In late January, the U.S. Court of Appeals for the First Circuit issued its opinion in United States v. Bilodeau, 2022 WL 225333 (1st Cir., Jan. 26, 2022), a case involving two marijuana growers from Maine who were indicted by the federal Department of Justice (DOJ) on charges of violating the Controlled Substances Act (CSA). The growers were operating three facilities in Maine where they grew and/or distributed marijuana, purportedly as registered caregivers to qualified patients, which is legal under Maine’s medical marijuana laws. The growers maintained “facially valid documents” demonstrating their compliance with such laws.
However, after an investigation into the growers’ operation, federal agents executed search warrants for two of the growers’ facilities and subsequently indicted the growers for, among other things, “knowing and intentional manufacture and possession of marijuana with intent to distribute in violation of the CSA and conspiracy to do the same.” The growers then petitioned the U.S. District Court for the District of Maine for an injunction preventing the federal government from proceeding with the prosecutions, arguing that the Rohrabacher amendment prohibited the use of federal funds for such an endeavor.
Rohrabacher’s Practical Limit on Prosecution
The Rohrabacher amendment, named for former US Representative for California’s 48th district Dana Rohrabacher, is a rider that has been attached to Congress’ annual appropriations bill every year since 2015. The amendment stipulates that none of the funds made available to the DOJ under Congress’ annual appropriations bills may be used to prevent any of the fifty states from “implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” As stated by the First Circuit, the Rohrabacher amendment “places a practical limit on federal prosecutors’ ability to enforce the CSA with respect to certain conduct involving medical marijuana.”
The growers asserted that, pursuant to the Rohrabacher amendment, the DOJ could not use federal funds to prosecute them for violating the CSA. They argued that because their allegedly illegal activities were authorized under Maine’s medical marijuana laws, a prosecution for such activities would therefore amount to the DOJ effectively preventing Maine from implementing its own laws authorizing the cultivation and distribution of medical marijuana. The District Court did not agree with the growers, however, and ruled that the prosecution of all counts against them could proceed. The court premised this decision on its finding that the growers were “patently out of compliance” with Maine’s medical marijuana laws and were instead “part of a ‘large-scale… black-market marijuana operation’” that was clearly not authorized by such laws. The growers then appealed the Court’s decision to the U.S. Court of Appeals for the First Circuit.
A Nuanced Interpretation of Rohrabacher
In hearing the interlocutory appeal, the First Circuit became only the second of the federal circuit courts to interpret the Rohrabacher amendment, following the Ninth Circuit’s 2016 decision in United States v. McIntosh, 833 F.3d 1163. In its opinion, the First Circuit began by agreeing with the Ninth Circuit’s reading of the amendment and its conclusion that “the DOJ may not spend funds to bring prosecutions if doing so prevents a state from giving practical effect to its medical marijuana laws.” The First Circuit further echoed the Ninth Circuit by acknowledging that “the prosecution of persons whose conduct fully complied with” Maine’s medical marijuana laws would prevent those laws from having much practical effect, which is “precisely what the rider forbids.”
Importantly, however, the First Circuit ultimately disagreed with the Ninth Circuit regarding the circumstances under which a federal prosecution would prevent a state from giving practical effect to its medical marijuana laws. Rather than adopting the Ninth Circuit’s “strict-compliance test to differentiate between prosecutions that prevent a state’s medical marijuana laws from having practical effect and those that do not,” the First Circuit opted for a more nuanced approach. It rejected the strict-compliance test promulgated by the Ninth Circuit in McIntosh on the grounds that “the potential for technical noncompliance is real enough that no person through any reasonable effort could always assure strict compliance.”
While recognizing that the strict-compliance requirement went too far, however, the First Circuit stressed that “Congress surely did not intend for the [Rohrabacher amendment] to provide a safe harbor” to those with facially valid documents “without regard for blatantly illegitimate activity.” The First Circuit stated that in this case, the evidence clearly showed that the growers’ outward appearance of compliance with Maine’s medical marijuana laws was a façade, employed for the purposes of selling marijuana to unauthorized users. Thus, the First Circuit upheld the ruling of the District Court, affirming its denial of the growers’ motion to enjoin their prosecutions.
Impact of Bilodeau on Medical Marijuana Laws
Though the Maine growers were unsuccessful in challenging their prosecution by the DOJ under the Rohrabacher amendment, the First Circuit’s interpretation of the amendment is an important development in the field of medical marijuana law. The only previous judicial guidance regarding the application and effect of the Rohrabacher amendment, provided by the Ninth Circuit in McIntosh, stipulated that individuals involved in the cultivation and distribution of medical marijuana must strictly comply with all aspects of their state’s medical marijuana laws to avoid being prosecuted by the federal government for violations of the CSA. The First Circuit has now supplied a fresh interpretation in Bilodeau that is much friendlier to those in the medical marijuana business.
Close up of medical marijuana buds sitting medical prescription pad on black background
Under the First Circuit’s approach, one who is legally engaging in the industry under their state’s medical marijuana laws cannot be prosecuted by the DOJ for it unless their conduct rises to the level of “blatantly illegitimate activity.” If a medical marijuana grower or distributor is making a reasonable effort to comply with their state’s medical marijuana laws, they will be protected from federal prosecution by the Rohrabacher amendment, even if there are aspects of their conduct that are not in strict compliance with such laws.
Of course, it must be noted that the First Circuit’s interpretation of the Rohrabacher amendment in Bilodeau is not binding on other federal judicial circuits, nor does it provide a bright line rule. The First Circuit itself acknowledged that in “charting this middle course,” it did not “fully define [the] precise boundaries” of what types of conduct would qualify as “blatantly illegitimate activity.” The only activity that the First Circuit has clearly classified as “blatantly illegitimate” is that of the growers in Bilodeau – an operation “aimed at supplying [marijuana to] persons whom [none of the prosecuted growers] ever thought were qualifying patients under Maine law.”
Takeaways for Medical Marijuana Businesses
In light of Bilodeau, those engaging in the medical marijuana business should continue to make every effort possible to fully comply with all aspects of their state’s medical marijuana laws. Though it is promising that the First Circuit’s decision in Bilodeau interprets the Rohrabacher amendment as providing greater protection from DOJ prosecution for state-licensed medical marijuana growers and distributors, this is still a very new area of law which is rife with the possibility of conflict between the federal government and the state legislatures that have enacted statutes legalizing medical marijuana within their borders.
Those in Maine, New Hampshire, Massachusetts, Rhode Island, and Puerto Rico who are legally growing, selling, buying, or using medical marijuana under their state’s laws can take some degree of comfort in knowing that they are not likely to be federally prosecuted for minor failures to comply, so long as they are not engaging in blatantly illegitimate activity. However, those in other states should continue to err on the side of caution when it comes to strict compliance, as there is no telling whether the First Circuit’s interpretation of the Rohrabacher amendment will be adopted by other federal circuit courts.
TPS Lab, a mainstay of the Rio Grande Valley and the farming industry for over eight decades, wants to help hemp and marijuana growers achieve success and higher yield of crops. TPS Lab President Frank Schultz explains the importance of research and patience as many new farmers and entrepreneurs dip their toes into this emerging field.
Texas Hemp Reporter: How did you begin in the field of soil testing, can you give us a bit of your origin story?
TPS Lab: The lab was established in 1938 by Dr. George Schultz (no relation). I am the third-generation president and conservator of an 80-plus year-old institution, starting as a client in the early 2000s.
THR: You have clients all over the globe, but here in Texas, what would you say is the single, biggest challenge a farmer will face in terms of crop health?
TPSL: Education. We often get calls from people who say they are interested in growing hemp but it emerges during the conversation that they have done little to no research into the plant, its unique requirements, possible markets or the industry in general. Unfortunately, we have seen and heard firsthand accounts from people who lost millions of dollars due to lack of experience or faulty research. Some “bet the farm” and lost it.
Even experienced growers, from gardeners to well-established farmers, often do not appreciate the costs, infrastructure required and especially the labor-intensive nature of growing CBD industrial hemp. (We saw a reduction in hemp acres grown with our clients in 2020 from 2019, largely due to the realization of the labor required.) Additionally, experienced growers of other crops are accustomed to few changes in plant varieties and genetics year after year.
However, new hemp genetics are being developed continuously to enhance oil percentages and characteristics, and suitability for specific growing conditions and regions. This means that a grower must constantly be on the lookout for new varieties to better suit his growing conditions and accommodate dynamic market demands for the latest desired CBD isolates.
A BIG mistake some of our clients made was in retaining marijuana consultants to advise them on growing industrial hemp. With the understanding that genetics is where it all starts and is key to the capacity of cannabinoid production and composition (or lack thereof), the growing practices for each are quite opposite in several ways:
Money bag on the background of agricultural crops in the hand of the farmer. Agricultural startups. Profit from agribusiness. Lending and subsidizing farmers. Grants and support. Land value and rent.
● With marijuana, the varietal genesis is typically C. indica L., due to its penchant for producing high levels of THC. Plant stress is purposely induced during the middle and latter stages of development to further stimulate the production of THC. This is done by limiting fertilization, water, light or causing any other factor to induce stress.
● C. sativa L. is the varietal genesis of industrial hemp and typically has a lesser penchant for producing THC. However, THC production is still stimulated by plant stress. Accordingly, it is essential to limit stress in order to limit THC content to 0.3% or less to have expectations of a harvestable crop – even for sativa.
The good news is that we can do much to limit stress and encourage production of CBD by providing balanced nutrition at critical times during plant development and to at an extent, managing water. We can even compensate, to degrees, for other stressful conditions such as weather. With marijuana, stress is encouraged.
But there’s more: Because you get a harvestablecrop does not mean that you get a sellablecrop! Over the past several years, we’ve seen processor’s demands increase for percentage of CBD and even for particular isolates of CBD (CBG, CBN, etc.) – and now, ∆-8 THC (in Texas). The appropriate genetics, stress management, cultivation practice, and correct, timed nutrition and water are the answer.
THR: Can you describe your operation in Edinburg?
TPSL: We are a consulting agronomic laboratory. We’ve been in the same location for decades and have current technology analytical instruments. We are open to the public and encourage growers large and small to bring in their samples or visit with one of our consultants to get answers to their toughest questions.
The main and unique features of the lab are its proprietary methods of soil and compost testing, emulating the way plants take up nutrients in any soil type and calibrated against actual plant uptake (Plant Natural® Soil & Compost Tests); its Ask The Plant® plant sap analyses based on proprietary plant nutrition standards and its What’s In Your Water Becomes Part Of Your Soil® irrigation and spray water analyses for quality management.
