Hemp-Derived Delta 9 Divides Cannabis Community

Everything you need to know about hemp-derived delta-9 THC.

Two camps are emerging around hemp-derived delta-9 products: those that are in favor of them and those that see the products as fierce competition to the more regulated THC-cannabis products.

Making the picture even more confusing is that some states are attempting to ban the intoxicated hemp products, while others prefer to leave well enough alone. This has created a patchwork of legality across the U.S.

Courts also have delivered inconsistent rulings on whether the states can even ban them, thanks to the 2018 Farm Bill and its vague proclamation of legalizing hemp derivatives. That bill just got a one-year stopgap extension, so expectations are low that any clarification will come soon.

At one time, the producers of hemp-based delta-8 products, which could be found crammed on the counters at convenience stores, were looked down on by the regulated cannabis producers. They were considered to be cheap products and without regulation.

Despite that, consumers seemed pretty happy to buy the products, with Brightfield Group reporting that Delta-8 THC products have generated $2 billion in sales over the last two years.

Hemp producers now are taking it a step further, pushing out hemp-based Delta 9 products. Sales have been on fire, and some regulated cannabis companies are crossing the hemp line.

Here’s everything you need to know about hemp-derived delta-9 THC.

What’s Driving the Move into Hemp-Derived Delta-9?

The biggest motivators for crossing over to hemp-based delta-9 products is money. Since low-THC hemp is legal, businesses don’t face the same taxation and regulation that marijuana products do.

Scott Jennings the CEO of online clean cannabis marketplace Flower Market said he understands the decision by regulated cannabis companies to add hemp-derived delta-9 to the portfolio of products.

“They’re like, ‘We’ve got a dispensary that can’t put out a sign; we can’t advertise.’ They can’t do anything, and then across the street is somebody selling delta-8 or some kind of low-level delta-9 product, and they’ve got green neon cannabis leaf signs in this window,” Jennings said. “And all of that is legal.”

Customers have told him they aren’t fighting it anymore.

“In fact, I’ve got an interview scheduled next week with a company that is going full-blown into it,” he said.

1906 is one cannabis company that has crossed over to the hemp lines.

I see that as the natural progression of our original mission,” CEO and co-founder Peter Barsoom said. ”We made the decision back in April to go down the hemp-derived delta-9 path. We will be the first real national edibles brand to go down the (direct-to-consumer) route.”

He pointed out that intoxicating hemp beverages like CANN have already been available to buy online. Once his company became comfortable with the FDA’s stance on these products it was game on.

Barsoom likens it to alcohol. If you want a low-dose beer, you can buy it online, but if you want stronger hard liquor, you go to a liquor store. Same with cannabis and THC.

He also pointed out the economies of scale, since the company can make both products in the same facility.

“Today we’re creating ‘Go’ five milligrams,” he said. “Tomorrow, we’re creating ‘Go’ two milligrams. So we get the economic efficiencies of scale by being able to operate out of one facility that services multiple markets.”

What did the 2018 Farm Bill do?

The 2018 Farm Bill declared hemp legal if it had no more than 0.3% delta-9-tetrahydrocannabinol. It explicitly included “any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers.”

Under the new rules, hemp producers realized they could capitalize on the delta-8 compound and market the products as cannabis that could get you high, but not too high. That stirred up some consumer interest and regulators saw it as a low priority and essentially ignored the products.

With that green light, hemp producers stepped up to chemically synthesize delta-9.

“I think when (the government) creates two markets and one is just structurally more loose, which is what hemp is, it’s hard to not look over there and say, ‘Geez, why are we over here?’” Jennings said.

Hemp-derived producers operate with fewer taxes and less regulation in general.

But questions remain about where the line is with regard to psychoactive products. And the FDA has yet to issue any clarification.

Will the Next Farm Bill Fix Things?

Many operators, including Jennings, were pinning their hopes for clarity on the 2023 Farm Bill. But Congress punted any updates to 2024 with a stopgap funding bill.

Jennings believes the government will tighten the regulations around intoxicating hemp, with the argument centered on minors being able to buy these products.

But not everyone thinks Congress will pick up the subject in the upcoming farm bill.

“That conversation won’t even really begin in earnest until the beginning of December for a couple of weeks and then not get picked up until February again,” Bob Hoban, senior director at Clark Hill Strategies, said. “In fact, to the contrary, we’re talking about raising the THC limit to 1%, which would exacerbate this problem dramatically because then all the farmers are going, ‘You think the THC flower situation now is challenging? Wait ’til you see that.'”

Hoban argues that the farm bill is intended to help farmers grow more, not less, and putting restrictions on hemp farmers goes against the spirit of the Farm Bill. He also thinks that lawmakers are content to let states figure it out on their own.

What’s Next?

The division within cannabis was on full display when the Cannabis Regulators Association (CANNRA) sent a letter to legislators asking them to craft language cutting the “loophole.” It called on regulators to expand the definition of THC to include THCA.

“THCA is the precursor to delta-9 THC and readily converts to delta-9 THC when heated, combusted, or aerosolized,” the letter said.

The letter also recommended that federal lawmakers make it clear that states can enact their own, stricter policies governing hemp and cannabinoid products – which they’re doing. At the same time, som states are embracing hemp-derived products.

Jennings believes that so many hemp operators are moving into the market so quickly that pure economics will take over.

“They will flood the market and drive down prices, bringing an end to the quick buck,” he said. He also thinks regulation will soon set in and that will make it less desirable for producers.

Hoban, on the other hand, expects a different outcome from the divide.

“The conflict will exist until everyone realizes the inevitable merging of the systems,” Hoban said. “These systems have to merge. The hemp people are dedicated to hemp, and the marijuana people are dedicated to marijuana. Instead of just being business people and saying, ‘These are all just mechanisms to derive products that are either ingredients or consumer products that people want.’ That’s all this is.

“Cannabinoids, the plant, flowers, they’re merely ingredients or commercial products,” he added.


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Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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