Friends – it seems like now you can’t swing a dead cat without hitting a beverage infused with hemp-derived Delta-9 THC. Not only that, they’re available for nationwide shipping. What’s next – mail order Delta-9 THC-infused knishes? These products generally claim that they’re “federally legal” because the Delta-9 THC is derived from hemp and no more than 0.3% of the weight of the entire product.
Ever since the 2018 Farm Bill came into effect and someone read the hemp language a little too closely, we’ve been talking about the debate over the legality of hemp-derived Delta-8 THC (most recently mentioned a few weeks ago). The cannabis bar has been at odds for some time over whether the 2018 Farm Bill legalizes hemp-derived Delta-8 THC because the broad wording exempts it. My argument was that this interpretation “proves too much” (to use a term that was favored by a certain Constitutional Law professor who taught at Northwestern Law in the 90’s, but which I never really understood – I think that it means that a certain conclusion would also allow for truly absurd results, maybe). In other words, if the law would allow hemp-derived Delta-8 THC, then why wouldn’t it also allow hemp-derived Delta-9 THC (synthesized or not) in concentrations high enough to have noticeable psychoactive effects? (By the way, all signs point to Congress clearing this up when the 2018 Farm Bill gets replaced later this year, or sooner if Congress finally forces the FDA to regulate hemp derivatives, as teased a few days ago.)
Few people listened to me (even those to whom I was giving actual legal advice, which this newsletter is not). Then the Federal appellate court decision in AK Futures last May only made things even more confusing, leaving more questions than answers about whether and how the court’s formulation could ever be implemented, and why they kind of misread the language of the 2018 Farm Bill themselves. Nonetheless, many in the industry read that opinion to nationally legalize any psychoactive cannabinoid so long as it’s derived from hemp. So here we are.
To me, it’s hard to imagine how the industry thinks it will win favor with the Federal politicians who are holding back legalization, let alone their base voters who still oppose legalization and see the product as dangerous, when companies are making psychoactive products really easy to buy (without any restrictions!) outside of the licensed structure. I know that many of my colleagues in the industry disagree with this sentiment, but I try not to be a nuchshlepper.
Also, in case you missed it, Lowell Farms announced that it’s going to swap its senior secured debt for 49% of the company and intellectual property – another example of the kind of rough-and-ready restructuring that we talked about earlier this year.
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Hauser Advisory provides advice and strategy on business lifecycle events and cannabis industry navigation, tapping into a deep, national network
and twenty-five years of dealmaking and capital markets experience.
© 2023 Marc Hauser and Hauser Advisory. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. Subscribe to Cannabis Musings at hauseradvisory.com.