Online Hemp Sales Could Invite Impending Federal Crackdown

Online sales of hemp products – specifically delta-9 THC products that are derived from hemp – are likely to see a federal regulatory crackdown in the coming months.

Congress is currently mulling the 2023 Farm Bill, while state lawmakers across the country are slated to hold their yearly sessions. Many are expecting hemp extract sales and shipments – particularly those happening online and across state lines – are likely to get attention from both federal and state lawmakers.

As our Los Angeles marijuana business lawyers can explain, the concern with delta-9 products is that they possess intoxicated properties, yet aren’t being taxed, overseen by safety regulators, and are being shipped across state lines with little oversight.

For those who may be unfamiliar, delta-9 products are different than delta-8. Delta-8 THC products are manufactured in labs. Lawmakers have set limits on delta-8 products. So now, some hemp manufacturers have concentrated the delta-9 THC that already exists in hemp plants, allowing them to make tinctures, edibles, and vapes that are intoxicating – and then sell those online. Delta-9 is the THC compound created when raw hemp is heated, but in smaller amounts than what one might find in a cannabis extract.

Some manufacturers doing this have gone on record to say that doing this allows them to operate in currently-underserved markets. Some marijuana businesses contend that purveyors of this practice are cutting corners unfairly by using hemp – which is legal at the federal level – to make THC – which is not. The intoxicating properties of THC are what led to prohibition of it in the first place, and what continues to be a sticking point for overturning stringent federal laws against marijuana sales.

The sudden popularity of hemp-derived delta-8 over the last few years was largely unanticipated. Hemp farm operators and retailers saw a sudden new potential in a part of the plant few had previously paid attention to.

Still, many hemp operators have been careful to remove any trace of intoxicating THC from their CBD products, for two main reasons:

• To avoid unwanted attention and oversight from federal authorities.
• To attract consumers who don’t want to be intoxicated/who may be drug tested.

Delta-9 has somewhat confused matters. A fair number of marijuana business advocates assailed D-8 products because they were made in a lab through a chemical conversion process that lacked health and safety oversight. It was those criticisms that largely fueled the delta-9 hemp extract market. Technically, a 5-gram gummy can contain more than 15-milligrams of delta-9 THC and still comply with federal regulations because it still comes in under 0.3 percent THC by dry weight. Being able to market it as both natural and legal was a compelling point for some hemp growers, manufacturers, and retailers.

However, many California marijuana businesses have viewed this as unwelcome competition. Many had seen a bright-line partition between hemp and cannabis. Of course, hemp is cannabis – and always was (just like marijuana). But delta-8 and delta-9 products blur the lines between marijuana-derived products and hemp-derived products.

Those in the hemp industry may be enjoying something of a free ride for the moment, but that’s because they aren’t operating under the same crushing weight of taxes, regulation, and black market competition those in marijuana growth and sales.

Hemp industry insiders, however, insist they aren’t in competition with marijuana companies. Rather than respond to concerns by quickly imposing the same taxes on hemp-derived products, they urge an easing to the marijuana business taxes.

Those on all sides of the table will closely be following the discussions regarding the Farm Bill, as this will be the first time it’s been revised since it opened the doors to hemp and CBD in 2018.

It should be noted that even if the THC content meets the federal definition of hemp, states still have the authority to oversee the safety of ingestible products sold within their borders. Some have noted that if you change the composition of hemp, it may no longer be considered legal in certain states.

Those that are selling d-9 products should do so with great care, particularly if they’re doing so through online sales/the mail. Consult with an experienced cannabis law attorney to ensure you are in compliance.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:

As hemp THC sales boom online and by mail, cannabis industry braces for crackdown, Feb. 9, 2022, By Kristen Nichols, Marijuana Business Daily