Heightened Crackdowns on Delta 8 THC Loom Across the U.S.

The legality and safety of Delta 8 THC remains uncertain, yet it continues to attract entrepreneurs and investors.

As the cannabis market continues to expand in the United States, one particular compound has been gaining attention for its potential business prospects: delta-8 THC.

The cannabinoid, often touted as a milder and less psychoactive alternative to the more well-known delta-9 THC, has found itself in a unique position due to its ambiguous legal status.

Delta-8 THC occurs naturally in very small quantities in the cannabis plant, but most commercially available versions of the compound are synthetic or have undergone a chemical process to create it. It has gained popularity for its purported benefits, which include reduced anxiety, improved focus, and mild euphoria. As a result, Delta 8 has been marketed as a more functional, “clear-headed” alternative to Delta 9 THC.

However, the legality of Delta 8 THC is murky. The 2018 Farm Bill legalized the production and sale of hemp-derived products, including cannabinoids like CBD, as long as they contain less than 0.3% delta-9 THC. Since delta-8 THC can be derived from hemp through chemical processing, many manufacturers and distributors have claimed that it is technically legal under the Farm Bill.

The Drug Enforcement Administration has maintained that all synthetic tetrahydrocannabinols, including delta-8 THC, are classified as Schedule I controlled substances. That stance, however, has done little to alleviate confusion among businesses and consumers, with some states implementing their own regulations to address the uncertainty.

Financial Interest

Despite the legal gray area, businesses have been quick to capitalize on delta-8’s growing popularity, even at the expense of legal cannabis dispensaries. Many companies have started producing delta-8 products, such as vape cartridges, gummies, and tinctures, which are sold online and in physical stores across the country.

The market for delta-8 also is expected to grow exponentially, with analysts predicting it could become a multibillion-dollar industry in the coming years.

Investors have noticed the potential opportunities in the delta-8 THC space. Some startups focusing on the compound have attracted significant funding, with some raising millions of dollars in seed rounds and Series A funding. These types of investments allowed these companies to expand their product lines, increase production, and broaden their distribution networks.

Safety Concerns

While the business implications exist, growing concerns about the safety of these products are also deterring investors and consumers. Anecdotal and agency-recorded evidence of adverse side effects – and even death – can be found with a simple Google search.

For instance, data collected from Virginia’s three poison control districts, as reported by WVEC, had more than 1,200 calls in 2022 involving “THC”, the main psychoactive component in marijuana. Of those THC calls, 180 were coded as either delta-8 or “synthetic” calls.

One district reported that 40 of its 85 cases were among patients 19 years old or younger, illustrating the allure the products have on young adults under the age of 21.

The uncertain legality of delta-8 THC remains a risk for businesses and investors alike. Some states have already banned the compound for those under the age of 21, and others have rejected it entirely.

Further regulatory action could impact the market’s growth. Additionally, increased scrutiny from federal authorities could lead to enforcement actions against companies operating in the space.

Still, the delta-8 market continues to grow, attracting entrepreneurs and investors looking to capitalize on its potential.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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