High anxiety over federal weed loophole

The meteoric rise of Delta-8 is reminiscent of the early days of the CBD boom. The products appeared on the shelves of gas stations, vape shops and numerous e-commerce stores overnight.

But there is one big difference: Delta-8 products are made marketed as a “legal” way for people to be stoned.

The rise of the cannabinoid has deeply divided the hemp industry and its proponents. Some hemp growers stay away because they fear a crackdown is imminent. Others hope to use the regulatory gray area to make money.

Entrepreneurs like Jeff Gray and Josh Wurzer at SC Labs, a cannabis testing facility in California, fear the Delta-8 trend is another vaping crisis waiting to happen. As of 2019, Almost 3,000 people were hospitalized and 68 died due to lung disease, largely related to illegal marijuana vaping products.

“States are behind the eight-ball in this one,” said Wurzer. “This means taking the CBD and synthesizing a new compound using different chemicals that can lead to contamination and harmful by-products.”

What exactly is Delta-8?

Delta-8 THC is an isomer of Delta-9 THC, the compound responsible for the intoxicating effects of marijuana. That is, the two are largely the same compound with minor atomic differences. The vast majority of Delta-8 products are not derived from cannabis. Instead, manufacturers convert plant-based CBD into delta-8-THC using a chemical process called isomerization. The process combines CBD with a solvent, acid, and heat to trigger the reaction that converts CBD to THC.

“Cannabis is cleaner than the water you drink, it’s so severely tested,” said Gray, referring to the regulated marijuana market in California. However, Delta-8 is a “highly unregulated industry”. There are no clear requirements. “

When Congress passed the 2018 Hemp Legalization Act, it sought to distinguish the crop from marijuana. Hemp and marijuana are the same plant species as Cannabis sativa L., but hemp cannot contain more than 0.3 percent THC. The distinction is legal, not scientific.

“It’s not clear whether [Delta-8 THC products] are illegal under the 2018 Farm Act, “said Jonathan Miller, General Counsel of the US Hemp Roundtable. “It is clear that it violates the spirit of the law.”

Hemp advocates in Congress like Senate Minority Leader Mitch McConnell “support hemp but not intoxicating products,” Miller said.

McConnell’s office did not respond to a request for comment.

The link could violate the DEA’s tentative final hemp rule that aims to regulate the 2018 Agriculture Bill that removes crops as a state-controlled substance. The rule emphasizes that “synthetically derived tetrahydrocannabinols” remain controlled substances. However, there is no agreed definition of what “synthetically derived” means.

The DEA declined to comment on the legality of Delta-8 until it finalizes its tentative definitive hemp rule. “We are in the process of reviewing thousands of comments and are not speculating about what might happen as a result,” said a DEA spokesman.

Market expansion

Last year’s CBD boom resulted in falling prices and a large amount of CBD isolate in the hemp industry. The Delta-8 trend provides “processors with an opportunity for large stocks of the CBD isolates they have built,” said Ian Laird, chief financial officer at Hemp Benchmarks.

It’s attractive to both processors and retailers because the compound is more profitable than CBD. In January, Delta-8 was priced at around $ 1,400 per kilogram, while CBD isolate sold for around $ 550 per kilogram.

While it is difficult to determine the size of the market since a large proportion of Delta-8 sales are online through untracked channels, Hemp Benchmarks estimates sales at least $ 10 million over the past six months.

“It’s the fastest growing segment,” said Laird.

While many industry watchers believe the Delta-8 surge was due to consumers in states that have not legalized marijuana, hemp companies are seeing high sales even in states that have adult marijuana markets.

The reasons are numerous: State-licensed marijuana companies are heavily regulated and taxed. Delta-8 products do not have the same level of oversight or tax burden, which lowers costs for consumers. People can order products online and have them shipped in the mail – for marijuana

While some hemp traders are seeing minimal impact from the Delta-8 surge on their CBD sales, small hemp growers like ImOberstag and Heath Scott suffer much greater success. ImOberstag began manufacturing Delta-8 products after nearly all of its wholesale customers said they were only interested in buying. Scott, who runs 7 Point Farm & Apothecary in Tennessee, said he’s seen a 50 percent drop in sales of CBD products.

Scott stays away from the site for the time being. He is struggling with bank account blocks and payment processing problems and fears that getting started with Delta-8 will only exacerbate these challenges.

Then there is the regulatory uncertainty. The hemp industry is grappling with ever-changing regulations, and Scott is concerned that a change in regulations is imminent.

“How do you invest in something that is so shaky?” he asked himself. “It’s legal until it isn’t.”

Still, he believes Delta-8 is more than a fad.

“I think there are advantages,” he said. “Give us some rules to work with.”

A challenge for the supervisory authorities

The call for regulations is a familiar refrain in the CBD industry that has asked the FDA to provide regulatory clarity. However, this is not an easy task for regulators: much is still unknown about the chemical process of converting CBD to Delta-8.

“It’s not just a neat one-to-one conversion,” said Steven Crowley, compliance specialist with the Oregon Liquor Control Commission. “Fifteen to 30 percent are unknown by-products.”

And there are not only unknown by-products, but also manufacturers who make compromises or who simply do not know better can bring in impurities from the solvents and acids used in the process.

Another problem is adding flavor additives or diluents, said TJ Sheehy, director of data and analysis at the OLCC.

The agency issued new rules on additives following the vaping crisis that comes into effect in April. “None of this affects sales of Delta-8 products in store,” Sheehy said. “It’s a black box that, contrary to actual science, is filled with anecdotal user experiences.”

Then there is the problem of a lack of standardization in laboratory tests. “If I would take [a hemp product] In 16 different labs, I’ll probably get 16 different results, “said ImOberstag.

According to industry representatives, laboratory buying occurs in both the hemp and state-regulated marijuana industries. Manufacturers choose laboratories that are more likely to produce favorable results.

“When I have one [certificate of analysis] from Colorado, what if someone is here [in Illinois] buy it and get arrested … and the police test it? ” he said.

ImOberstag recently established a DEA-licensed laboratory in Florida in the hope that the stringent requirements will lead to the most accurate results for its Delta-8 products. “I’m trying to find a way to be as legitimate as possible,” he said.

What’s next?

Regulators are concerned not only with adult consumer safety, but also with sales to minors. The OLCC launched rules for Delta-8 THC last week. The details are still up in the air, but regulators want to ensure at least some level of purity in these products.

Regulated marijuana manufacturers also have concerns about a product that competes with their industry but does not have laboratory testing requirements. The Michigan Cannabis Manufacturers Association on Monday urged marijuana regulators to monitor Delta-8 products, describing their sales as “an imminent health threat to all Michigan residents.”

Delta-8 is likely to lead to “a new iteration of the patchwork quilt of state hemp laws,” said Shawn Hauser, chairman of the hemp and cannabinoid practice at Vicente Sederberg law firm.

Legislators in several states are beginning to pay attention to such products.

For example, in Oklahoma there is a bill that would include delta-8 THC under the definition of “marijuana”. A Florida bill would regulate the sale of Delta 8 products and include age limits and other restrictions. A California bill proposes taxes and labeling requirements for products that are psychoactive and not naturally derived from the cannabis plant.

However, if history serves as a lesson, restrictions on Delta-8 THC can only lead to one thing: a boom in produces its almost identical cousin – Delta-10 THC.

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