Accidental Legalization
What’s going on?
You’ve probably seen at least one advertisement for cannabis products online, usually in the form of drinks or edibles. They tout full effects, real THC, offer to ship them to your door, and promise that they’re legal. But are they actually? You may be surprised that the answer is yes. How? That’s the beauty of incompetence.
Current Legal Status
At this point, everyone knows that the cannabis legal landscape in the US is complicated, to say the least. As it currently stands, 39 states (and D.C.) allow for medical cannabis sale, purchase, and possession. 24 of these states (and D.C.) have also legalized cannabis for possession and use. To further complicate things, Virginia and D.C. have not established legal frameworks for sale and distribution, so even though use and possession are legal, you either cultivate it yourself or get it from a black or gray market seller. But wait, there’s more: of those 24 states, not all allow for personal cultivation (looking at you, Delaware, Illinois, New Jersey, and Washington).
You’ve probably heard a lot about states’ rights in the news recently, and it’s pretty clear that even though cannabis is federally illegal, states are still given the agency to determine whether they want to permit sale and use within their borders. While we’ve covered what this weird limbo means from a financial standpoint, it also has an impact on interstate travel. While it’s obvious that it’s illegal to transport cannabis from a legal state to one that still bans it, it’s also prohibited to transport cannabis from one legal state to another. Cali weed has to stay in Cali when you drive to Vegas, so to speak.
What this also means, is that each state, by default, has its own self contained cannabis market. Every bit of cannabis sold in New York was grown in New York, just as everything sold in Illinois was grown and manufactured in Illinois. This clearly presents challenges, from companies looking to expand to consumers craving a certain cultivator’s supply after moving. If only there was a loophole…
The 2018 Farm Bill
Oh hey, look, a loophole. As with many things meddled with by the government, many times those writing the laws aren’t necessarily the most qualified to actually do so. C’est la vie. Many times this has a negative impact on our lives, but sometimes we can actually benefit from this. And sometimes, entire industries can be built around such an oopsie. That’s what happened with the 2018 Farm Bill (also known as the Agriculture Improvement Act of 2018, but that’s a mouthful).
To give a bit of background, the Farm Bill is a sprawling piece of legislation passed in 2018 that was designed to be updated after five years, in 2023. It still hasn’t been updated, by the way, but we’ll get to that later. What it encompassed was a whole slew of provisions that were intended to support farmers through certain programs and subsidies, fund nutrition and conservation programs, allocate money to agricultural research, and made some pretty drastic changes to the treatment of hemp as an agricultural product. One of these things is not like the other.
Prior to the Farm Bill, any plant under the Cannabis Sativa L. species was considered to be marijuana, a schedule 1 controlled substance. Any and all cannabis plant was treated as such without regard to whether it was actually capable of providing psychoactive effects or not. This clearly hampered a lot of progress with regards to growing hemp for industrial functions, such as use in creating hemp fabrics and plastics. Now, hemp can be grown for such purposes and more, but there’s a catch.
The text of the bill states that any hemp grown in accordance with the provisions of the bill must be tested to show that it contains <0.3% Delta-9 THC by dry weight, Delta-9 THC being the main psychoactive compound in cannabis. If the plant tests in this range, then it can be sold and processed legally due to this provision. If this bill did what it was intended to, then it would be pretty cost prohibitive to grow hemp for THC consumption purposes. The amount of plants that would need to be grown to get any meaningful concentration of Delta-9 THC would be immense. But here’s where the loophole comes in.
THCA
Delta-9 THC isn’t actually something that forms in high concentration on any Cannabis Sativa L. plant, hemp or not. What does form naturally is THCA (Tetrahydrocannabinolic Acid). Over time, however, THCA’s acid group falls off and it turns into Delta-9 THC. The fun part is that this transformation also happens instantly when heat is applied. Yeah, that’s why you have to heat your weed up in butter before adding to your brownies, and why eating a fistful of raw cannabis won’t do anything but taste bad. Even the cannabis you buy in the dispensary is mostly THCA.
So, given that the farm bill specifies that only the Delta-9 THC content has to be below 0.3%, farmers are free to grow plants with as much THCA as they want. This can then be sold on the free and legal market to all the companies that you see selling drinks and edibles with actual Delta-9 THC in them. These companies either refine the THCA into Delta-9 themselves (a process known as isomerization), or buy the already refined Delta-9 THC to use as product inputs. They’re able to do this because they’re refining these plants into hemp-derived THC, and because it’s hemp-derived, it’s perfectly legal in the eyes of the law.
Now, this doesn’t mean that these companies, can sell straight up Delta-9 THC in a tincture or anything like that. Because this is hemp-derived, the final product still needs to contain <0.3% THC by weight to be considered legal. But drinks are heavy and gummies can be any size you want, so it’s not really that hard to stay on the right side of the law. If you had a hemp-derived edibles business and you wanted to make a 10mg edible, all you have to do is ensure that your edibles weigh just over 3.33 grams. Just like that, your product contains <0.3% THC by weight and is perfectly legal to sell nationwide. The USPS will even deliver it straight to your door.
So, yeah, because our elected officials who wrote the law didn’t have an understanding of the biology or chemistry of the plant, they effectively legalized cannabis in 2018. But the story doesn’t end there.
A Second Look at State’s Rights
As we covered earlier, just because something is federally illegal doesn’t mean states can’t make it legal in their borders. Well, the opposite is also true. Just because the US legalized something federally (even by mistake) doesn’t mean states can’t outlaw it. That’s just what’s happened to the hemp-derived cannabinoid industry. Clearly the ability to manufacture hemp derived edibles represents a risk to the in-state cannabis market of legal states, and flies in the face of total cannabis bans in others. This has led to some states taking measures to combat the sale of such products in their state.
Certain states that have full bans on cannabis, such as Idaho and the Dakotas, have amended their laws to tackle this loophole. They require that the THC and THCA content of any hemp product be less than 0.3%, and also outlaw any cannabinoids produced through isomerization. With these adjustments, they’ve really closed any gaps that would allow for psychoactive hemp-derived products.
Other states with full legal markets have also taken measures to close this loophole out of a desire to protect in-state cannabis cultivators, manufacturers, and retailers from out-of-state competition, as well as ensure they don’t miss out on any cannabis tax revenue. California and Washington, two states known for their cannabis industries, have taken similar measures as the fully illegal states mentioned above. New York and Rhode Island limit the THC per serving to 1mg, and Virginia limits to 2mg. Colorado, Vermont, and Connecticut and other states have similar potency limitations, but also limit the sale of hemp-derived THC consumables to licensed dispensaries.
What Now?
They say all good things must come to an end, and that’s certainly a possibility here. We may be staring down the barrel of this loophole being tightened up. As mentioned earlier, the Farm Bill was set to be phased out and updated in 2023. If you’ve been paying attention, you’ll know that it’s now 2025. Although that’s the case, the Farm Bill still hasn’t been updated yet, so 2018’s is still in effect. As of now, we’re still good. But it’s looking increasingly likely that this will be changing soon.
Amendments have been proposed to include THCA in the 0.3% threshold, which would effectively kill this entire hemp-based cannabis industry on arrival. This is just one hotly contested issue in a bill rife with hotly contested issues. So the silver lining here is that with so many things to disagree on, it remains to be seen whether the bill will get finalized this year, or if we’ll just see another extension. Whatever happens and whenever, the new farm Bill will send shockwaves through the hemp-derived industry; either bolstering it and enshrining its legitimacy, or taking it down with one fell swoop. Only time will tell.