Intoxicating hemp booming in Missouri as regulators, marijuana industry try to shut it down

Amy Moore, director of the Missouri Division of Cannabis Regulation, spoke about intoxicating hemp products during a panel discussions at the MJ Unpacked Conference, held in St. Louis on Nov. 5 (Photo by Rebecca Rivas/The Missouri Independent)

Missourians can walk into a CBD shop right now and buy something that looks just like the canisters of marijuana buds and joints sold in state-regulated dispensaries.

Coffee shops are selling seltzers with 5mg of Delta-9 THC — an amount that would produce a strong buzz — right next to the juices in their coolers.

At farmers markets, bakers are selling intoxicating brownies and other homemade treats in stands right next to farm-fresh vegetables.

Many elected officials and Missourians have publicly puzzled at how this happened in a state where voters created a marijuana program designed to be highly regulated and limited to licensed dispensaries.

While there's no single explanation, industry experts and cannabis advocates say much of the blame — or credit — goes to a little noticed provision in the 2018 Farm Bill that is effectively acting as a back-door to widespread marijuana legalization.

"Now people are saying, 'Well, basically all marijuana is hemp," said David Vaillencourt, board chair and co-founder of Denver-based S3 Collective. "It's all legal. The Farm Bill legalized it."

Cost to enforce ban on intoxicating hemp products in Missouri estimated at nearly $900K

Vaillencourt spoke during a panel discussion last week at the MJ Unpacked Conference held in St. Louis, where lab experts and regulators chimed in on various panels to talk about the impact of hemp products on marijuana industry and how to regulate it.

Since Congress descheduled hemp in the 2018 Farm Bill, many states have been grappling with having two nearly identical intoxicating cannabis markets that are "bound by very different rules," Vaillencourt said.

In Missouri, there's no government agency in charge of making sure products being sold as intoxicating hemp are actually made from hemp. No agency is making sure these products are safe, and there's no age restriction set by the government to buy them.

Vaillencourt said this market has eclipsed the state-regulated marijuana industry in size in some parts of the country.

"That's significant because that marketplace didn't exist several years ago," he said.

While Delta-8 edibles or seltzers are the most recognizable products in the intoxicating hemp industry, the products are rapidly evolving — making it challenging for regulators to keep up.

"From a health community standpoint, we are very concerned with brand new compounds coming out of these processes that we've never seen before," said Amy Moore, director of the Missouri Division of Cannabis Regulation during one of the panel discussions at the conference. "We really have no idea what they do, either from experimentation or study."

For Moore, it's even more concerning that these compounds are being made "in large amounts, and just see what happens."

This year, Missouri lawmakers attempted to address the issue, first with failed legislation and later with a stalled-out executive order issued by Gov. Mike Parson trying to ban the products.

For the third year, the upcoming legislative session will be the battlefield between the hemp and marijuana industries. Both will be pushing for their own proposals of sensible regulations.

This "civil war" between the two industries is happening all over the country, said cannabis attorney Rod Kight, who has represented hemp businesses in lawsuits nationwide.

"Which one is going to win out," he asked, "or what is the end result here?"

On one hand, marijuana companies say it's unfair that they "played by the rules," Kight said, and now have to compete with purported hemp products available at gas stations.

On the other side, hemp industry leaders say what they're doing is legal under federal and state law.

"There's all these different things that people have in their minds about what it means to have legal hemp," Kight said. "But the reality of the situation is, for all practical purposes, cannabis is legal in the United States. We just call it hemp."

Competing proposals Parson's attempt this summer to ban intoxicating hemp remains on hold, perhaps indefinitely.

When the order went into effect on Sept. 1, the governor was hoping to utilize compliance officers at both the state's Division of Alcohol and Tobacco Control and DHSS' Bureau of Environmental Health Services to implement the ban.

However, those plans quickly came to a halt when the Secretary of State Jay Ashcroft rejected the emergency rules that would have given the alcohol division the authority to conduct inspections.

That meant that the state's food inspectors were left to handle compliance on their own.

But a lawsuit by the Missouri Hemp Trade Association and a bungled "raid" for hemp seltzers at a veterans home on Sept. 11 have squashed any further actions.

The two current pathways for a ban to move forward — through administrative rules and potential new legislation — won't see any movement until the spring.