Test results alone have little meaning to most growers, so our main product is the experience and ability to interpret lab data and provide our clients with specific interpretations and recommendations for their specific crop and their particular growing circumstances. Accordingly, every test and recommendation is custom and written by a senior consultant – no “shotgun” approach.
THR: Is Plant Natural Innovations your company as well? Did you formulate the CSL+ Organic Fertilizer?
TPSL: Plant Natural® Innovations was established as an independent company to provide formulations of some recently-available and highly-beneficial products which are not generally recognized by growers. The lab’s most senior consultants proposed, developed and designed CSL+ and other organically- based products based upon their decades-long experience in soil health and plant nutrition. Product lines will expand as development continues.
THR: Can you tell us about your “Ask the Plant” program?
TPSL: The lab began testing plant sap (petioles) in 1964, making it an early pioneer in private-lab plant testing. One of my predecessors, Dr. Albin Lengyel of Phoenix, Arizona, started testing plant sap in cotton in the late ’40s and later extended it to many other crops around the country. Another legacy from Dr. Lengyel is the Plant Natural® Soil & Compost Tests.
Originally, Ask The Plant® (ATP) was intended to be a season-long “dynamic” nutrition program for growers to allow them to apply appropriate nutrients in appropriate amounts at critical stages of crop development for best ROI by periodic in-season testing, based upon the physiology of the crop. However, we get many calls sometime during the season from growers who are having serious problems and need help immediately.
Money with sheet of marijuana close-up on background of one hundred dollars with an artificial ray of light, high quality image. Thematic photos of hemp and cannabis
Accordingly, much of ATP has evolved into “911” calls concerning physical crop damage (such as by wind, sandstorm or hail) or sudden manifestations of insects, disease or nematodes. We have had remarkable success in guiding our clients past these, and on to doing well by the end of the season.
By the way, HEMPlan® is a comprehensive, specialized and extended version of ATP, exclusively for industrial hemp growers, based, in part, upon a decade of experience with Canadian growers, plus decades-long experience in other exotic and high-value crops around the world.
Again, HEMPlan®, as is ATP, is intended to be a pre-season-to-harvest program, but as with ATP, we get calls from growers sometime into the season about problems they’re having. Unhappily, some call us too late for us to be able to salvage them.
THR: Do you have a success story you’d like to share of a farm you’ve been able to help?
TPSL: Yes. Some years ago, we were working with sugar beet, potato and mustard (plus other) growers in the Pacific Northwest – fairly high-value crops at the time. They had been relying on state extension agents and their local co-ops for advice for years. And it had stopped working – to the extent that several generations-old family farms were facing soon bankruptcy.
Our VP of Research, formerly a tenured professor at the University of Maine, thence a Senior Research Scientist with the USDA – ARS, Weslaco, went on a field trip, together with our COO, to visit with some of our clients up there. He told me that as a [cloistered] academic, it was the first time he ever visited with people who were the end-recipients of and directly impacted by his research.
One day, he was sitting in the kitchen of a farmer, whose farm was in dire straits, when his wife leaned over and whispered, “please help us!”, our VP said that he suddenly realized that what he did seriously impacted real people. Before, it had been simply academic.
This farm, and one other facing bankruptcy, and others did well by the end of the season.
It wasn’t magic – it was simply applying long-established agronomic principles combined with recent discoveries which seem to have been ignored or forgotten by the institutions.
THR: What do you enjoy most about your work?
TPSL: I really enjoy hearing the success stories and how we help improve the clients’ circumstances – sometimes even to the extent of saving their farms.
All considered, it’s not a bad way to live.
For more information on TPS Lab’s custom plant, soil, water and other testing and consulting services, visit TPSLab.com or call 956-383-0739. They can also be visited at 4915 W Monte Cristo Rd, Edinburg, Tx 78541.
For more information on Plant Natural® Innovations plant nutrition products, visit Plant-Natural.com or call 956-380-4050.
While the legalization and participation in the hemp industry is growing in the US, the lack of banking support with funding these businesses remain a national issue. Herring Bank is making strides right here in Texas to change that narrative with their CBD & Hemp Banking Program.
Herring Bank is a FDIC insured institution that must adhere with federal, as well as state regulatory requirements. In banking the Marijuana Related Businesses, Related Entities, Hemp and Hemp Derivative businesses, Herring Bank, if not in compliance with federal and state regulatory requirements, faces the potential of severe penalties.
The bank began serving the Marijuana Related Business, Related Entities, Hemp and Hemp Derivatives industry in April 2019 and has since built a multi-state program that now services over 20 states. Headquartered in Amarillo, Texas, Herring Bank has branch locations in Texas, including Grand Prairie, Vernon, Azle, Clarendon, Seymour, in Colorado (Colorado Springs) and in Oklahoma (Altus). Herring Bank has also grown outside of their branch footprint to other Texas cities such as Dallas, Houston, Austin, San Antonio, and McAllen in which to serve the hemp and hemp derivative industry. Herring Bank’s Marijuana Related Business, Related Entities, Hemp and Hemp derivatives strategy has positioned the Bank to take advantage of opportunities that may be available with the passing of any future cannabis legislation.
Andrew Escamilla is Herring Bank’s Hemp and Hemp Derivative Product Manager. With nearly 15 years banking experience behind him, Mr. Escamilla has the knowledge and excitement to assist businesses in obtaining banking services. Herring Bank has, and continues to, learn about and reach out to the industry. Mr. Escamilla explained that the regulatory/legal environment and the required resources and infrastructure required to support a compliant program. Mr. Escamilla explained that it is important for a bank to understand the industry to know the challenges experienced by industry businesses and individuals, to ascertain the importance of providing a banking service solution as well as identifying the various state compliance requirements the industry must adhere with.
Mr. Escamilla explained that industry clients must provide certain information to the Bank in order to receive access to banking services. The information provided to the Bank is carefully reviewed by the Bank prior to providing any banking service to a potential client. The submission of the information is important to ensure that Herring Bank meets its federal and state compliance requirements as well as it allows the Bank to monitor the respective client’s adherence with its applicable state’s compliance requirements. Mr. Escamilla explained that information prospective clients must submit, includes such things as, information about their respective location(s), the intent of business, type of products being sold, the business structure, business ownership details, supporting documentation such as lab reports on crops, state licensing, etc.
Mr. Escamilla explained that the Banks willingness to Bank the entire spectrum of cannabis related businesses, of all sizes and types. Mr. Escamilla enjoys working with and assisting, potential and existing hemp and hemp derivative clients with their banking needs. Mr. Escamilla believes in staying up to date with what is occurring in the industry and continuing to learn as much as he can about the industry, including the associated federal and state laws that impact the industry. Escamilla has seen many customers come in who have been closed out 2-3 times by banks before they get to him, just trying to operate but encounter limited tolerance of the industry or simplistic pilot programs that cannot fully support their needs.
Herring Bank paves the way in cannabis related product banking to help the industry. Herring Bank’s moto is “Building Relationship for a Lifetime”, which is something the Bank lives every day. Herring Bank would like to establish a relationship with everyone in the hemp and CBD industry. Mr. Escamilla would love to meet you and discuss what Herring Bank can offer you.
The State of Recreational Cannabis (Is Texas Playing It Safe? Or Just Missing Out?)
Texas Cannabis Laws are conservative at best in the Lone Star State. New representatives at the Capitol need to be voted in for a real cannabis program to begin to take place in Texas.Be sure to know your candidates this coming Spring Election in 2022 to act with your Vote on Cannabis.
The fact that the Lonestar state is still vehemently anti-cannabis (at least in legislation at the state level) despite being surrounded by a sea of green is a true testament to the independent Texas spirit. It seems Texas is more likely to secede from the United States than it is to legalize recreational cannabis.
America’s coalition of green – or pro-weed – states is vast, snaking from Washington state down the West Coast, then east to Arizona and New Mexico, up over the Texas panhandle into Oklahoma; and from Arkansas, it goes straight north to Canada and all the way along the Gulf of Mexico to Florida. And that’s not including several other Southwestern states, as well as most of the Mid-Atlantic and Northeastern states.
As of this writing, a grand total of 18 U.S. states have legalized recreational cannabis for personal use, including our immediate neighbors Colorado and New Mexico; and three others, Arkansas, Oklahoma and Louisiana, are part of 18 states that allow only medical cannabis (and, therefore, have the infrastructure to fully legalize in the coming years.)
The 12 states without some kind of cannabis industry, aside from hemp and CBD, are now the minority. We can’t blame it on politics either. Even blood-red states like Montana, Alaska, Alabama and West Virginia have some version of legalization.
But don’t think Ol’ Big Red is bone-dry on the sticky-icky. Far from it. Consider these numbers:
Given the likelihood of steady, easy transport of cannabis into Texas from these red-eyed neighbors (in addition to the cartel-sponsored black market already operating here), the state of about 30 million people likely has, at any time, more illegal cannabis than several other legal states. Just look at population alone: Less than 750,000 people live in both Alaska (legalized in 2014) and Vermont (2018); Montana’s (2020) population is just over 1 million.
If that probability doesn’t convince you that Texas is one of the most weed-heavy states, consider the average age of a Texan is just 34.6 years old, a Millennial; and Millennials love getting down on some ganja. A new Gallup survey says as much as 20 percent of those belonging to my generation say they currently use cannabis. But that number doesn’t include much of the other 80 percent too stoned to complete the poll.
Perhaps Texas is just being strategic in entering the country’s multi-billion-dollar legal cannabis market that is reported to reach $41 billion in annual sales by 2026. That means it could soon be about the size of the craft-beer market. In 2020 alone, legal sales across the U.S. hit a record $17.5 billion, up 46 percent from 2019. Colorado, one of the first to sell recreational cannabis, grew by 26 percent to hit $2.2 billion. California, America’s largest cannabis economy at $3.5 billion, increased sales by more than half a billion dollars. (Yet illicit cannabis sales, via the black market, are estimated at more than $100 billion every single year.)
But here’s some relief: At least local governments are getting on board. Several of Texas’s most populated regions have decriminalized possession of cannabis, including the cities of Austin, Dallas, Cedar Park and El Paso, as well as major counties (Bexar, Harris, Travis and Williamson).
Then there’s hemp, at least. Thanks to the 2018 Farm Bill, Texas politicians are embracing the hemp-derived CBD market, expected to reach $23.7 billion in 2023.
And at least Gov. Abbot is starting to come around to this magical plant. When he’s not crusading to ban books from children, he’s doing what he can (but not all he can) to help Texans suffering from cancer and PTSD. In 2021 he very compassionately signed a bill into law that allows the increase of the current 0.5 percent THC cap on “medical cannabis” to a whopping 1 percent! Tax dollars well spent.
