Hemp-Derived THC – Why its Unregulated Market is Becoming a Problem

It’s been more than four years since Congress passed the Farm Bill of 2018, which legalized hemp across the United States. Until this point in time, hemp was, like the rest of the cannabis plant, federally illegal. The bill defined “hemp” as cannabis plants that contain less than 0.3% of Delta-9 THC and removed such plants from the definition of “marijuana” under the Controlled Substances Act (CSA), where it remains defined as a Schedule I drug. This definition, legally exempting hemp from the definition of marijuana, also applies to products derived from hemp.

Cannabidiol, or CBD as it is commonly known, is a cannabinoid like Delta-9 found in the cannabis plant that, unlike Delta-9, does not induce an intoxicating effect when consumed. Once hemp became federally legalized, CBD derived from hemp also became legal. Right out of the gate, the popularity of CBD as a wellness supplement took off across the nation, as did other lesser-known cannabinoids such as CBN and CBG.

There are over 100 known cannabinoids in the cannabis plant. It didn’t take long for other legal derivatives of hemp to start being produced and sold alongside CBD. Delta-8 THC and Delta-10 THC are two such cannabinoids that have been gaining notoriety in the past couple of years. While they produce an intoxicating effect like Delta-9, this effect is not considered as powerful or intense as Delta-9 (although research on this issue is in its infancy).

However, unlike Delta-9, these two cannabinoids are not produced in large amounts in the cannabis plant and thus, were not commercially viable. That was until the Farm Bill and the legalization of hemp. Producers soon found that they could take CBD, which is produced in commercially viable amounts in the plant, and convert it through a chemical process into Delta-8 and Delta-10. These synthetically derived cannabinoids, their producers argue, are derived from CBD, a derivative of hemp, and therefore are just as legal as CBD.

The chances are, no matter where you live in Ohio (or any state for that matter), you have encountered retail establishments selling these Delta-8, Delta-10, and other minor cannabinoid products. Some have even taken the bold step of calling themselves dispensaries. This raises a number of concerns regarding the safety and legality of these products and how they are being sold. Read on for some of the most common questions we’ve been seeing. Some of the answers might surprise you.

Are these “dispensaries” licensed?

No. Retail stores with neon THC signs in their windows are unlikely to be state-licensed cannabis dispensaries. That’s because most states with legal cannabis have restrictions on advertising and marketing, and that includes signage. Neon signs in the storefront window are a hard NO in Ohio, and in many other state medical programs.

Is the retailers’ sale of these products legal?

Yes. These establishments selling Delta-8 are legal. They are engaged in selling products derived from hemp, and hemp is now federally legal. This means products derived from hemp can now generally be sold freely all over the USA and online subject to federal regulation, which to date is virtually non-existent.

Are these products safe?

Not necessarily. Many of the products being sold in these pseudo-dispensaries, carryouts, and paraphernalia shops have not been proven to be safe. These products have not been tested to the same extent that most states test medical and adult-use cannabis. Not even close. Testing and accurate labeling are critical components of consumer safety when it comes to the cannabis plant, and the reality is that hemp and hemp-derived products are not held to the same testing and labeling requirements as state-licensed medical and adult-use marijuana products.

Adding further complexity, the data on potency and consumer safety of these products is borderline non-existent. Certainly, there are many safe and effective hemp-derived products on the market. However, the problem lies in expecting consumers to be able to distinguish legitimate, properly tested products from the unregulated, untested ones. The FDA has done very little when it comes to regulating hemp-derived products and, in fact, recently told Congress that it was not able to find a pathway toward doing so under its current regulatory framework.

What about OVI Laws and identifying those “under the influence?”

Delta-8 and Delta-10 are intoxicating substances. From a molecular standpoint, they are almost identical to Delta-9. Both are considered “lite” versions of Delta-9, meaning they are not as intoxicating, but research quantifying that differential is scant at this time. When it comes to testing for THC in a person’s blood, most methods account for Delta-9, but not Delta-8 or Delta-10. Accordingly, a patient in Ohio’s medical marijuana program with a valid medical card, who consumed tested and regulated products, could test positive for Delta-9, while a person who consumed untested and unregulated Delta-8 products could evade detection. This doesn’t seem like an intended result of existing OVI laws.

Testing issues extend beyond trying to detect impairment. Patients and consumers who participate in state-licensed cannabis programs also run the risk of failing drug tests given by their employers depending on the laws of that particular jurisdiction. Consumers of hemp-derived THC may pass that same test. But they also may fail the test. These products are not tested the same way legal cannabis products are tested, and in many cases, they weren’t tested at all. So, a consumer really cannot be certain that the product they are consuming doesn’t have some amount of Delta-9 in it, even a trace amount, instead of the Delta-8 or Delta-10 that it was advertised to contain. And that trace amount could be enough to fail a drug test.

How do regulations for state-licensed cannabis businesses and hemp-derived businesses compare?

State-licensed cannabis businesses are also affected by the unregulated hemp-derived THC market. Unlike legal cannabis, there are no marketing and advertising restrictions on hemp-derived THC. There are generally no restrictions on where hemp-derived THC products can be sold, while most state-licensed cannabis programs restrict how close dispensaries can be to schools, daycares, churches, and parks. Producers of hemp-derived THC products also don’t have to pay for multiple rounds of product testing, costly licensing fees, expensive security systems, and many other business and legal requirements that all add up to a higher cost to produce that gummy or vape cartridge.

The fact is that right now, when compared to a state-licensed cannabis business, a hemp-derived THC business benefits from a lower cost of entry, lower production and operational costs, less regulation, legal interstate commerce, normal tax treatment, availability of banking services, and other enormous advantages. This, too, does not seem like an intended result of legalizing hemp.

What’s the path forward?

These are not easy problems to navigate, but some measures can be taken to start to straighten all this out. Standardized procedures that bring some commonality to how hemp-derived products and state-licensed cannabis products are tested would be a big step forward in ensuring patient and consumer safety. Getting the FDA on board to regulate how both hemp-derived products and cannabis-derived products are manufactured and marketed would go a long way toward creating a level playing field for businesses in both industries (and yes, that would require federal legalization of cannabis for the latter to happen). And finally, a fresh look at the policies and procedures for testing individuals for cannabis consumption and impairment to ensure accuracy and fairness would promote public safety when it comes to both hemp-derived THC and state-licensed cannabis products.

* Michael Shaw contributed to this article.

Mac Murray & Shuster is a nationally recognized firm focused on consumer protection and privacy regulatory compliance and litigation. With a team led by former state regulators, we provide comprehensive counsel to businesses of all sizes in highly regulated industries, including financial services, healthcare, teleservices, automotive, insurance, and consumer marketing.

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