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The US House Agriculture Committee recently approved an amendment to the draft 2024 Farm Bill aimed at redefining hemp to 'close the loophole' created by the 2018 Farm Bill. This move could potentially ban hemp-derived cannabinoid products, such as delta-8 THC and THCA, and has sparked an ongoing debate on how to regulate hemp-derived cannabinoids.
While the draft bill has a long legislative journey ahead before becoming law, it holds the potential to disrupt the $28 billion gray market and significantly reshape the future of the US hemp industry. Though the 2024 Farm Bill hemp update could 'close the loophole,' lawmakers could still decide to maintain the status quo – or delay making a decision altogether.
Understanding the 'Loophole'
The 2018 Farm Bill, which legalized hemp by defining it as having a THC level of 0.3% or less, inadvertently created what many see as a 'loophole.' This legislation led to the rapid growth of a multi-billion dollar market for CBD and hemp-derived cannabinoid products, now widely available in convenience stores, gas stations, and online retailers.
While the 2018 bill aimed to promote hemp as an agricultural commodity, it also opened doors to a thriving market for hemp-derived cannabinoid products. The vagueness in the 2018 Farm Bill's wording, combined with the fact that hemp and cannabis are essentially the same plant, contributed to this new market's success.
The proposed amendment in the 2024 Farm Bill starkly contrasts the inclusive definition of the 2018 version. It seeks to redefine hemp only to include "naturally occurring, naturally derived, and non-intoxicating cannabinoids." This change could effectively remove popular hemp-derived products like gummies, beverages, and edibles from store shelves nationwide.
DEA Clarification
Amidst discussion over the future of the Farm Bill, a top official at the Drug Enforcement Administration (DEA) drafted a letter on May 13 that clarified THCA, one of the key cannabinoids at the heart of this debate.
THCA, or tetrahydrocannabinolic acid, is the non-intoxicating biosynthetic precursor to THC. When heated, THCA converts to intoxicating THC through the decarboxylation process. Many high-THCA products are labeled as hemp and sold outside the licensed cannabis market because they contain less than 0.3% delta-9 THC – until heated for smoking or vaping.
Despite recent efforts to 'close the loophole' on THCA, the May 13 letter asserted that there is no loophole to begin with. Terrence Boos, chief of the DEA's drug and chemical evaluation section, clarified that the legal threshold includes not only delta-9 THC but also related cannabinoids like THCA. Thus, THCA products do not meet the legal definition of hemp.
This clarification has sparked significant controversy within the hemp industry, with some arguing that this interpretation "would destroy the hemp industry." This debate over the THCa loophole is not a new one, though, with experts clashing on the legal status of hemp-derived cannabinoid products for years. Although the DEA announced its intention to develop a final rule to clarify this policy in May 2023, hemp-derived cannabinoid products remain in a legal gray area after a federal appeals court in 2022 ruled that the language of existing laws exempts delta-8 THC from DEA control. However, while the federal discussion unfolds, some states are taking action.
State Bans and Restrictions
Several states have already implemented or proposed bans on hemp-derived cannabinoid products. New York, Washington, Oregon, and Colorado have moved to prohibit hemp-derived cannabinoid products. In contrast, states like California, Michigan, Maryland, and Connecticut have simply prohibited them outside of regulated cannabis channels.
Then, there are states like Minnesota, Louisiana, and Virginia, which have opted to adopt laws to regulate the hemp-derived cannabinoid market outside of the cannabis sector. Still, with much of the United States leaving hemp-derived cannabinoid products unregulated or enacting unclear bans, the market is thriving – especially in states without legal adult-use cannabis.
With this patchwork of state laws already adding complexity to the market and intensifying concern over the risk of federal prohibition, many professionals in the hemp industry have spoken out against the House-approved amendment. Although the amendment still has a long way to go before it becomes part of the final 2024 Farm Bill, it has sparked a heated debate between stakeholders in the hemp and regulated cannabis industries.
Industry Perspectives
The distinction between cannabis and hemp has given rise to two separate markets, each with unique perspectives on how hemp-derived cannabinoids should be regulated. While both industries involve the cultivation, processing, and sale of essentially the same plant, they are sharply divided by significant differences in taxation, regulatory frameworks, and operational challenges.
Advocates in the legal cannabis industry argue for more stringent regulations on intoxicating cannabinoids to safeguard consumer safety, prevent underage access, and ensure fair market practices. Conversely, professionals in the hemp-derived cannabinoid products market are hoping that the definition will remain unchanged, asserting that 'closing the THCa loophole' could put an end to their businesses. They argue that this change would impact not only businesses in the hemp-derived products space but also those in hemp farming for the grain and fiber markets, as well as seed companies, breeders, and flower producers operating across state lines.
The intensifying debate over the 2024 Farm Bill also comes at a tumultuous time for the legal cannabis market. The potential rescheduling of cannabis from a Schedule I to Schedule III narcotic under the Controlled Substances Act (CSA) looms on the horizon, adding further complexity to the future of these industries.
The Future of the 2024 Farm Bill
Initially, the 2018 Farm Bill was set to expire in September 2023. Although this bill is typically updated by Congress every five years, President Biden extended this deadline to allow authorized programs to continue through September 2024. With only a few months left until this deadline, there is mounting pressure to reach an agreement. Though the subject of hemp is only a small portion of the bill, it remains one of the most contentious topics.
Still, it's yet to be seen what action, if any, Congress will take on the 2024 Farm Bill. While the House has approved the cannabinoid ban amendment, it will also need to be adopted by the Senate before it becomes law. Unless the Senate passes an identical version, the differences between the two versions must be reconciled. Although the Senate has not published its version yet, the Senate Agriculture Committee's recent 2024 Farm Bill proposal summary did not address intoxicating hemp-derived or synthesized cannabinoids.
With multiple contested topics within the 2024 Farm Bill, there is a real possibility that Congress may once again extend the 2018 Farm Bill. The stakes are high for both the regulated cannabis and hemp-derived cannabinoid industries, but the future is still unclear on how updates to the 2024 Farm Bill will impact the industries.
Stay tuned to our CannaBites Blog for additional updates about the 2024 Farm Bill and other snackable news, commentary, and more from across the cannabis industry.
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