If this legislation is any indication of cannabis progress in the Lonestar state, start saving your beer money for a trip to New Mexico or Colorado. Because it’s going to be a long while before legal weed comes to Texas.
As a child Josh Kesselman would watch his father’s trick- lighting a rolling paper on fire throwing it in the air and POOF! It would vanish. Josh became obsessed with rolling papers and amassed a large collection as a hobby. In college during the 90’s he researched a class project of the aspects of opening a small smoke store in Gainesville Florida. “I got an A then decided hey what about really opening an actual store.” Josh tells. But nobody would fund or rent to a hippie, Harley-riding wannabe entrepreneur who would attract a stoner clientele. Finally someone agreed to lease an old record shop for 400 dollars a month. Being poor Josh moved into a friend’s shed. He was quite blank on how to move forward. He employed his “Tom Sawyer” theory of questioning customers what they wanted to see displayed, and would promise to have the product within two weeks. He always did and satisfied his clientele. People wanted oddities and Josh found that selling rarities increased his margins.
Then Josh sold a bong to the daughter of a US Customs Official. The police closed the store, confiscating bongs, pipes, but not the rolling papers.
Josh relocated to Phoenix, Arizona, a mecca for counter-cultural smokers. Josh found a pro-marijuana movement in the city as Arizona has become an adult-use state now. He did well with a shop selling hi-end European rolling papers. A Spanish craftsman came on and they developed an all natural product, no bleach, no chalk, vegan, plant-based. Some detractors called them brown bags but Josh was unmoved. Persistence paid off and RAW was born. In a year the papers had flooded the local market.
He approached a mill and promised to purchase one million tons. Once again he put all his money in his mouth. In 2008 hip hoppers began singing about RAW papers, Currency, Wiz Khalif, then 2Chainz, Chance, Rae Sremmund, Action, Chief Keef, and of course the Raw Song itself. Next Dom Kennedy, Ozworld and RAW became the shit.
Then there’s Josh the celebrity himself. YouTube, social media, gatherings, conventions, podcasts. Giving to charity: forming the RAW Foundation for philanthropy. Water is Life Intentional and Wine to Water, Trees for the Future, CarbonFund.org, Home “Fur” Good (for homeless animals), and KIVA, a crowdfunding source for the underprivileged.
Josh fought the FDA in their Tobacco Bill which banned flavored blunts, and there was a huge consumer backlash. “I believe in humanity strongly” Josh says of how inspiring it was to see regular people standing up for thier rights. Today Josh Kesselman employs over 2000 people and has a net worth of 42million. RAW is the most popular rolling paper brand in the world.
In 2020 a Spanish company HBI International sold rolling papers four times to hired investigators that were of an inferior quality under the RAW label. Mark Giangiuli and his partner Dawn were defendants as alleged operators. A lawsuit claimed the couple sold papers likely manufactured in China and India, whereas the bulk of rolling papers are made in Alcoy Spain. Pay Pay was the first rolling company in the world, in the 1700’s cigarettes used to be rolled in leaves and even newspaper. Mark Giangiuli responded to press inquires blaming HBI calling them “thugs” and referred to a prosecuting attorney as an “asshole”. Dawn his wife also left seriously viscous voicemails for inquiring journalists. Cited in court documents Giangiuli repeatedly denied selling counterfeit products and counter-sued. HBI also counter-sued asking for profit-loss of 2 million in damages. Neither side responded to journalist inquiries. In late 1990’s HBI had invited CEO RAW Josh Kesselman to Spain for a business meeting. In an article called “The Unfiltered History of Rolling Papers and Tommy Chong’s Big Jamaican Vacation” Kesselman admitted that he contacted a Niles from HBI.
Although the pandemic hurt sales RAW came out on top as the most health-conscious innovation in the smoker’s world. It’s hemp-based, burns slow, even, smooth and Josh reminds us “Blunts are not to be inhaled, just as cigars are not to be inhaled.”
On August 21, 2020, the Drug Enforcement Administration (the “DEA”) published a rule regarding the scheduling of hemp and marijuana, effective immediately (the “Rule”). The cannabis community swiftly reacted with an interpretation that this Rule outlawed Delta-8 THC, the hemp industry’s new favorite cannabinoid. The impact is that if Delta-8 THC is, in fact, a Schedule I controlled substance, the threat of felonious criminal prosecution would thwart the commercial viability of this cannabinoid. We dug into the Rule and other materials, and we disagree with the “now illegal” conclusion. Instead, we theorize that so long as the Delta-8 is derived from cannabis that meets the definition of hemp, it does not appear to be illegal under the federal CSA and we don’t believe the DEA Rule alters this.
What Does the DEA Rule Say?
The DEA repeatedly stresses throughout the publication that the Rule’s purpose is to simply codify what was already changed via the 2018 Farm Bill: “This interim final rule merely conforms DEA’s regulations to the statutory amendments to the CSA that have already taken effect, and it does not add additional requirements to the regulations.” The Rule states there are only four conforming changes:
The definition of “Tetrahydrocannabinols” on Schedule I of the official “Schedule of Controlled Substances” (21 CFR 1308) is modified to carve out “any material, compound, mixture, or preparation that falls within the definition of hemp” (as defined in the 2018 Farm Bill). What does this mean?
Regardless of what any product label may say (i.e., “hemp” or otherwise), if a product has more than 0.3% Delta-9 THC, it is a controlled substance. Regardless of being hemp-derived, if the derivative, extract or product has more than 0.3% Delta-9 THC, it is a controlled substance. None of these changes, alters or affects the FDA’s jurisdiction over products containing cannabis and cannabis-derived compounds. Naturally occurring THCs in cannabis are not controlled substances so long as they are at or under the 0.3% Delta-9 THC threshold. Any of those that are above the 0.3% Delta-9 THC threshold are controlled substances. Synthetically derived THCs are all controlled substances, regardless of THC content.
Essentially removes Epidiolex (and any generics the FDA may subsequently approve) from control in schedule V (21 CFR 1308). Also removes the requirement for import and export permits for Epidiolex (and any future generics). The definition of “Marihuana Extract” on Schedule I is modified to be limited to extracts “containing greater than 0.3 percent delta-9-tetrahydrocannabinol on a dry weight basis.” What does this mean?
Regardless of whether the extract comes from hemp or marijuana, if it exceeds the 0.3% threshold, it is illegal. It is important to point out that this definition, even before the Rule, includes the following exception: “other than the separated resin (whether crude or purified) obtained from the plant.”
The Rule reiterates these changes were already mandated under the 2018 Farm Bill: “DEA’s regulatory authority over any plant with less than 0.3% THC content on a dry weight basis, and any of the plant’s derivatives under the 0.3% THC content limit, is removed as a result.”
What is Delta-8 THC and is it legal?
Our clients frequently ask us about the legality of Delta-8 THC and our view has been that the cannabinoid, if derived from hemp and the end product remains at or below Delta-9 THC, then the substance is likely legal, but to keep in mind that Delta-8 (when not derived from hemp) is on the controlled substances schedule and the government probably did not intend to create a pathway to legally get high from THC, so be prepared for the law to change at any moment. Delta-8 THC is one of hundreds of cannabinoids that are found in the cannabis plant. Delta-9 THC is the most widely known cannabinoid and causes a psychotropic reaction felt as an intoxicating “high.” Delta-8 THC, on the other hand, is nowhere near as well known and has been gaining in popularity over the last year, largely due to its alleged ability to have a substantially different and significantly less intoxicating but still mind-altering effect. There is also research dating back to 1975 regarding its potential for treating cancer and other studies exist showing various potential health benefits (see here, here and here).
As mentioned, the DEA does include Delta-8 THC on its list of controlled substances (updated August 2020) under “tetrahydrocannabinols,” but the 2018 Farm Bill expressly carved out “tetrahydrocannabinols in hemp” (See Section 12619(b) of the 2018 Farm Bill the very last provision of the entire bill). This carve out indicates any type of THC from a cannabis plant with Delta-9 THC at or below 0.3% is legal (at the federal level). It is important to note there may be states with more restrictive laws that do criminalize Delta-8 THC, even when derived from hemp. There may also be states where marijuana-derived Delta-8 THC is legal (but illegal at the federal level).
We don’t believe the USDA intended to create a mechanism for people to legally get high, but the focus on hemp has been the Delta-9 THC concentration, because of its known psychotropic effects. Delta-8 THC may have gone under the radar, but perhaps not. The DEA doesn’t schedule every substance that produces mind-altering effects, such as kratom.
Is hemp-derived Delta-8 THC synthetically derived? The DEA Rule published on Friday repeatedly states that it is merely conforming other statutes to comply with the 2018 Farm Bill so the laws are consistent. The language in the Rule causing uproar is this:
“The [2018 Farm Bill] does not impact the control status of synthetically derived tetrahydrocannabinols (for Controlled Substance Code Number 7370) because the statutory definition of “hemp” is limited to materials that are derived from the plant Cannabis sativa L. For synthetically derived tetrahydrocannabinols, the concentration of Δ9-THC is not a determining factor in whether the material is a controlled substance. All synthetically derived tetrahydrocannabinols remain schedule I controlled substances.” (emphasis added).
Where people are getting caught up is the term “synthetically derived.” Delta-8 is a phytocannabinoid naturally existing in the cannabis plant – it is organically derived. Its natural occurrence is too low to be extracted outright, but – and we do not claim to be chemists – it is our understanding there is an isomerization process that can take place to convert CBD to Delta- 8 THC. Isomerization is the transformation of one isomer into another, isomers being molecules with the same molecular formula, but having a different arrangement of the atoms in space. We don’t believe that isomerization converts a phytocannabinoid into a synthetic one in the manner “synthetic” is used by the DEA. The 2018 Farm Bill definition of hemp includes all “isomers” of hemp. Therefore, any isomer of a hemp plant is also hemp and, pursuant to the 2018 Farm Bill, does not fall under the Controlled Substances Act (the “CSA”).
We believe the reference to “synthetically derived” is referring to a man-made chemical, not a process by which someone at a lab isomerizes one organic molecule to another (i.e., CBD to Delta-8 THC). If the concept that any material formed from any sort of human controlled chemical action taking place means that material is “synthetically derived,” then that would mean all of the hemp-derived products that go through processing are synthetic, and that is simply not the case. This article does a good job explaining the differences between synthetically derived cannabinoids, biosynthesis, and plant-based extraction. The first two take place without the plant at all. It does not seem feasible to conclude that isomerization of a hemp-cannabinoid equates to material becoming “synthetically derived.”
