How The Cannabis Administration And Opportunity Act Could Hurt The Hemp Industry
Although the final draft contains much-improved provisions, it continues to propose regulations that would undermine the cannabis industry.
Last summer, Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR), and Senator Cory Booker (D-NJ) unveiled a 163-page discussion draft legislation, known as the Cannabis Administration and Opportunity Act (CAOA). The CAOA intends to end the decades-long federal cannabis prohibition, regulate cannabis, and reinvest in communities of color that have been unfairly targeted in the War on Drugs.
While the draft bill of the CAOA was a huge step forward in the federal legalization of cannabis, its sponsors recognized that the proposed language needed to be fine-tuned and invited stakeholders to submit their feedback to produce a robust final proposal.
Following receipt of numerous comments, the sponsors filed the final version of the CAOA in the upper chamber on July 21, 2022 — the summary of this version can be found here.
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Although the final draft contains much-improved provisions, it continues to propose regulations that would undermine the cannabis industry — the summary of the revisions made to the discussion draft is available here.
Of interest today are the provisions that, if passed in their current version, would hinder the economic growth of the hemp industry. These provisions include:
- Sections 803 And 804: Definition Of Hemp
As I have discussed at length in this column, states have been wrestling for a few years now with solving the problematic issue of unregulated intoxicating products that technically comply with the federal definition of hemp under the Agriculture Improvement Act of 2018 (the 2018 Farm Bill).
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In May of this year, the Ninth Circuit Court of Appeals opined that the 2018 Farm Bill legalized delta-8 tetrahydrocannabinol (Delta-8 THC) derived from hemp and that “[i]f … Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”
The CAOA aims to fix this mistake; unfortunately it does so by setting a THC threshold that would negatively affect nonintoxicating hemp-derived products.
In its current form, the CAOA provides that products made or derived from hemp that exceed 1 milligram of total THC per 100 grams on a dry weight basis — translating into 0.001% total THC — would be excluded from the federal definition of “hemp” due to their intoxicating effects.
This threshold is an arbitrary and unrealistic standard that would essentially delegate most nonintoxicating hemp-derived products to the adult-use cannabis market due to the limitations of current testing protocols and technologies. States like Colorado, which have chosen to tackle the complex regulation of these intoxicating hemp-derived products, understand the complexities and nuances associated with these testing standards and THC limits and, as a result, have created commissions of industry experts to develop regulations grounded in science and industry standards. Such approach should also be adopted at the federal level to ensure a realistic and practical distinction is made between nonintoxicating and intoxicating hemp-derived products.
If left unrevised, the CAOA’s imposition of burdensome restrictions that are only warranted for intoxicating products would most likely destroy the hemp industry’s economic growth.
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- Section 504: Regulation of Hemp-Derived CBD
The CAOA provides a regulatory framework for the sale of hemp-derived CBD but no other derivatives.
Although CBD was the first and possibly remains the most recognizable hemp derivative on the market, other hemp-derived compounds, such as cannabigerol (CBG) and cannabinol (CBN), have been studied and have gained popularity among U.S. consumers. As such, the protections and regulations contemplated by the CAOA for CBD products should be expanded to all nonintoxicating hemp compounds to ensure these products remain lawful and safe for consumers.
The new federal bill also proposes to limit the regulation of hemp-derived CBD products as dietary supplements and imposes more stringent and onerous safety evaluations than those imposed on other botanical ingredients.
This narrow regulatory pathway has long been advocated by a group of hemp stakeholders; however, it fails to take into account that in the past four years, a large and thriving CBD food and beverage market has been established in many states that chose to legalize and regulate CBD products.
In addition, the CAOA fails to align with laws and regulations adopted by the international community and foreign countries that have determined CBD products are safe for human consumption and can be marketed as novel foods provided they meet specific safety and testing standards.
Lastly, the market for hemp biomass in the production of dietary supplements is limited. Allowing CBD in food and beverages would bring large, mainstream retailers on board and drastically help fuel the industry’s economic engine. BDS Analytics, a leading cannabinoid marketing research group, recently forecasted that CBD beverage sales alone would reach $1.2 billion by 2023 and $1.7 billion by 2024.
So all this to say that strictly limiting the sale of CBD products as dietary supplements and imposing unrealistic THC limits would reduce the number of offerings in the marketplace but also unfairly disadvantage the hemp industry by inflicting unique and unjustified burdens on their products.
Nathalie Bougenies focuses her practice on health and wellness, in addition to corporate transactions and regulatory compliance. For the past four years, Nathalie has helped clients navigate the complex regulatory landscape of hemp products intended for human consumption and advises domestic and international clients on the sale, distribution, marketing, labeling, and importation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s “Marketplace.” She also authors a weekly column for “Above the Law” that features content on cannabis policy and regulation. For four consecutive years, Nathalie has been named Rising Star by Super Lawyers.
