The next five-year re-authorization of spending and requirements for US Department of Agriculture and related programs has been the most common prediction for a legislative vehicle to change US law defining lawful hemp and resolve a federal regulatory conundrum.
However, Congress will be on Capitol Hill for a brief period after the 5 November elections before the current session ends and it hasn’t prioritized re-authorizing the current farm bill passed in 2018 including language de-scheduling hemp, or cannabidiol (CBD), as a controlled substance.
Lawmakers in 2023 extended the 2018 bill for a year, through the end of fiscal year 2024, and in late September passed a continuing resolution for spending at current levels on USDA programs along with other federal agencies and services through 12 December.
The combination of a low priority and little time on Capitol Hill is another sign pointing to more states enacting their own regulations to define lawful hemp before Congress might act.
Until changes are made through a farm bill re-authorization or other legislation, the federal definition of lawful hemp will remain any part of the cannabis plant containing no more than 0.3% concentration by dry weight of delta-9 tetrahydrocannabinol, the ingredient most commonly associated with marijuana’s intoxicating or psychoactive effects.
“Whether anything is done soon at the federal level is tough to gauge, especially in a divided Congress and in an election year,” said Jonathan Hyman, a partner at Knobbe, Martens, Olson & Bear LLP in Los Angeles.
“I think it is significantly more likely that additional states will adopt their own restrictions prior to Congress acting to narrow the definition of hemp. This is unfortunate as it will likely lead to more inconsistencies and unpredictability, which undermines the ability of legitimate businesses to efficiently participate in this market,” said attorney Jonathan Menkes, a Knobbe Martens partner in Orange County, CA.
Hyman and Menkes, co-chairs of the firm’s CBD and legal cannabis practice group, commented on questions from HBW Insight after they and other Knobbe Martens attorneys discussed federal regulation of CBD and other cannabis-derived ingredients in a recent JD Supra blog post.
Changes to the 2018 farm bill hemp provision (7 USC Chapter 38 Sec. 1369o) are needed, the industry and regulators agree, because its definition of lawful hemp unintentionally left the door open for using other cannabis ingredients which may also have those effects, such as delta-8 and -10 THCs.
“The fact that the original Farm Bill did not address these cannabinoids is not surprising as Congress usually deals with the immediate risks at hand or is playing catch-up, and many of these cannabinoids may have been unknown to Congress or in the market until scientists and companies sought to get around the limits of THC set by the Farm Bill,” Hyman said.
Separately, the Drug Enforcement Administration, with the Department of Health and Human Services' recommendation, in April published a proposed rule to reschedule cannabis from Schedule I, subject to the strictest regulatory and criminal provisions, to Schedule V, the least strict. The public comment period on the proposal closed in July with around 43,000 comments submitted.
“The cannabis world is still hoping to see full legalization soon. The move to reschedule cannabis is a step in the right direction, but is not full legalization and does not address the issues with delta-8 THC or other cannabinoids such as delta-10, THCA, THCV, and many others,” Hyman noted.
State Actions More Likely, Along With Inconsistencies
The potential for using psychoactive ingredients other than delta-9 THC is a major reason the Food and Drug Administration has deemed all hemp unlawful in dietary supplements, food and personal care topicals while allowing sales of those products as long as they are compliant with all other relevant manufacturing, labeling and marketing regulations.
The agency, after studying its options for a rulemaking to solve its dilemma, in 2023 asked Congress to pass legislation authorizing establishment of a regulatory pathway specifically for the use of cannabis-derived hemp ingredients in non-drug products subject to its oversight.
“I think it is significantly more likely that additional states will adopt their own restrictions prior to Congress acting to narrow the definition of hemp. This is unfortunate as it will likely lead to more inconsistencies and unpredictability, which undermines the ability of legitimate businesses to efficiently participate in this market,” Menkes said.
Currently, regulatorily compliant businesses marketing products categorized as hemp-containing aren’t likely to use potentially psychoactive derivatives because they’re aware of the likely future for those ingredients.