Synthetic cannabinoids (“SCs”) that the DEA targets are products like Spice and K2 (recall several years ago when the market was proliferated with “fake weed”), which are synthesized in labs to mimic the biological effects of THC. This DEA Fact Sheet on K2/Spice says SCs “are not organic, but are chemical compounds created in a laboratory.” SCs are part of the designer drug market and are typically liquid agents applied on plant material to look like marijuana. They were initially developed by researchers decades ago to study effects on the endocannabinoid system (in the absence of being able to study real cannabis as it has been illegal), but began to enter the consumer market in the U.S. around 2008. The DEA has identified the chemical makeup of various SCs and added them to the list of controlled substances to try to thwart the illicit market, but some actors continue to modify chemical structures to create new unscheduled SCs as a loophole to the CSA. A history of SCs is laid out in a recent DEA temporary scheduling order. Understanding the background of SCs is important because of how the legislature intended the term as it used in the CSA and how the DEA has historically treated these inorganic, lab-created chemicals that attempt to mimic THC and skirt the CSA. We have also looked up several federal cases that discuss SCs and the bulk of those relate to products like Spice and K2, as mentioned above. We found no federal case law on Delta-8 THC.
What does the 2018 Farm Bill say?
In order to understand what the DEA is doing in this Rule, we need to first understand why they are doing it. That reasoning is found in the 2018 Farm Bill which, in part, defined “hemp” and carved it out of the definition of marijuana in the CSA. The 2018 Farm Bill defined hemp as follows: “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
As mentioned above, the very last section of 2018 Farm Bill amends the CSA and expressly removes tetrahydrocannabinols in hemp” from the list of controlled substances. The 2018 Farm Bill included hemp-derived Delta-8 THC in the definition of hemp as part of the hemp plant and it removed hemp-derived Delta-8 THC from the list of controlled substances as a tetrahydrocannabinol in hemp.
The DEA Rule now follows suit in that it modifies the listing of “tetrahydrocannabinols” on the Schedule of Controlled Substances by adding the following stipulation: “Tetrahydrocannabinols does not include any material, compound, mixture, or preparation that falls within the definition of hemp set forth in [the 2018 Farm Bill].”
This reiterates the notion that so long as the 0.3% Delta-9 THC threshold is met, then the material is hemp. It follows that any derivative THC within such material (so long as the Delta-9 THC concentration is at or below the 0.3% on a dry weight basis) is also hemp and therefore not a controlled substance. The Rule, in modifying this definition brings the Schedule of Controlled Substances in line with what the 2018 Farm Bill mandated.
Final Thoughts:
Delta-8 THC is THC – it is not a lab-created substance with a chemical structurally altered to mimic its own biological effects. Delta-8 THC is organically derived and is the substance it is intended to be. Delta-8 THC has a substantially different effect on the body than Delta-9 THC that has value in and of itself that has shown promise on many medical fronts. Nonetheless, consumers should be aware of any product being consumed, especially those that are not clearly regulated. There are many ways to process cannabis extracts, some of which use solvents that are dangerous if consumed, so it is crucial for end-products to be tested by a reliable third-party for harmful ingredients, including residual solvents, and have accurate certificates of analysis available.
In Hemp Indus. Ass’n v. DEA (357 F.3d 1012, 2004 U.S. App. LEXIS 1846), a well-known case from 2004 regarding DEA’s treatment of THC in hemp, the court concluded the DEA could not regulate unscheduled drugs without following proper procedures to do so (a great summary of that case can be found here). The DEA Rule from Friday repeatedly states it is not changing any laws, so even if it wants to come down on hemp-derived Delta-8 THC and re-schedule it, this Rule is not the appropriate avenue to do so.
It is for these reasons we do not believe the DEA Rule altered the legality of hemp-derived Delta-8 THC. However, that doesn’t mean the DEA isn’t trying wrangle it back in or isn’t looking for someone to make an example out of. Being the example, even if the end result is a win, would likely be a lengthy, expensive and potentially traumatizing experience. Proceed accordingly.
Despite the immediate effectiveness of the Rule, comments are being accepted through October 20, 2020. Providing comments during a government rule-making process is a great opportunity to make your voice heard and effect change, and the only way you would have standing to make a legal challenge to the Rule later. If you think the DEA should clarify its position on Delta-8 THC or the “work in progress hemp extract” issues that need to be addressed (another area of significant concern laid out in this article by attorney Rod Kight), make sure to send incomments. Details on how to do so can be found in the Rule, and our attorneys can assist your business with crafting them.
THE INFORMATION IN THIS ARTICLE IS NOT INTENDED TO BE LEGAL ADVICE, SHOULD NOT BE TAKEN AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN PLACE OF CONSULTING WITH A QUALIFIED ATTORNEY PRIOR TO TAKING ANY ACTION. NO ATTORNEY-CLIENT RELATIONSHIP IS CREATED BY ANY READING, USE OR REPUBLICATION OF THIS ARTICLE. THE THEORIES PUT FORTH HEREIN ARE STRICTLY NOVEL IN NATURE AND HAVE NOT BEEN TESTED IN A COURT OF LAW.
The Texas Hemp Reporter this November will be blooming itself across the Lone Star State in time for Harvest Season. With the recent expansion of Houston Texas market to receive the September edition, the Austin TX based Cannabis publication is headed north and south this November adding in two more metros totaling over a 1000 smoke shops in Texas. Dallas and San Antonio will begin receiving the free magazine in area CBD stores and smoke shops this holiday season. The expansion is a good thing for the growing Texas cannabis and Hemp market. With recent public awareness about new legislation and readily available medicines , cannabis has a growing fan base with fellow Texans.
The Texas Hemp Reporter is expanding the magazine across the state and will be offering a subscription base option for growers and fans of the industry publication living in more rural areas of the Lone Star State.
The producers of the magazine also host a popular podcast in the Texas arena , The Texas Hemp Show discuses legislative concerns, banking challenges, and often interviews business professionals in the Hemp space around the State. Tommy Chong, Sid Miller, Freeway Rick Ross, and recently Cheech Marin appeared on the podcast that also currently airs on local Talk Radio News Radio 590 KLBJ.
For more information or to advertise your business with the radio show or the magazine reach out to Publisher and Host Russell Dowden at 512-897-7823 or email [email protected] for more details on how to be a guest on the show or have your business profiled in the magazine.
Texas Hemp Reporter: Who is Happy Karma Hemp? Can you tell us a bit of your origin story?
Laran Snyder: I started my business to be unique and different and to really help others, but also from a completely non-business like standpoint, my degree is in opera and while I was getting my degree I was studying minors in psychology, art and German and I also went to massage therapy school while I was going to university, this was in 1996 and 97. It’s just so funny, because even though I always knew that music was something that I wanted to study and have as part of my life, I’m like a Jill-of-all-trades, so to speak. I know a little about a lot of things, and they all go hand-in-hand and they have cohesively formed this circle that has become what my life is right now. When I started my business, I wanted to do so debt-free, so being a musician and a massage therapist, I took tips and extra income and saved, from the ground up, and that’s how I’m still running my business, so I chose to run it very small and go slow, kind of like what you do with CBD! You go slow and low, and slowly go up on your dose. And that’s what I’ve been doing with growing my business.
THR: Many people turn to CBD as an alternative to standardized medicine. Have you received positive feedback from your customers?
LS: I believe there are SO many ways that people can heal themselves and enlighten themselves and some of those are through music, massage, natural medicine and cannabis (CBD), hemp especially, being this amazing and miraculous plant that can heal the planet itself: the ground, the soil, the air, and then, of course, its inhabitants.
I’ve always believed there’s a symbiotic relationship between different things in life that all work hand-in-hand toward the betterment of human life, the energy of the world and how the planet resonates in positivity and experiences. It just kind of allowed me to be Superwoman. Using CBD topically on clients allowed me to go beyond the ability I already had as just a massage therapist, by relaxing and relieving muscle tension and pain, I didn’t have to work as hard to get those muscles to relax, so I didn’t have to take them closer to a level of pain, so to speak.
And personally, I’ve used CBD for myself, with the help of both of my doctors, to wean off of a lot of my medication that I had been on for decades. I had childhood depression with underlying anxiety and PTSD. Starting at the beginning of my 30s, the depression kind of got better, but the anxiety reared its really ugly, terrible head. I was a completely different person and was full of anxiety all the time. It was kind of like the Tasmanian devil, running around. That’s kind of how my anxiety presented to other people. CBD actually helped me remove myself from that storm that was around me constantly, but it also helped with so many other aspects of my life, including pain and inflammation, so I was able to replace those medications. That was when I knew that I had to go into this industry. Being on medications as a child when your brain is developing, that’s already a really difficult time. And with children who have problems being themselves and being insecure about who they are as people, it’s just really tough for kids. Even though I believe that things happen for a reason, I do wish that CBD had been around and prevalent and available to that little Laran because it’s been like an emotional support dog. It’s like a big supportive hug!
I’ve had a client who said that she was sitting in traffic and she was thinking “man, I can’t wait to get home and have my CBD” because she was really stressed, and she said she started salivating just thinking about it, like she couldn’t wait to take it because it tastes really good, as well. And just by doing that she felt her stress come down a little bit. I was like, “hey, that’s really cool!” I’d never thought of it that way until she said that.
A lot of my clients use my topical for their children because it’s an all-around multi-purpose salve as well as a super-duper pain relieving salve. What’s cool about it is that it’s 100% natural but also organic herbs (I call them yummy herbs), they are meant to combat inflammation from all sides. That, in correspondence with full-spectrum CBD or full-spectrum hemp extract with CBD, can be used even on sunburns and bug bites and boo-boos. This one girl burned her hand by picking up a curling iron from the hot end (not the handle) on its highest setting and burned the living tar out of her hand and she was going between this wedding venue and her hotel and she stopped on the way and I gave her a sample of CBD under her tongue to help combat the inflammation and the shock and she also applied my salve to the site because it’s loaded with arnica. Arnica is one of those things that, the minute you have a burn or some type of trauma on your skin, as long as it’s not an open wound, you can coat it with arnica and that starts the healing process immediately and it helps remove the trauma so that you can start healing. We can’t heal when we’re in a state of inflammation. She came back an hour later, wanting to buy the salve and a CBD oil because she said she was already feeling more relaxed, and she’s kept in touch on Facebook (she lives in Buffalo, NY). So, it’s little things like that-little coincidences. The universe brings people that I’m able to help to my booth, and that’s the beauty of it.
THR: From where do you source your CBD? Where is it tested?
