The Future of Hemp: Insights and Trends

As more U.S. states adopt marijuana-friendly policies, several states are also seeking to impose stricter regulations on hemp-derived cannabinoids. The federally legal hemp industry must already navigate a complex mix of federal and state laws. Given the ongoing and upcoming legal changes throughout 2024, hemp businesses need to remain adaptable.

#### Current Legal Status of Hemp
The Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, signed into law in December 2018, excluded “hemp” from the Controlled Substances Act’s (CSA) definition of marijuana. Hemp is defined as cannabis (Cannabis sativa L.) and its derivatives containing no more than 0.3 percent delta-9 THC on a dry weight basis. Before this, the CSA did not distinguish between marijuana and hemp, categorizing all cannabis (with some exceptions) as a Schedule I substance controlled by the Drug Enforcement Administration (DEA). The 2018 Farm Bill effectively legalized the cultivation and sale of hemp and its derivatives at the federal level.

This legislative change created what some see as a “loophole” for selling products containing cannabinoids like delta-8 THC and tetrahydrocannabinolic acid (THCA). Changes in state laws throughout 2023 and 2024 may impact the legality of many hemp-derived cannabinoids.

Since 2018, the market for non-delta-9 THC cannabinoids has flourished, including for intoxicating hemp products. Forbes reported that delta-8 THC product sales exceeded $2 billion in revenue in 2021 and 2022. A federally funded study from December 2023 found that people in states without legal marijuana markets were more than twice as likely to use delta-8 THC. This suggests that cannabis prohibition may unintentionally encourage delta-8 THC use.

In 2023, it was expected that the new 2023 Farm Bill would address the “loophole” regarding psychoactive hemp products. However, President Biden extended the 2018 Farm Bill through September 30, 2024.

#### What’s Next for the Hemp Industry?
State legislators, particularly in states without legal marijuana markets, are working to redefine and restrict hemp-derived products containing potentially intoxicating cannabinoids other than delta-9 THC. States like Nebraska, Florida, Tennessee, South Dakota, Arkansas, Alaska, and Virginia have proposed or passed laws to restrict these products.

Many states are imposing “total THC” limits, which include all THC forms in the product. For example, a product with 0.2% delta-9 THC and 20% delta-8 THC would have 20.2% total THC under this definition. If a state law sets a 0.3% total THC limit, such a product would be illegal.

Some states are also banning synthetic or chemically altered cannabinoids, which includes delta-8 THC, delta-10 THC, THCA, and others.

#### Specific-State Hemp Restrictions
**Proposed Laws**
– **California**: AB 2223 seeks to define “synthetically derived cannabinoid” and amends the definition of “industrial hemp” to prohibit products containing such cannabinoids. AB 45, enacted in 2021, uses a “total THC” definition and prohibits the sale of inhalable hemp products until regulations and taxes are established.
– **Nebraska**: LB 999 aims to clarify that synthetic products, particularly those with THC above legal limits, are illegal.
– **Florida**: HB 1613 and SB 1698 propose limiting delta-9 THC in hemp products and banning certain synthetic cannabinoids.
– **South Dakota**: HB 1125 seeks to ban chemically modified or converted hemp-derived products, including delta-8 and delta-10 THC.

**Proposed Regulations**
– **Tennessee**: The TDA’s proposed regulations introduce a “total THC” definition for legal hemp products, potentially making products with more than ~0.34% THCA illegal.

**Passed Laws**
– **Arkansas**: Act 629 sought to ban certain cannabinoids but was blocked in court.
– **Alaska**: New regulations prohibit products with non-naturally occurring cannabinoids and require “total THC” testing.
– **Virginia**: New laws impose “total THC” limits, and the VDACS is enforcing these regulations strictly.

#### The Future of Hemp-Derived Cannabinoids
State-specific regulations will likely negatively impact the hemp industry economically, especially in states without legal marijuana markets. Consumer interest in minor cannabinoids continues to grow, often for treating sleep or pain. Legal access to regulated marijuana products may reduce the use of unregulated cannabis, highlighting the need for more research and informed regulation.

It remains to be seen whether state or federal lawmakers will address the “loophole” issue in the next Farm Bill.

#### Next Steps
Hemp businesses should stay updated on legal changes at both the state and federal levels and begin updating policies, operations, and legal strategies to navigate these uncertain times effectively.