As Hemp THC Expands In The Market, Rules Of The Road Are Lagging
February 27, 2024With hemp-derived THC beverages enjoying a wave of growth in markets like Minnesota and Texas—where they’re able to be sold at traditional retailers—regulation of the fast-rising segment is lagging behind its development at the consumer level. That’s created uncertainty for operators across the business, with some retailers reticent to enter the fray before effective rules of the road have been put in place.
The issue was a hot topic of discussion at the recent Wine & Spirits Wholesalers of America Access Live event in Las Vegas, where emerging brands in the space were looking to connect with drinks distributors to bolster their market footprints. Speaking at the event, Chris Lindsey, director of state advocacy and public policy at the American Trade Association of Cannabis and Hemp (ATACH), echoed the position of the WSWA that federal oversight of intoxicating hemp products belongs with the Alcohol and Tobacco Tax and Trade Bureau (TTB), just like beverage alcohol.
“It belongs to TTB because TTB knows exactly how to regulate intoxicants,” said Lindsey. “They can tax it, they can make sure people are compliant with their laws…We are training the public that this is where this belongs. And it’s a model that we’ve had for generations.”
The TTB is better positioned to regulate the hemp-derived THC category than the Food and Drug Administration (FDA), for example, Lindsey said. “Having the FDA be the regulatory authority requires new law,” he explained. “It requires a bunch more employees and a bunch more money. And there’s nobody in Congress right now plotting how to make the FDA bigger and more powerful.”
Complicating the issue is the fact that despite their ubiquity on store shelves in certain markets, the Drug Enforcement Administration (DEA) still considers hemp intoxicants as Schedule I drugs, even after Congress legalized hemp products under the Farm Bill. “The DEA doesn’t think the law really changed,” said Lindsey. “They still see these products as Schedule I controlled substances. The FDA says this hasn’t really ever been approved for use.”
On the other hand, federal agencies have declined to enforce their authority on the subject, allowing state governments to hold sway, with Florida and Missouri among those looking to more tightly regulate the category. (Overall, Delta-8 THC, which was initially the main hemp intoxicant, is either banned or heavily restricted across about half the country; newer hemp-derived products have frequently included Delta-9 THC, however, which many state governments have yet to address.) “Even though FDA has sent many letters out saying you can’t send it across state lines, the Postal Service is not doing any enforcement,” Lindsey noted. “I don’t see the DEA in there shutting any of these businesses down.”
Congress could step into the vacuum to provide more clear rules by amending the Farm Bill, with Lindsey’s group urging lawmakers to clarify that states have authority to regulate hemp intoxicants, as they do alcohol, among other changes. But Lindsey said that legislators keep “kicking the can down the road. I think if the Farm Bill does not change, it’s probably going to be a bump for the industry because the perception the public has is that it means the lane will stay open.”—Daniel Marsteller
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