LS: People still aren’t completely educated on CBD, and so I do feel like maybe some people, just to try it, are going to spend less on the lower-end products that maybe got their hemp from Romania or China, where they use Roundup to make the plant easier to cut. Even though they have to do third-party testing on the final product, it doesn’t mean that the actual testing of the hemp didn’t show some type of pesticides. It’s a little scary to me because it’s so unregulated. That’s why I get my hemp from my farmers in Oregon. They have a GM-free certified USDA organic certified and kosher-certified extraction facility. I’ve been with them since Day 1. So every single product uses the exact same strain from the exact same farmer every single time.
I did the research but then I chose to formulate our products so that our formulation is different from everybody else in the industry, so we do NOT white label, we don’t resell other brands. Every single ingredient, I vetted where they were coming from to make sure that not only are they ethically sourced from sustainably grown farms, but also ethical (meaning, not taking from Indigenous peoples, leaving them with resources to continue to support their families. Instead of taking everything and then they don’t have something else to grow), we never use palm oil because it contributes to the deforestation of the rain forest. We don’t use soy, because not only can it contribute to hormone imbalance in men, women and children, but also it’s one of the most genetically modified plants on the planet. Things like this to some people don’t really mean anything, and that’s okay. But to me, being an ethical and sustainable and even hopefully becoming a regenerative energy company where we choose farming that’s regenerative. But what it does is it actually helps reduce the carbon footprint we create and have created. People don’t realize that corn and soy and even strawberries are some of the most genetically-modified plants. And I LOVE corn and I LOVE strawberries, but I make sure that I always buy organic and it’s really hard to find organic corn because it’s usually genetically modified.
THR: What is the market like in Texas for CBD?
LS: A lot of people don’t know that we’ve actually been around since the beginning in Austin, which makes me chuckle when they start realizing it, because we didn’t have the budget for the marketing and lots of advertising and exposure, and so now it’s really word-of-mouth, which I think is a wonderful way to grow anything, it builds so much more trust and loyalty.
When I was researching and doing the formula for Happy Karma, I hadn’t even completely decided on the name yet. And there were no other CBD companies on the radar in Austin. Other than a couple of pharmacies and a couple of smoke shops, nobody was an actual CBD store yet. Rawsome was the very first and then we opened a month later in March of 2018, so we are one of the first Austin-based and women-owned CBD companies, which is something I’m really proud of as well. Being a pioneer of the industry has been pretty amazing. So much has changed in three and a half years.
There were tons and tons of obstacles being in this business, before it was federally legal, before it was state legal, before there were (and still aren’t completely) the banking laws that we need, not having a way to do merchant accounts and all of these things that we were having to skate around and figure out. It’s so much easier now for new people to get into the industry. It’s been an interesting ride so far. For me, it’s not about going out and meeting hundreds of people in the industry, it’s about the people who are not in the industry whose lives can be impacted.
THR: You’ve recently been recognized in your field and awarded Best Texas E-Commerce Retailer and Best Texas CBD Manufacturer at the Texas Hemp Awards. What do you think sets you apart from your competitors?
LS: It’s such a huge honor to know that more people follow and get word-of-mouth and know about my company than I ever thought did, which is humbling in and of itself. In the very beginning, I planted a seed and I’ve been tending to those rows of plants and I know that they’ve been growing, but I had no idea how much they’d grown. The seeds blew off into other fields that I didn’t know about. Three and half years later, I’m just now hearing about those plants that are growing in other people’s plots, so to speak. I’m learning how many people actually have been following me and my business and the reviews and the success stories. So for me to have had the votes and to win the Best CBD Manufacturer and the Best CBD Retailer, I was originally in the Best CBD Manufacturer and then she decided the last day of voting to make an e-commerce category. But to win the best CBD manufacturer was amazing! I didn’t think that was going to happen. And then, we made the top five of the “Best of Austin” Chronicle issue, which was huge! I was told that thousands upon thousands of votes were cast. The fact that enough people nominated us to get us into the top five was so amazing. It blew my mind, I had no idea. I mean, that’s a lot of people!
At the very beginning, when I opened, CBD wasn’t that well-known yet, and so there weren’t all these shops around that carried a white label brand. There were all these shops that were looking for CBD suppliers, and they were calling me and asking me, but the thing is, my products could’ve been sitting next to five other white labeled products, and they could’ve all theoretically come from the same manufacturer, from the same generic formula. To me, that dilutes the quality of my brand. Someone did say to me, though, “Laran, when you go a store, you have your low-end products and you have your high-end ones, and it’s up to the consumer as to whether they’re willing to pay for quality or quantity, getting something for cheap.” You’re getting what you pay for, I guess. I really prefer being there to educate and tell people, relaying the difference, for them to make a decision.
THR: Can you explain the process of infusing Reiki into your products?
LS: Reiki is an energy modality. Everything is energy and energy is everything. Every single thing, even a stone, everything is made of energy. Just like the experiment where the kids “bullied” one plant and complimented the other, it’s the same thing with everything. There have been scientific studies about how positive energy changes the freezing structure of molecules making snowflakes. Energy can really help everything. The same is true with intention, for example, somebody who’s Catholic might get some holy water or get a blessing from a priest or something, this is not a religious thing, it’s just a belief that by putting intentions into the body, it’s a body modality. It’s something that massage therapists can be trained to do for their clients. But then, you can take that and put it into anything. Almost like saying a blessing over your food before eating it, it’s the same kind of principle. So, what happens is everything is made and manufactured and tagged and labeled, and then a third-degree Reiki master infuses them with intentional energy.
THR: Where can our readers buy your products?
LS: Having my booth at SoCo Maker’s Market, I get to meet so many amazing Austinites that come by and shop on south Congress. Me being a world traveller, I love being able to meet people from all over the country and the world!
I don’t do anything like anybody else. I don’t like to be a crowd-follower. I’m either a crowd-starter or I like to stand on the sidelines and be completely different, I always go against the grain. I get SO many calls asking where I’m located. At times I do wish we had a storefront so that we could accommodate the people who want to come in and browse, and the people that want to come in and meet me, the people that I spend hours on the phone with. They’re always shocked at how much I’m willing to give them, but I do that because I think it’s important that they feel validated, even if I’ve not been through what they’re going through, I can still empathize. It’s not about a sale to me. And that goes all the way back to what I said before about me running a business totally NOT like a business!
That’s the nice thing about being the owner of a company, I’m able to help my fellow musicians and other people when they need it.
THR: That’s the rewarding part, right?
LS: Yeah, we can get so wrapped up in ourselves and “me, me, me” and it just feels so good when you’re able to help somebody. There are times when someone’s injured or hurting or they need emotional support and you know that, especially during COVID, you can’t be there, you can’t bring them food. I have a friend who lost her mom during COVID, and I couldn’t be there to give her a big hug. I felt hopeless, and I thought, “what can I do to help her?” and I thought, “wait, I’ll give her an emotional support dog!” So I gave her a bottle of CBD to try to help her through. It’s a nice way to be able to help other people, to give them the gift that keeps on giving.
THR: Where do you see the future of hemp as a renewable resource?
LS: People say we have a lumber shortage. No, we have a tree and forest shortage. One acre of hemp can replace three acres of trees in three to four months, instead of 30-60 years. Let that sink in. That’s not only sustainable, it’s part of regeneration. Those plants are taking a lot of crap out of the air, and they’re pulling it into the soil, and the soil is re-nitrogenated by the plants and it’s helping with the water runoff because all of the water is going down instead of running off. It’s helping to put microbes and fungi and all of these great nutrients back into the soil. Just doing little things. We don’t have to do everything the right way or whatever we think is the right way. Just taking little steps for our bodies and for the planet is something. Just because I use compostable gloves when we’re manufacturing, and doing things that I know are going into the compost or into the trash and the recycling, doesn’t mean that everybody has to do that. It just makes me feel good at the end of the day, doing something a little extra.
THR: What is your impression of this unprecedented time, where we may finally feel safe to spend time with our friends and family again?
LS: In getting older, when you make a decision or when something happens in life, you don’t always know what kind of waves and ripples you put out until sometimes several years later, and then you start hearing back from people. So, sometimes we plant a seed and we walk away and we don’t know whether it caught and grew or if it created other plants and that’s how this whole process has been for me. And then of course with COVID, it just got much more deep and energetic.
Me being a massage therapist and a professional vocalist (I’m in the Patrice Pike band), before COVID, we had a residency at the Saxon Pub every Thursday for eight years. So, the Saxon was my second home! Everything’s changed. That was a source of income. But with my business, I’ve never had to impose sales quotas on myself. I want to be able to go to the market and introduce myself and explain the amazing things about this plant. If I meet new people, and I give them a business card and share some information and they leave with a smile, then I’ve done my job. It’s such a rewarding thing to come home every day and be able to tell my wife about all the great people I get to meet. That’s how I built my business, by not just thinking about money, and it just rolled back into itself and it’s still such a pleasure to be able to go and meet people and talk to people. I hand-write a thank you note for every single order that goes out. The slogan for Happy Karma Hemp is “Create Happy Karma”. I believe we can create happy karma by helping others first. By doing good things or having good intentions, by going above and beyond, whether people ever know it, is not the point. The point is that, energetically, it’s a positive, kind, intentional thing. It’s not necessarily up to those people to reward me back, the universe takes care of me. God, the universe, takes care of us in a plethora of ways that we may never even notice or know.
We just had our first post-quarantine performance at Saxon last week. One of my posts recently on Instagram was about being kind to oneself, and a lot of people have grown and changed over the past 15 months and change is not bad, it’s just change, it’s just different. A lot of people have become a little more enlightened and a little more sensitive to energy and more in tune with nature and they’re vibrating on a different frequency. So, for some of these people, the thought of going back into big crowds is too much, myself included. I have been, most of my life, what I would consider a super-extrovert but I changed over the pandemic and I enjoyed being home and being in the back yard and being around nature. And my sensitivity became heightened, so my very first show back at the Saxon was very overwhelming, just to see all these people that I used to see every week. At the same time that it was a wonderful, glorious reunion, it was also intense being around so many people and feeling that energy. The pandemic and the events over the past 15 months have brought up some controversial issues. Hopefully, people will recognize that it’s so much easier to be kind than to be right. My first gig back was just really overwhelming and I was realizing that at least half of the people I was talking to were having the same struggle. Over the next six months, some people will just sort of tiptoe out and some people will come out with a vengeance, and that’s okay.
It’s amazing after three and a half years of my company, to be able sit back and go, “whoa, I created all of this completely from nothing, all by myself, from scratch.” And when someone says it’s helping them, it’s amazing to stop and remind myself that I helped somebody.
