Marijuana and Hemp Industries Strike Tentative Deal Over Delta-8 THC, Modified Cannabinoids

This state's hemp and marijuana businesses want Colorado to create a task force to smooth a rift between the two industries.

Although both are cannabis plants, hemp and marijuana differ in one key way: THC. If a hemp plant's flowers or a final hemp product tests above 0.3 percent THC, it is considered marijuana by the federal government and must be destroyed or remediated. A variety of hemp plants have been selectively bred to produce low amounts of THC and high amounts of CBD, a non-intoxicating cannabinoid with medical benefits. But complicating things is the fact that CBD can be modified into forms of THC, including some that aren't explicitly banned by the federal government.

Most of the country is still unfamiliar with modified cannabinoids, a new wave of cannabis compounds whose development was made possible by a recent federal loophole. That window has created a burgeoning market online for gummies and vaporizers that can provide intoxicating effects similar to those of marijuana products sold at dispensaries. The possibilities became apparent after Congress legalized hemp farming in 2018, with hemp-derived cannabinoids like CBD soon converted into Delta-8 THC, Delta-10 THC and other THC isomers that are technically different from Delta-9 THC; CBD can also be converted into Delta-9 THC. Since Delta-9 is the only form of THC mentioned in the Controlled Substances Act, hemp product manufacturers now have a lucrative opportunity, especially in states without legal recreational marijuana.

But here in Colorado, that opportunity has encountered opposition.

Cannabis law firm Vicente Sederberg and several major members of the licensed marijuana industry want to see more guardrails in this state on modified cannabinoids, citing public-safety issues and unfair business practices employed by certain players in the hemp and CBD spaces.

According to law firm co-founder Christian Sederberg, creating forms of THC out of hemp extraction wasn't on the radar when he and other legalization advocates drafted Amendment 64, the initiative that ended the prohibition on Colorado marijuana and hemp in 2012. "What [Amendment 64] was intending to do was discussing industrial hemp, which includes food products — but modified cannabinoids and other things like hemp products that are substitutes for THC products really weren't intended," Sederberg says. "We want to ensure that products are sold safely and in the correct venue that prevents consumers and kids from getting their hands on intoxicating products. If products are intoxicating, I think they should be sold in the state's medical marijuana system or retail marijuana stores."

Calling Delta-8 THC products "low-hanging fruit" in the legal structure, Sederberg has set his sights on hemp products that claim to contain less than 0.3 percent Delta-9 THC by weight, but still advertise having up to 10 milligrams of THC per serving, similar to recreational marijuana edibles sold in Colorado dispensaries. "If the position is that it is an industrial hemp product because it was derived from an industrial hemp plant and it is 0.3 percent THC by weight...we, under Colorado law, think that is an intoxicating product," he argues.

A bill introduced in the Colorado Legislature last month would ban any intoxicating cannabis product that isn't produced by a state-licensed marijuana business or sold at a licensed dispensary. Colorado hemp businesses don't support the measure, saying that such blanket restrictions on cannabinoids are too much, too soon. Not all modified cannabinoid products are intoxicating, they argue, and some are geared toward medical use. The regulation of modified cannabinoids could involve some sticky measures on the hemp production side as well, according to hemp industry representatives.

Manufacturers of low-THC, high-CBD medications sourcing their cannabinoids from hemp instead of marijuana feel unfairly targeted by Senate Bill 205. There are also worries that banning modified cannabinoids outright or requiring hemp manufacturers to become licensed marijuana businesses could give this state's larger marijuana businesses a chokehold on two different industries.

“Although I support the intent of this bill, vested interests in big marijuana seek to destroy the natural hemp-derived-CBD industry. The consequence for my son, Zaki, who has come to rely on CBD, would be catastrophic," says Heather Jackson, co-founder of medical cannabis nonprofit Realm of Caring.

As introduced by sponsors Senator Don Coram and Senate President Stephen Fenberg, SB 205 would have also limited hemp-derived tinctures, a popular medication for certain forms of epilepsy and other debilitating diseases, to 20 milligrams of total THC per bottle. Depending on the size of the bottle, 20 milligrams of THC could be a very low amount per dosage, Jackson points out.

The bill's original language also cut out scientific analysis when determining which cannabinoid products were intoxicating, potentially disregarding dosage factors and adding other cannabinoids outside of THC to the prohibited list.

A late amendment to SB 205 created something of a compromise by kicking the can down the road. Rather than calling for an outright ban on any hemp product deemed intoxicating, SB 205 now calls for a task force of officials from the Colorado Attorney General's Office and the state's departments of agriculture, marijuana enforcement and public health, as well as hemp and marijuana industry stakeholders, to "study intoxicating hemp products and make legislative rule recommendations."

The amended bill passed its first hearing before the Senate Business Affairs & Technology Committee 4-0 on May 2 and is expected to be on the fast track during the legislature's final days. Both sides insist that this is a discrete issue and not a signal of battles to come between hemp and marijuana — but the SB 205 compromise certainly doesn't rule out conflict.

Marijuana Industry Group, one of Colorado's largest trade groups for state-licensed marijuana businesses, supports the amended version of SB 205, but also supported the original version, too. According to executive director Truman Bradley, allowing intoxicating products to be sold outside of dispensaries is a risk to children, even if IDs are required for any sales.

"Right now this is a loophole that some bad actors are going to exploit. We can argue about the details of different limits within the bill," Bradley says. "I think there's a lot of momentum now to get this passed, and I think there are some finer details to get this worked out for the hemp producers."

Colorado Hemp Association vice president Samantha Walsh agrees that the sale of intoxicating products should be restricted to adults 21 and up, but stops short of saying that dispensaries should have exclusive access to sell them.

"We support finished, intoxicating products being sold through an appropriate retail scheme that includes over-21 and proper measures to ensure that products are safe, but we also support a process that is informed and backed by science in regard to what is intoxicating in a finished hemp product and what isn't," Walsh says. "We respect the vertically integrated and brick-and-mortar investments the marijuana industry has made, but markets change — and businesses should be able to adapt to that change without adopting protectionist practices."

The Colorado Marijuana Enforcement Division has banned marijuana dispensaries from selling hemp-derived THC isomer products, and regulatory agencies in New York have issued similar legal positions, but no state legislature has yet banned modified cannabinoids outright. In fact, late last week, Virginia lawmakers rejected a move by the governor that would have banned Delta-8 THC products in that state.

Veronica Carpio, a Colorado hemp farmer and founder of trade group Grow Hemp Colorado, calls modified cannabinoids "uncharted territory" for Colorado lawmakers, but says she believes the marijuana and hemp industries can come to an ultimate agreement.

"We're definitely two different spaces," she says. "But Colorado has always been a leader in dealing with this uncharted territory, so I have no doubt we can come together and deal with it."

The amended bill now moves to the Senate Finance Committee. Fenberg's office didn't respond to a request for comment; Coram, who is a hemp farmer, couldn't be reached for an interview.