They both will be met by the hemp industry's growing political power, which includes the Missouri Petroleum & Convenience Association and many liquor distributors.

"Frankly, alcohol sales are off," Chris Lindsey, director of state advocacy for the American Trade Association of Cannabis and Hemp, said during a panel discussion at the St. Louis conference. "That leaves a lot of alcohol distributors looking for new products."

The opposition also includes a number of small business owners, Kight said.

"In Missouri, you wouldn't ban these products because it would completely pull the rug out from underneath the multi-billion dollar industry, mostly consisting of small businesses," Kight said, "and give it to the existing license holders, which tend to be huge corporate entities."

The argument that banning these products would harm thousands of small businesses in Missouri and further feed what critics call the marijuana "monopoly" was largely successful in blocking proposed legislation the last two years.

However, the state is not backing down.

The Division of Alcohol and Tobacco Control proposed new state rules this month that would ban the sale of hemp-derived products for any licensed liquor retailer. Those rules must be approved by a legislative committee that oversees administrative rules.

The Missouri Department of Health and Senior Services' preliminary budget requests $877,000 to fund more food inspectors to implement Parson's executive order

Those funds would become available on July 1, if lawmakers approve the request as part of the state budget.

The department estimates that 40,000 food establishments and smoke shops and 1,800 food manufacturers could potentially be affected by the governor's order, the budget request states, "but the majority of these facilities are at low-risk of requiring investigation."

"It is estimated that all seven inspection staff can conduct 2,900-3,500 site visits annually," it states.

The department also budgeted $160,000 to hire two full-time attorneys, in the event that business owners challenge enforcement actions.

On the other side, the hemp industry will be proposing its own legislation for regulations on these products, including testing, age restrictions and package labeling.

Diana Eberlein, chair of the Cannabis Beverage Association, notes that THC seltzers and drinks are being sold at the country's largest liquor retailers, including Total Wine.

And that's even more of a reason why states like Missouri need to pass regulations to prevent "an absolute disaster from happening."

"This has really evolved," Eberlein told attendees at the St. Louis conference, "and it's exciting, but we also need sensible regulation in place to make sure that the consumer is kept safe. We need to push for it, and alcohol is a power that can get behind us to really put this across the line."

New compounds Moore, the head of Missouri's marijuana regulatory agency, explained that her division has learned how to create a successful regulatory framework since medical marijuana came on line in 2018.

If hemp products are allowed to be sold outside of dispensaries and their regulatory framework, it would be like "starting over from scratch," Moore said.

"It's important to be very concerned about health and safety, which I think we all are," she said. "I would say it's a big project, a lot to be done there."

One of the most common ways to make these products — and is often referred to as a "loophole" — is to convert the nonintoxicating compound CBD into the psychoactive compounds Delta-8 and Delta-9 THC by using a chemical conversion.

Several experts talked about this process creating new compounds that have not been tested.

"You end up creating a lot of other chemicals besides the one that you're targeting, and it's very expensive to pull all that back out," Lindsey said. "That's what companies like Pfizer and pharmaceutical companies spend a lot of time on."

Because the products aren't being regulated, consumers have a "false sense of security," he said.

And those concerns are shared by hemp leaders as well, Kight said, fueling their push for regulations.

"We don't know how they interact with humans, and safety is a big concern," he said.

However, Kight sees a shift in the industry moving away from conversions and "a lot of these strange sorts of cannabinoids."

"For the most part, you're beginning to see more and more products that are just sort of Delta-9, CBD and THCA," he said.

THCA is a naturally abundant cannabinoid that transforms into Delta-9 THC when smoked or heated. Since the 2018 Farm Bill, botanists have figured out how to breed cannabis plants capable of passing the only federal checkpoint required on hemp plants — a visit from U.S. Department of Agriculture inspectors 30 days before harvest.

At that point, the levels of Delta-9 THC and THCA are below the federal threshold, he said, but both increase when harvested 30 days later. Kight believes there's lots of marijuana flower sold in dispensaries that would probably meet this standard of hemp as well. It's a point that's being argued in court, he said.

"THCA is the most abundant cannabinoid that cannabis produces," he said. "If there's any cannabinoid that humans have truly ingested for thousands of years, it's THCA. The hemp industry is moving kind of back towards this more natural sort of state of affairs, and I'm very pleased with that."