8”; especially those sold online or in gas stations and convenience stores.
- Products with more than 0.4 milligrams of THC per container would be prohibited.
- Enforcement is slated to begin one year after enactment, giving industry, states, and regulators time to adjust.
Lawmakers – led by Senator Mitch McConnell, who also sponsored the 2018 Farm Bill – say the loophole was being used to market intoxicating hemp products in packaging and settings similar to those for children (e.g., gummies, candy-like packaging, etc.). The economic and regulatory implications are massive: the hemp-derived product market in the U.S. is a multi-billion dollar per year business.
The lobbying push to close the hemp loophole created strange bed fellows: Smart Approaches to Marijuana SAM), one of the leading anti-marijuana groups, and the American Trade Association for Cannabis & Hemp (ATACH), which represents regulated cannabis companies, joined forces in supporting the measure.
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The attorneys at Chilivis Grubman represent businesses within the cannibas/hemp industry, including manufacturers, distributors, and retailers. If you need assistance in these areas, please contact us today.
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