Texas Hemp Reporter: It is quite an honor to speak with you Steve. Most interviewers would ask this kind of a question toward the close, I’ll flip the coin. What is the future of cannabis?
Steve: The future of hemp is to become the most profitable cash crop on Earth. Dollar per dollar volume cannabis will begin to outsell actually any other single product. Here’s some statistics, since legalization in California alcohol use is down by 25%.. in most areas where legalization has occurred alcohol use reduction is between 15 and 20%. And I should mention Pabst Blue Ribbon has come out with a non-alcohol hemp tonic.
So many products can be replaced with hemp-based ones that are equal in price or cheaper to construct. If you press hemp seeds you get a wonderful emerald thick liquid that is bio-fuel for diesel engines. If you mix hemp seed oil with 10% ethanol, also derivable from hemp, you have a perfect bio-fuel for any diesel engine. Grind hemp seeds up you get hemp milk, a delicious beverage to put in your coffee or granola. Take a truck. Some of the truck’s body could be made from plastic from hemp oil, the engine could run on hemp diesel, the boxes the truck carries could be hemp fiber, the socks and shoes of the driver could be hemp..
Hemp is the toughest fiber, much tougher than cotton. They found wills and bequests from the middle ages where people would bequeath their hemp linens to new generations because they don’t wear out. The Levi
company has come out with jeans that are 30% hemp. That’s because they see that hemp is eco-friendly and sustainable. Using hemp paper and for furniture we could eliminate the need to cut down trees. Hemp wood is 20% stronger than oak and 100 times faster to grow.
There’s something like 25,000 products that are hemp-derived.
Texas Hemp Reporter: You’ve co-founded or founded about ten businesses and organizations. Are you a counter-cultural hero?
Steve: I don’t think it is very heroic for someone to refer to themselves as a hero. I think that I am very lucky to have seen the light at a young age and to have the skills to organize things. I love to found, I love to get a business going then as it grows and others can manage it I move onto to something new. As far as the counter culture is concerned.. look the hippies gave us the personal computer right? The hippies gave us organic food to eat, the hippes gave us the electric car, introduced the west to yoga.
Texas Hemp Reporter: I personally believe there is a strong subculture surrounding the whole CBD thing, and medical marijuana. Do you think we can tap into this culture to make the industry more compassionate? To “love the plant” as you say?
Steve: Yeah. I believe so. Look we better, we’re destroying this planet real fast, we as consumers have a mission and we better act on it. I didn’t start
out to create a new industry but a new kind of industry. As with our Last Prisoner Project I approached the industry for support and they came through. In only a year and a half we have seen the release of thousands around the world, some due to Covid 19 petitions. Michael Thompson was released after serving 24 years of a minimum 40-years sentence. He was the longest serving non-violent prisoner of Michigan. All for selling 3 pounds of marijuana.
Also we hope to widen the investment in new licensees, as with Arc-view. We are interested as much in how not to invest.. there is a large disproportion of new cannabis licenses in disadvantaged communities. We have to see black and brown people thriving in an industry they had a lot to do with founding. We need to find out how to support, create capital flow, sustain, educate and see those people grow.
Texas Hemp Reporter: I have been studying some of your writings. From your website, “A Lesson From Another Teacher” it is exciting because you’re talking about medical psychedelics.
Steve: Yes. I was traveling over four continents meeting with growing cannabis ventures when right in my hometown of Oakland California the city decriminalized natural visionary plants making psychoactive substances the lowest priority of the Oakland Police Department. I have always wanted to see visionary plants decriminalized as a Drug Reform activist. Also as a person who has incorporated psychedelics and cannabis into my own spirituality.
If you follow the history you know of cannabis, from the oldest known usages in central Asia, if you go east you find that marijuana became central to Hindu culture in India, and Buddhism such that it is a medicine in the Ayurveda canon. Excavations have found cannabis in temples, around statues, if you travel to Japan, the indigenous religion of Shinto, there will be a long hemp rope at the entrance to Shinto temples.
It has been shown in Israel use of cannabis as a grave offering, especially young women who had died in childbirth. And in Egypt it was burnt to clear temples. Really everywhere it is woven into the spiritual practices of peoples. It was central to ancient Greece, as were many other psychoactive plants. It wasn’t until Rome solidified their empire making Christianity the state religion which banned all psychoactive plant use. You see all those old Greek statues that are missing arms and such, that was hordes of Christians who would come in and search out anyone using any psychedelic plant, take them out of their homes and execute them. Even all those philosophers of the Academy which gave us western civilization they were using all sorts of psychoactive plants.
Interview conducted by Sana v’Ritzvah
Steve DeAngelo is a globally recognized cannabis leader who was dubbed “the father of the legal industry” by former Speaker of the California Assembly & 41st Mayor Willie L. Brown Jr. From grassroots community campaigns to appearing on national television networks and every uphill battle for legalization in between, his trailblazing work and creation of a model medical cannabis dispensary that set best practices for an entire industry make him one of the world’s top cannabis experts, foremost thought leaders, and recognized entrepreneurs.
Steve is Co-Founder and Chairman Emeritus of Harborside, now a publicly-traded company on the Canadian Securities Exchange with California dispensary locations in Oakland, San Jose, San Leandro, and Desert Hot Springs-only the second dispensary in California to feature a drive-thru. The vertically integrated California cannabis company founded in 2006 has more than 300,000 registered patients. Rooted in Steve’s belief that cannabis use should be wellness centric, Harborside was one of the first in the nation to support comprehensive cannabis education for seniors, veterans, and families with severely ill children. Featured in numerous high profile media pieces and winning multiple awards, including Best Dispensary in California (2017), Harborside continues to set the industry gold standard and is a leading advocate for diversity, environmental sustainability, and economic justice in the cannabis sector.
Steve is also Co-Founder of Steep Hill, Inc., the first commercial cannabis lab in the country, and Co-Founder of Arcview Group, the first cannabis investment firm. Steep Hill has grown to become a world leader in cannabis science and technology with extensive expertise in lab testing, remote testing, genetics, research and development, and intellectual property licensing. Arcview angel investment network now includes more than 600 accredited investors and has raised over $270 million for 200 cannabis-related companies to date. Steve formerly served Arcview as Vice President; the firm remains dedicated to galvanizing progressive drug policy reform by empowering a responsible, profitable industry.
Early on as an activist, Steve was skipping school to attend anti-war demonstrations and eventually dropped out to join the Youth International Party – also known as the Yippies. He went on to become the lead organizer of the annual Fourth of July Smoke-In in D.C., carrying the position for a decade. Steve graduated summa cum laude from the University of Maryland. He also opened a legendary D.C. counter-cultural gathering place that became known as a refuge for local cannabis and peace activists during the Reagan-Bush era, including William Kunstler, Wavy Gravy, and author Jack Herer. Steve helped Jack Herer edit and publish the manuscript for his soon-to-be-famous book, “The Emperor Wears No Clothes,” and became a lead organizer of the first Hemp Museum and Hemp Tour. He created his first cannabis business, Ecolution; the company was one of the first to ride an industrial hemp boom, manufacturing hemp clothing and accessories for retail sales in 50 states and 21 countries during the ’90s.
Continuing to stand tirelessly for legalization and decriminalization of cannabis around the globe, Steve remained at the forefront of the cannabis reform movement, playing a pivotal role in the passage of Initiative 59-Washington D.C.’s medical cannabis law. After a legal battle lasting four years with the U.S. Department of Justice, he ultimately succeeded in defending their multiple attempts to close Harborside. He helped to pass Prop 64, California’s adult-use law, and making history on January 1, 2018, made the first legal cannabis sale in California’s first moments of legal recreational use.
As an industry pioneer and progressive leader, Steve attracts global invitations to present and appear before audiences of thousands, reaching beyond cannabis and inspiring action toward restorative and equal justice, individual and community wellness, and cultural change for the sustainability of earth and humankind. At SXSW 2019, he gave the first-ever cannabis-themed keynote to be featured at the conference and was invited to return as a featured presenter the very next year. A reputable and known American cannabis leader, advocate, and educator, he appeared by invitation to renowned Oxford Union in Great Britain for the 2017 ‘War on Drugs’ debate sessions. Appearing before audiences around the world is a natural progression of Steve’s life work. As a prime advocate of diversity, sustainability, and social justice, he carries his message to help build a world that lives by the same values cannabis can teach.
Steve is the author of The Cannabis Manifesto: A New Paradigm for Wellness, and an originator of the wellness approach to understanding cannabis. His acclaimed book is a compelling account of a personal journey with cannabis that outlines numerous solid arguments for legalization while presenting research-backed benefits of the plant. In its first week of release, the title became number one bestseller in the Wellness category on Amazon-the book’s guiding statement: “Cannabis is not harmful, but prohibition is.” Steve DeAngelo’s special feature presentations for keynote delivery include The Cannabis Renaissance Global Edition, Whole Plant Medicine is the Best Medicine, North American Roots: The Cannabis Plant & Prohibition’s Truth, and The Cannabis Creed (debuting at SXSW 2020).
Steve’s great success and persevering advocacy draw top tier national media attention. In 2009 he was the subject of a NY Times cover, the first-ever by the publication to include a feature story on legal cannabis. He has appeared nationally on all major media outlets, including FOX, CBS, CNN, NBC, CNBC, and extensively in publications such as The Wall Street Journal, The New York Times, and USA Today. Special feature media projects include a starring role in Weed Wars, the first cannabis-oriented reality T.V. show (Discovery Channel), Ask Steve DeAngelo weekly web series by Green Flower Media, and development of entertainment works under DeAngelo Bros. Productions, a company founded by Steve DeAngelo and brother Andrew DeAngelo. A podcast and weekly television show documenting Steve’s travels to cover cannabis culture globally are coming in 2020 to Free Speech T.V. (FSTV), a 24-hour independent television network currently available in 37 million U.S. homes.
Steve is the recipient of the 2015 High Times Lester Grinspoon High Times Lifetime Achievement Award and was named one of the most influential people and “gatekeeper of the industry” in 2015 by the International Business Times. In 2016 he was named one of the seven “Most Powerful People” in America’s cannabis industry by Fortune. Most recently, he was honored with the Peter Tosh Equal Rights Award and inducted into the Marijuana Business Daily Hall of Fame.
Steve believes that an ethical and politically engaged industry will be the most powerful force in spreading cannabis reform to every corner of the planet. As Founder of the Last Prisoner Project (2019), he will not stop until the last cannabis prisoner is free. As host of the Radio Free Cannabis podcast-launched in 2020, his role as an activist seeking global unity for equal justice, advocating for human rights around the world, for cannabis legalization across planet earth, and the end of criminalizing medicinal plants worldwide, continues.