Copying Popular Snack Brands ‘Doomed’
In warning letters about hemp-containing products, the FDA and the Federal Trade Commission twice have identified multiple firms marketing products containing delta-8 THC in packages resembling popular candy and snack brands.
“I am hard pressed to think of any examples of legitimate companies in cannabis, hemp, or hemp derivatives (including delta-8) that have a successful business model of copying well-known brands. Such a model simply will not and cannot succeed for any sustained period of time,” Menkes said.
“Any legitimate business who expects to be a legitimate player in this industry must be original or at a minimum, not copy or imitate the packaging of well-known brands. As we have seen time and time again, such a business voyage is doomed at the port,” he added.
Copying popular brands in packaging for products containing hemp has at least two strikes against it.
“First, well-known brands are very protective of their intellectual property, and they will not hesitate to shut down any other company that infringes upon their rights, especially their trademark and copyright rights, as these rights protect the heart of their brand,” Menkes said.
“Second, state and federal regulators are keenly aware of the serious risks that unsuspecting consumers, including children, will mistakenly consume products with harmful levels of THC because a cannabis or hemp company imitated the packaging of some well-known consumer brand. This risk is particularly heightened for candy, cereal, and other consumer packaged goods.”
Hyman also pointed out hemp products in copycat packages not only run the risk of harming someone, but exposing sellers to enforcement action by the FTC and trademark infringement and counterfeiting lawsuits by brand owners.
“Serious regulated brands do not want to face these issues and are too busy building their own brands to rely on imitation packaging. As the cannabis industry continues to mature, we will likely see less and less of these imitations. Even if regulated cannabis brands move into the hemp space for less regulation and to avoid state sales taxes, we do not believe they will abandon their branding efforts to do so,” he said.
Little Restriction Through Farm Bill’s Delta-9 THC Limit
The attraction of lawful hemp defined in federal law only by a limit on delta-9 THC concentration, however, has been apparent.
“Enterprising hemp companies are turning to any and all cannabinoids they can utilize to provide some of the psychoactive effects of THC without going over the .03% limit set by the Farm Bill,” Hyman said.
Moreover, cannabis product firms are expanding into hemp products due to fewer regulatory hurdles. Hemp products usually can be sold over state lines and in venues other than regulated dispensaries, for instance, and are not subject to high state taxes cannabis products are.
“However, these efforts are fraught with risks as such products are subject to state bans,” Hyman said, adding, “At least 18 states have banned delta-8 and the products are severely restricted in many others.”
He noted New Jersey recently enacted a delta-8 THC ban and in California emergency hemp regulations were imposed in September with “a list of 30 cannabinoids such as delta-10, THCA, and THCV that goes well beyond delta-8 and delta-9.”
“Generally, in states with regulated markets, cannabis products, whether for adult recreational or medical use, need to comply with state cannabis advertising regulations. Most, if not all, of these regulations prohibit selling products that appeal to children. Imitating well-known consumer brands would certainly fall under these prohibitions,” Hyman added.
“Given this, we are seeing less of these types of issues in regulated markets. However, in non-regulated states or in the black markets in regulated states, we are still seeing these issues by ‘bad actors’ and not by serious, regulatory compliant firms.”
The California proposal, like a provision the House Appropriation Committee included in its fiscal year 2025 appropriation bill for the FDA, would require industrial hemp food, beverage and dietary products have no detectable THC or other intoxicating cannabinoids per serving.
The House bill also excludes cannabinoids synthesized or otherwise manufactured outside the plant.
The California proposed regulation also would set 21 as the minimum age to purchase hemp products and limit the number of servings of products to five per package.
Standalone Senate legislation introduced in September wouldn’t set a limit on all THC ingredients but would restrict sales to consumers 21 and older and authorize the FDA to order recalls or impose bans any cannabis products with dangerous chemicals or additives.
The bill also would establish a regulatory structure, implemented by a Center for Cannabinoid Products, for cannabinoids found naturally in hemp and allow ingredients it defines as “semi-synthetic” while prohibiting artificial or fully synthetic cannabinoids.
