🔒Federal ban on psychoactive hemp products spurs state review, uncertainty for growers

The Attorney General’s office says it will review Connecticut’s law on hemp-infused beverages after a major change at the federal level. Language included in the bill that ended the government shutdown has effectively closed a loophole that had legalized psychoactive hemp products federally since 2018. Attorney General William Tong was among the signatories from 39 states and territories to a letter sent to Congress in October, asking lawmakers to clarify the federal definition of hemp. Hemp products can contain varying levels of THC, the same drug as cannabis. The letter said that the provisions of the 2018 Farm Bill have been “wrongly exploited by bad actors to sell recreational synthetic THC products across the country. … Many of these products — created by manufacturers by manipulating hemp to produce synthetic THC—are more intoxicating and psychoactive than marijuana.” The changes included in the shutdown bill will take effect in 2026. Most commentators see them as a complete ban on the industry. Connecticut passed its own law on hemp in 2022, which imposed much stricter regulations on hemp products than those in the Farm Bill, but did allow for the sale of certain drinks containing low levels of hemp’s active ingredient. “We are reviewing the federal law for its impact on Connecticut’s infused beverage industry, and anticipate there may be a need for state legislative action prior to the effective date of the federal changes one year from now,” said a spokesperson for Attorney General William Tong. In addition to threatening Connecticut’s growing hemp beverage sector, the federal change may also upend a legal challenge that hemp growers and sellers have brought against the state for its restrictive laws. The lawsuit maintains that Connecticut should have abided by the previously looser federal standard, permitting the growth and sale of a wider range of hemp products. The Farm Bill legalized hemp containing no more than 0.3% Delta-9 THC on a dry weight basis. “With passage of the Act, the plaintiffs we represent are in an interesting position,” said Genevieve Park Taylor, of Sound Legal LLC in Westbrook. Park Taylor sued the state in August of this year. The plaintiffs say Connecticut’s law — which reclassified higher-THC products as cannabis — has devastated the state’s hemp industry, causing licensed operations to plummet from 119 to just 25 over two years. “If the hemp plaintiffs are correct, and it is the federal law definition of hemp that applies to both hemp cultivation and sales, the Act will have a real and detrimental effect on their operations,” Park Taylor said. “This would also mean that the State violated federal law from 2022 until now.” She said it’s also possible the court may find that state law properly applies to the hemp industry, in which case the limited sales the state has allowed may continue after 2026. “The hemp plaintiffs look forward to having the court decide these very complicated issues. Their livelihoods rest on those decisions,” she said. “By and large, the new federal law now aligns with Connecticut’s state laws, which already did not distinguish between sources of THC. In Connecticut, these untested and unsafe high-THC products sold outside of the regulated market were already illegal and there is no change,” the Attorney General’s office said in an emailed statement. The state’s Department of Agriculture had formulated a plan as of 2021 to support the hemp industry in Connecticut on the basis of the 2018 bill. “We are working to assess the situation and how it might impact Connecticut hemp growers,” said a spokesperson for the CT Department of Agriculture. Meanwhile, Connecticut’s hemp beverage producers are considering their options. Connecticut cannabis retailer and producer Hi! People launched a line of hemp-infused fruit seltzers in the state in October. “We’ve seen great demand,” said CEO David Salinas. “We’re currently sold in a little over 40 stores in the state. One ​of ​our ​customers ​sold ​a hundred ​cases ​in ​a ​week ​and ​a ​half.” He says he’s currently in limbo waiting to see which way the state will go. If Connecticut keeps its law in place, the federal change could actually benefit his business because it would close the federal loophole that’s seen out-of-state companies ship in products with a much higher level of THC. “If the companies are no longer able to ship it across borders the way that they have been today, then those companies will have to use the producers in the state,” he said. “We produce out of Oxford, so that means potentially more revenue for us, more jobs, more opportunity.” However, if Connecticut decides to harmonize its laws with the new federal standard, it will shut down hemp-infused beverage sales altogether. Salinas says his business will be fine because the majority of his revenue comes from cannabis sales, but that’s not the case for everyone. “There's a lot of folks that are doing great work in that hemp space that are going to be affected by this,” he said. Salinas said the federal change did not come as a surprise, but after allowing seven years of legal sales, the impact across many states, not just Connecticut, will be considerable. “I understand why they did it,” he said “One of the biggest issues is that they waited this long to do it, which means it turned into a very, very, very big industry.”