Steve DeAngelo
Father of the Legal Cannabis Industry Global Cannabis Ambassador
Founder of Last Prisoner Project Host of Radio Free Cannabis Podcast Author of The Cannabis Manifesto
2019 MJ Biz Award 2019 Hall of Fame Inductee In the computer industry, there’s only one Bill Gates. In the automotive space, only one Henry Ford. And the marijuana world has only one Steve DeAngelo –MJBizDaily recognizes Steve DeAngelo
Russell gives an update on the magazines that were released this past July 4th weekend. Profiling Lucky Leaf Expo and many of the articles and stories featured in the new July magazine. The Lucky Leaf Expo is previewed along with the Southern Hemp Expo and a preview of CBD Seed Labs podcast # 40 coming up later in the week.
See you in Dallas July 8-9-10 stop by Booth # 122 and pick up a few copies of the magazine
“Role of Marijuana Components in the Migration and Proliferation of Stem Cells”
The significance of this study was that cannabinoids can enhance the regulation of two major sources of stem cells- adipose and bone marrow-derived from human and porcine sources.
Louis A. Cona, an MD already considers cannabis a “miracle plant”. Its modern history includes being used for weight loss in HIV patients, neuro-degenerative diseases, cancers epilepsy and the list goes on. He speaks to laboratory scientists at the University of California at San Diego and their trials concerning CBD oil effects on lab-grown neural stem cells donated by brain patients. The result: cannabinoid oil strongly regulates the proliferation, migration and neurogenesis of mesenchymal stem cells (MSCs).
StemX is a sports and regenerative medicine company that offers many healing modalities has an article suggesting that the body’s endocannabinoid system, which humans share with most mammals, which not only is a receptor system yet can produce amounts of cannabinoids themselves, just as the bone marrow may produce stem cells and that there are also an entire cellular receptor system for such.
The article found that stem cells “pretreated” with a combination of CBD and moringin demonstrated improved survival rates when re-introduced into tissues.
Penalty Reduction Bill HB 2593 an Update on Joe Moody’s
by Jesse Williams
Rep. Joe Moody (D) of El Paso authored HB 2593. The bill specifically deals with marijuana concentrates of up to 2 oz of tetrahydrocannabinols (THC). Moody had previously authored what has become HB 441 (another penalty reduction bill for marijuana flower) authored by Rep. Zwiener in the 87th legislative session.
HB 2593 would remove tetrahydrocannabinol and related substances from Penalty Group 2 and place them in a new category, Penalty Group 2-B, under the Texas Controlled Substances Act.
Penalties for possession of substances from the new Penalty Group 2-B would have been the same as those in Penalty Group 2-A, which range from a class B misdemeanor if the substance is two ounces or less, to life in prison or a term of five to 99 years and a fine up to $50,000 if the amount of substance possessed is more than 2,000 pounds.
Right now, any amount of concentrate found in your possession is a state felony. The last time penalty reduction was passed by the Texas legislature was 1973.
The bill passed out of the House committee with only two nay votes and passed in the House with a final supermajority vote of 108-33.
The bill proceeded to the Senate where it passed out of committee with only 2 nay votes as well. From there the bill was approved out of the Texas Senate with a delta-8 amendment attached by Senator Perry. The amendment would bring the regulation of delta-8 to what Perry called the federal limit imposed on THC by the 2018 Farm Bill. The second reading of the bill was passed with a 25-6 vote, and after the third reading for the final passage with amendment added, a vote of 24-7 was taken to pass the bill with supermajority support.
Grinded weed shaped as Texas and a joint.(series)
Senator Hinojosa asked if the amendment would bring any lab confusion such as the previous hemp bill, to which Perry responded no. Perry was also asked if the author (Moody) was okay with this amendment, to which the answer was yes.
When the bill went back to the House to see if the author conferred with the amendments or wanted a conference committee, Rep. Moody made a point of order on the bill. Moody requested a conference committee on the grounds that the delta-8 amendment was not germane (not relevant to purpose) to the bill it was added to. The House agreed that the amendment was not germane and the bill went to the conference committee. The same conclusion was reached in the conference committee.
The House then voted on the conference committee version without the delta-8 amendment language and passed the bill again. The bill was then sent to the Senate to be heard by the members on the floor. When sponsor Sen. Nathan Johnson (D) requested for the bill to get a vote on the floor, Lt Gov Dan Patrick denied the request, likely from frustration that the delta-8 amendment language was not present.
When this request on the floor was denied, the bill was effectively dead because the deadline was coming up within hours to have the bill passed by the Senate floor once more and sent to the governor.
Concentrates of THC now remain a state felony in the state of Texas until the legislature convenes again in 2023 to possibly bring up another bill.
Late last year, Scott Bailey appeared on the Texas Hemp Show podcast with Texas Hemp Reporter magazine’s publisher Russell Dowden. There, the certified public accountant at the Raleigh-based firm Carr, Riggs & Ingram (where he is also partner) discussed research grants, opportunities in the hemp industry, market recovery after an over-saturated 2019 growing season, as well as challenges hemp farmers faced in the pandemic year.
Now Mr. Bailey, formerly the treasurer for the North Carolina Industrial Hemp Association, has returned just in time for tax season to provide Texas hemp farmers (and even those considering getting into the industry) sound advice in navigating their financial futures.
He wants hemp farmers to realize, first and foremost, that hemp is a very unique crop, one that grows and is farmed quite similarly to tobacco. “It takes on a lot of character of the soil that it’s planted in,” Mr. Bailey said. “So if you have soils with pesticides and fungicides, which can have traces of heavy metals in the soil around where you’ve planted hemp, then that plant will take on those characteristics. That creates risks, because if you have pesticides and fungicides not approved by the FDA, you can’t sell hemp flower.”
TIPS FOR HEMP FARMERS DOING THEIR 2020 TAXES
Plan Early. Filing and paying tax liabilities earlier than standard corporate and business deadlines can create some relief in making estimated tax payments. This way, before the crop actually comes in, you’re not having to estimate your income or make estimated payments.
Find the Right CPA. Do your research, really doing a deep dive into the tax professional with whom you would be working. Do specific Google searches, and thoroughly read a tax professional’s website, pu and LinkedIn page. Also, try asking a CPA directly about what they know about the hemp-farming industry. “You’ll know pretty quickly if they know what they’re talking about,” Mr. Bailey said.
ADVICE TO ROOKIE HEMP FARMERS
Know the BIG THREE Long Before You Harvest. Know your seed, your soil and your source of sales. Will where you plant a specific seed variety produce strong yields? Is the soil clean and free of heavy metals and contaminants? Lastly, be sure you can convert this profitable plant to cash by knowing well in advance how and where you’re going to sell your product.
Line Up Your Testing Lab Early. Being such a new industry, there’s a shortage of testing labs in the U.S. So early in the business-development process be sure that you have a working relationship with a lab so that you can make sure your product has less than the legal threshold of 0.3 percent THC content.
Start Small. Not until there is a standard commodity price for hemp will crop insurance be available for hemp farmers, as a standard commodity price can be the only surefire way for insurance companies to accurately evaluate risk. “Our advice for a lot of people getting into hemp farming is, start small, get used to it, get good at it, and then increase your quantities. Be as sure as possible that what you’re growing you know you can sell.”
Hire a Knowledgeable CPA to Help You Jump through the Hoops of Grant Funding. An accountant who understands the hemp industry can you help apply for various types of grants, assisting you as you navigate your way through additional accounting requirements such as state and federal grant fund expenditures and various compliance’s.
The in-person event will be held in Houston, Texas on December 11 through 12 and feature networking, exhibitions, education, and seminars
Houston, Texas – October 28, 2020 – The Original CBD Expo South 2020 will be held in-person on December 11 through December 12, 2020 in Houston, Texas. The event, hosted by MACE Media Group, is the 17th conference by the creators of the Original Expo Tour and will be an exciting opportunity to bring the cannabis, wellness, and CBD communities together after nearly a year of virtual programming.
“We are looking forward to the opportunity to connect with and bring together our strong CBD community of leaders, new-entrants, and innovators,” said Celeste Miranda, founder and president of MACE Media Group and Cannabinoid Industry Association (CBDIA). “The CBD Expo is a time for us to reconnect, learn, and grow, both personally and professionally. We look forward to a safe and rewarding event.”
The event will feature exhibits from end products producers, equipment manufacturers, and ancillary businesses including financial and legal service providers that display the latest and most innovative advancements in CBD. Exhibitors will have the opportunity to directly engage with consumers, dispensary owners, and buyers from well-known entities like Whole Food, CVS Pharmacy, Starbucks Coffee, and Trader Joe’s.
In addition, the expo will offer unique cannabinoid education seminars from leading cannabis and cannabinoid PhDs, physicians, scientists, and researchers from around the globe. Seminar tracks include Research and Medicine, Regulation and Compliance, and Cannabinoid Education Certification.
Networking and community building opportunities will be at the forefront of this year’s event. Over 190,000 individuals have attended the CBD Expo since its inception and always brings a diverse group of cannabinoid and cannabis professionals within areas of education, advocacy, and business.
To attend this year’s event or learn more, visit us online at cbdexpo.net.
New restrictions and safety protocol will be in place due to COVID-19. To learn more about how we are protecting attendees and exhibitors, see here.Please direct all media inquiries to Chloe Latture at [email protected].
About MACE Media GroupMACE Media Group publishes niche cannabis industry trade publications. Its premiere title, Terpenes and Testing Magazine, was the first industry trade publication devoted to cannabis science. Its newer publications, CBD Health & Wellness Magazine, Extraction Magazine, and Hemp Farmer, revolve around the growing cannabinoid industry to provide news on trending applications, medical research, and updates with laws and regulations.
MACE also produces many trade events that attract dozens of cannabis and mainstream media journalists. Currently, MACE Media Group is producing a tour of CBD expos bringing together thousands of industry influencers, forming the most comprehensive CBD event in the United States.
As the popularity of CBD (Cannabidoil) grows, so does the question of whether companies will allow their employees to use it or not. In this article we are going to look at some facts and ideas related to how companies can go about not only protecting themselves, but employees from potential pitfalls of not having policies in place pertaining to CBD use in the workplace.
