Cannabis Musings - July 13, 2023
Some thoughts on THCA hemp products.
Friends – we’ve talked here before about hemp-derived THC products and their uncertain legal status. Beverages with high-inducing levels of THC extracted from hemp (but constituting less than 0.3% of the total net weight of the drink) are available online for shipment throughout the US, seemingly without requiring an adult signature. All of this is thanks to an aggressive read of ambiguous language in the 2018 Farm Bill, a convoluted Federal appellate court opinion in a trademark case, and the FDA not enforcing its own rules.
Long-time readers of these Cannabis Musings know that I’ve been planning my CBD knish business for years, waiting for the time when I can offer delicious CBD-enriched, potato-filled pastries from a food truck cranking out Klezmer tunes to draw in hungry crowds. And yet, I’ve held off from turning this illustrative conceit into reality because of pesky things like the Federal Food, Drug, and Cosmetic Act, related FDA regulations, and my much narrower view of the 2018 Farm Bill’s language.
So, imagine my surprise (and a bisl of jealously) when I discovered that the well-known cannabis and clothing brand Cookies is now selling THCA hemp flower online for shipment to about a dozen states (“where THCA is legal” per the website). THCA is the acidic form of THC, which converts to THC when it’s heated (decarboxylation). Cookies offers hemp flower, prerolls, vapes, concentrates, and other products that contain enough THCA to have a psychoactive effect when they’re actually used (I suppose someone could, say, eat these products unheated and not get high, but that’d be gross).
The explanation is that, because their products apparently contain no more than 0.3% Delta-9 THC on a dry weight basis, that makes them hemp and therefore legal, regardless of the amount of THCA. Cookies even offers up a “Legal opinion letter” (the website’s term, not mine) making this argument, although, to me, it’s more of a legal “memo” than a legal “opinion” (a specialized term for law firm work product that guarantees its written advice), particularly given that it doesn’t actually use the word “opinion” in rendering its conclusion (which is usually something you see in legal opinions (although not required), together with pages and pages of exclusions and assumptions).
I’m not going to dig into the legal analysis - not because I’m no longer practicing law, and not because these Cannabis Musings (a free newsletter, I’ll remind you) never ever give legal advice anyway, but because that’s not why we’re here. We’re here to point out the escalation of all of this. We’ve gone from hemp-derived CBD foods and drinks being sold at truck stops, to hemp-derived THC drinks being offered outside of dispensaries, to high-concentrate THCA hemp live resin being sold with a click by a prominent national brand.
The licensed cannabis industry was and continues to be built based on ambitious, yet calculated, reads of opaque state and local laws, not to mention in total defiance of federal law. It’s not an industry for the risk-averse (says the ex-lawyer). And yet, drafting of the 2023 Farm Bill is underway ahead of the 2018 Farm Bill’s September 30 expiration, with the hemp “loophole” the focus of interested parties. And the FTC, jointly with the FDA, recently stepped up enforcement against Delta-8 THC edibles.
It’s a peculiar time to be escalating - the more the bear is poked, the more likely it’s gonna wake up.
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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.