One of the first questions employers ask about CBD, Is it legal? In 2018, the Agriculture Improvement Act of 2018 (aka the Farm Bill) legalized CBD that is derived from hemp and contains no more than 0.3% THC (by dry weight). Notice the key word is CBD derived from “HEMP”, not marijuana. As far as state laws, hemp derived CBD with .3% THC or less is legal in all states with the exception of South Dakota per HB 1191, and with certain exceptions for Idaho Code§ 37-2701(t), and Nebraska LB657. As always, do your due diligence and double check your state laws. But overall, as long as it meets the federal regulations you are good to go in most states.
The next question that revolves around federal guidelines is how does one know if a certain brand of CBD is in compliant with federal and state laws? Well, this is where taking the time to check out manufacturers, labels, and product websites will pay dividends in preventing headaches down the road. There are four main things to look for and should be easily found with a specific product or manufacturer that ensures the product being made is legal and of high quality. Those four benchmarks are:
Where is the hemp grown? Look for hemp that is grown in the United States. U.S. grown hemp has strict guidelines set fourth by the USDA pertaining to growing and the cultivation of hemp. If it is grown in the United States by a licensed farmer, then odds are the hemp meets federal guidelines. Whereas hemp grown in another country… well, who knows what you are getting.
Look for a Certificate of Analysis. A COA shows the results of independent lab testing that checks for things like potency and contaminants. The batch number on the COA should match the number on the product’s label or packaging. A key component to look for on a product label is a QR code. This allows the buyer to download lab results for the product being purchased.
Who and how is the testing done? When it comes to testing, it is always good to have a 3rd party independent testing facility that is doing the COA versus in house. A legitimate third party lab will not have any skin in the game and will give true unbiased results. Labs should meet ISO 17205 standards and have been validated by one of three national regulatory organizations such as the Association of Official Agricultural Chemists, the American Herbal Pharmacopoeia, or the U.S. Pharmacopeia.
Look for comprehensive labels and potency. The label should match the COA results pertaining to the amount of CBD and THC described on the product in total and by dose. One should be leery of any label that is vague in ingredients, dosage, or COA information as many CBD products are found to be mislabeled or completely false. The more information provided on the label backed by a third party COA demonstrates a manufacturer/seller is open and honest with the CBD product they are producing.
Now that we have the Federal and State laws out of the way, what does it mean for a company? As an employer, can you demand or bar your employees from taking CBD? Technically, a business can write just about any policy they want for their business if it doesn’t violate fair standards and hiring. But let me ask you this, how can one with integrity prevent someone from taking an over the counter supplement in their off time that is legal if it meets federal and state guidelines? As of today, there is no test currently on the market to test just CBD. So, you can’t test to see if anyone is on CBD. Since there is no “psycho-active” effect with CBD products no one would ever be “under the influence” of said product. Now what can happen, is someone deciding to take a CBD product that contains the legal amount of THC (which is up to .3%) and potentially test positive for THC on a drug test. Again, this puts everyone in a sticky situation as they did not break any law other than failing a drug test simply because their CBD contained the legal amounts of THC. That is why it is important for people who are prone to drug testing to ensure that their CBD is THC FREE. On a side note, as the employer, you want to ensure that any drug test is THC specific. One of the most accurate tests currently on the market is a saliva swab test rather than some urine tests. (My next article will discuss issues and solutions pertaining to drug/THC tests.)
Here is my thing on that and this is just my opinion as a safety professional for nearly three decades. Since CBD does not negatively affect ones cognitive or physical performance when it comes to doing a task or job, one cannot use the argument of being “under the influence”. I discussed in my last article the positive benefits of CBD and employee performance when CBD is allowed to be used. Can an employer with sincerity and integrity be able to give a compelling argument to not allow employees to use CBD? I can not think of any other than that one nasty word that companies fear the most… liability. Let’s brainstorm on some commonsense options that can be written into policy that could reduce liability to a minimum, yet support the workforce to show a genuine interest in their health and overall wellbeing.
First, whether you are for or against CBD use, an employer needs to have at a minimum a clear and concise policy stating such. Not having one, opens the door to all kinds of issues and confusion when an employee is considering the use of CBD. What if an employer does want to allow CBD use? Depending on the size of the company and number of employees, a policy could be put in place that addresses the issue on a case by case basis. There are several situations health wise where CBD use makes sense and could benefit both parties. Again, there is no “one size fits all” solution and simply consider doing what makes the most sense for the company at that point and time.
If a company is large and wants to put a general policy in place to allow use and dependent on the state, an employer could possibly include a “prescription” or doctor letter clause that would allow CBD use while under the supervision/direction of a doctor or medical professional. That way if one tests positive for something, then all parties are covered. Noticed I said test positive and not under the influence. This clause is common for people that must take certain medications that are classified as narcotics or other drugs that are not normally allowed when drug testing is done within a company. It essentially allows an employee to take such medications when off duty/work or in some cases while at work if needed such as Adderall or Zoloft.
What if a company is in support of CBD use, but is adamant that their employees not test positive for THC? Creating a list of approved CBD retailers and manufacturers could be a viable solution. Yes, it does require a little work and research, but if a company is willing to invest a little time into vetting legitimate and reputable CBD manufacturers, then it benefits their employees with valid and reputable CBD products which would eliminate any potential of said employee testing positive for THC. If an employer was to use the four benchmarks to find reputable CBD vendors as discussed earlier, then a company can create a list of options for their employees that are 100% THC free for them to choose from, so they do NOT test positive for THC.
These are just a couple of ideas that are currently being used now with success. With the rise and legalization of CBD we are experiencing a revolution of sorts that requires educating and adapting to new trends. Over the next few years there will even more potential issues for states depending on if marijuana is decriminalized or legalized at the federal level. We are already seeing states where marijuana is legal having to make important changes to hiring and drug testing practices due to the laws. Since CBD is now legal, you might as well address the issue sooner rather than later and having sound policies in place will save a lot of potential grief not only to the employer, but the employees as well. Whether you are against or for CBD, it is here to stay.
Texas became the 43rd state to pursue a hemp production program when, on June 10, 2019, Governor Greg Abbott signed HB 1325, a bill relating to the production and regulation of hemp, into law. Currently, Texas law prohibits “the processing or manufacturing of a consumable hemp product for smoking.” Tex. Health & Safety Code § 443.204 (4). “Smoking” is defined as “burning or igniting a substance and inhaling the smoke or heating a substance and inhaling the resulting vapor or aerosol.” Id. at § 443.001 (11).
Interestingly, the original version of HB 1325, introduced by Representative Tracy King, contained no mention of smoking or smokable hemp. The first instance of the terms appearing occurred on April 15, 2019, in the Committee Substitute. Of note, the Committee Substitute contained no mention of inhaling “vapor or aerosol,” language later adopted that was intended to encompass vaping products.
The Texas Legislature granted regulatory authority to the Texas Department of State Health Services (“DSHS”) to draft and implement the rules that will govern the consumable hemp product program. On May 8, 2020, DSHS published its Proposed Rules in the Texas Register, which include the following prohibition: “[t]he manufacture, processing, distribution, or retail sale of consumable hemp products for smoking is prohibited.” § 300.104. Though it was no surprise that DSHS intended to ban retail sale of smokables, as a previous draft version of the rules released in December of 2019 included the retail ban, the rule has been expanded to include distribution of smokable hemp products as well.
The smokable hemp market is one of the fast-growing sectors in the hemp industry. In 2019 alone, flower and pre-roll sales were estimated to constitute $70.6 million dollars of the hemp market share. Hemp flower is the most lucrative portion of the hemp plant in today’s markets, for both farmers and retailers. So why has Texas, a state that touts itself for its agricultural prowess and favorable agricultural policies, elected to kill its smokable hemp market? While law enforcement may aver that no roadside testing mechanisms exist to differentiate hemp from marijuana, at least 40 other states currently operate hemp programs, and have for many years, with permissive flower sales, despite the lack of available quantitative field testing for law enforcement. Across the United States, hemp remains a highly regulated substance, subject to a hodge-podge of packaging and labeling laws, many of which, including Texas, require a URL link or QR code linking to a certificate of analysis, which demonstrates that the product contains less than .3% tetrahydrocannabinol.
WROCLAW, POLAND – FEBRUARY 04, 2020: Texas State Flag and word LEGALIZATION made of small wooden letters. Drug policy. Legalization of marijuana.
The statutory prohibition on the manufacturing and processing of smokable hemp products has already forced existing Texas companies to move their businesses out of state. Where Texas could have a taxable, job-generating business base, it has instead forced companies to abscond from its borders, taking other permissible factory operations, such as edible products, with them. As if that were not dire enough, DSHS now intends to override the Texas Legislature and ban the retail and distribution of smokable hemp – a move that will kill the entire smokable hemp market in Texas.
Unless DSHS removes the retail and distribution ban from its Final Rules, it is likely that a legal challenge will arise. As an agency, DSHS does not have the authority to adopt a rule contrary to the statute. Many in the hemp industry believe that a legal challenge based on the federal commerce clause would be an assured success and cite to an Indiana case, C.Y. Wholesale Inc., et. al. v. Holcomb, et. al., cause no 1:19-cv-02659 (S.D. Ind. 2019), as a final adjudication on the merits. However, an Indiana federal district court decision is not binding on the state of Texas. The Indiana decision was not a final disposition of the case. Instead, the order which is frequently cited was an order granting a preliminary injunction, which the state of Indiana promptly appealed to the Seventh Circuit, another forum where a decision will not bind the state of Texas. Lastly, Indiana’s challenge differed substantially from what a potential federal commerce clause challenge in Texas would look like because the Indiana law criminalized the possession of smokable hemp by an individual. A Virginia resident simply driving through Indiana could be arrested for possession of a smokable hemp product and charged with a Class A Misdemeanor. Texas law currently does not criminalize possession of a smokable hemp product by an individual.
So what can be done to fuel the flame for a smokable hemp market in Texas? First and foremost, you can submit public comment on the DSHS Proposed Rules until June 7, 2020, by emailing [email protected], with “Comments on Proposed Rule 19R074 Hemp Program” noted in the subject line of the email. Because the ban on manufacturing and processing is statutory, DSHS has no authority to rescind this prohibition. To end the prohibition on manufacturing and processing, you need to contact your Texas Representatives and Senators now – our legislative session gears back up in January of 2021, and if resolution is not obtained in 2021, the Texas Legislature will not meet again for regular session until 2023.
Chelsie Spencer is a cannabis and hemp attorney at Ritter Spencer PLLC who represents clients in all facets of the cannabis and hemp industries, including dispensaries, growers, processors, manufacturers, retailers, and more. Forbes Magazine dubbed Chelsie the “rare friendly face in the midst of a cutthroat CBD hurricane, the person you want on speed dial when things turn sour.”
