Illinois Dispensary Workers Strike When It Hurts the Most

Dispensary workers in Illinois are fed up with what they say are low wages and unfair practices committed by a major dispensary chain. 

Members of Teamsters Local 777 members at three RISE Dispensaries in Chicagoland, a subsidiary of Green Thumb Industries, walked off the job on April 19 at 4:20 p.m. CT to launch an open-ended unfair labor practice (ULP) strike. It’s the largest strike of its kind in the state to date, according to an April 19 press release.

“RISE workers are very grateful for the support and kind words they have received from their fellow Teamsters throughout the country, as well as the Illinois cannabis community,” Matt McQuaid, a Teamster representative, told High Times in an email. “We are still on the picket line.”

Courtesy Teamsters 777

Local 777 members say that RISE dispensaries demanded that workers at the Niles location remove pro-union buttons while they were on the job, which is a violation of the National Labor Relations Act. The Chicago Tribune reports that the Teamsters planned to strike just before the biggest day in sales for dispensaries. The strike arrives as workers in multiple states push for a higher minimum wage to meet the cost of living.

“The company’s demand that the workers remove their pins is part of a broader pattern of disrespect to their workforce,” stated Jim Glimco, Local 777 President. “GTI is refusing to offer these men and women wages commensurate with the cost of living, or retirement package that is acceptable for Teamsters. It’s far past time this company recognize the people responsible for all of the success it’s had.”

RISE opened 11 dispensaries across the state of Illinois, with six total in the Chicagoland area. WGN 9 reports that RISE Dispensaries parent company, Green Thumb Industries, plans on keeping the stores open despite the impact from the strike.

BREAKING: new video shows cannabis Teamster workers at RISE dispensary in Joliet IL walking out at 4:20 pm yesterday to begin their Unfair Labor Practice strike.

Time for @GTIGrows to stop retaliating against workers and agree to a fair contract! #420Strike pic.twitter.com/JIPOyWVUDY

— Teamsters Cannabis Workers (@Teamsters420) April 20, 2023

“These workers deserve prosperous, middle-class careers and they’re willing to fight for it,” stated Peter Finn, Teamsters Western Region International Vice President and Food Processing Division Director. “They aren’t walking off the job by themselves. They’re walking onto that picket line as one unified front, with the backing of more than 1.2 million Teamsters throughout North America.”

Several Illinois dispensary workers also chimed in to show their support for better wages that would show their true value.

“We’re focused on creating a high-quality career here and we need a wage that reflects how valuable we are,” stated Reilly Drew, a patient care specialist at the RISE Niles dispensary. “People think of advancing as moving up the ladder, but in this situation, it’s about raising the whole floor up for everyone. We want to make this a prosperous industry because it’s a profitable industry.”

Courtesy Teamsters 777

“The forceful removal of these buttons shows us how GTI feels about our movement, and how little they care about us as workers,” said Julie Evans, a patient care specialist at the RISE Rock Creek Boulevard dispensary in Joliet. “I feel that it is extremely unfair, disrespectful, and rude that Niles was forced to remove their insignias while other stores were not. I stand with my fellow Teamsters in solidarity against this unfair labor practice.”

Workers described the risks they encountered that took place during a strike.

“I voted to strike in solidarity with my RISE coworkers over the baseless and uninformed removal of the union button, which was intended to reduce representation in our stores,” said Brandon Basil, a patient care specialist at the Colorado Street RISE dispensary in Joliet. “We’ll fight for a fair contract with more to offer for our incredibly hardworking brothers and sisters in the cannabis industry, including a living wage!”

Teamsters Local 777, est. 1937, represents workers in a wide variety of industries in the Chicago area. For more info, visit their website.

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Worms Can Also Get the Munchies from Cannabis, Study Shows

It’s a well-known fact that using cannabis often leads to the “munchies,” prompting consumers to eat more and crave tasty, high-calorie foods. Now, a new study published in the journal Current Biology has found that cannabinoids can give worms the munchies, too — specifically, nematodes (C. elegans). 

“Cannabinoids make nematodes hungrier for their favored foods and less hungry for their non-favored foods,” said study co-author Shawn Lockery in a news release. “Thus, the effects of cannabinoids in nematodes parallels the effects of marijuana on human appetites.”

Lockery added that nematodes diverged from the lineage leading to mammals more than 500 million years ago, calling it “truly remarkable” that cannabinoids’ effects on appetite have been preserved through this amount of evolutionary time.

The study was originally inspired by Oregon’s legalization of cannabis in 2015. Lockery said their lab was examining nematode food preferences, relating to research on the neuronal basis of economic decision-making, when they decided to investigate whether cannabinoids would alter their preferences.

Nematodes also look a lot more like people at the molecular level than many other species, researchers note, begging the question if the feeding effects of cannabinoids would persist across species.

Cannabinoids bind to cannabinoid receptor proteins in the brain, nervous system and other parts of the body, researchers explain. These receptors respond to endocannabinoids, which are molecules already in the body. The endocannabinoid system is known to play a crucial role in a number of bodily functions, like eating, learning, memory, reproduction and more.

Researchers demonstrated that worms exposed to anandamide, an endocannabinoid, ate more of their favorite food, with effects dependent on the presence of the worms’ cannabinoid receptors. 

Further studies had researchers genetically replace the nematode cannabinoid receptor with the human cannabinoid receptor, finding that animals responded normally to cannabinoids. Researchers said this discovery emphasized the commonality of cannabinoid effects in nematodes and humans, adding that the effects of anandamide depend on neurons that play a role in food detection.

The study concluded, “In mammals, administration of THC or endocannabinoids induces hedonic feeding,” specifically citing that anandamide was shown to alter food consumption and “differentially alter appetitive behavior.”

Lockery elaborated, explaining that the sensitivity of one of the main food-detecting olfactory neurons in nematodes is “dramatically altered” by cannabinoids. He explained that, once exposed to cannabinoids, the worm becomes more sensitive to favored food odors and less sensitive to non-favored odors.

“This effect helps explain changes in the worm’s consumption of food, and it is reminiscent of how THC makes tasty food even tastier in humans,” Lockery said.

Of course, it’s simply fun to know that worms can have a similar experience to a human chowing down on a bag of Cheetos after smoking a blunt, but Lockery explained how these findings have meaningful, practical applications.

“Cannabinoid signaling is present in the majority of tissues in our body,” he said. “It therefore could be involved in the cause and treatment of a wide range of diseases. The fact that the human cannabinoid receptor gene is functional in C. elegans food-choice experiments sets the stage for rapid and inexpensive screening for drugs that target a wide variety of proteins involved in cannabinoid signaling and metabolism, with profound implications for human health.”

There are still a number of outstanding questions to explore on this issue, namely how cannabinoids change the sensitivity of nematodes’ olfactory neurons, which don’t have cannabinoid receptors. Researchers were also curious to study how psychedelics interact with nematodes in the future.

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Australian Cannabis Activists Protest THC Ban for Drivers

A group of Australian cannabis activists took to the streets of Sydney in a motorcade of military vehicles to protest the failed War on Drugs and policies that punish drivers who are found to have THC in their system. Known collectively as the Who Are We Hurting? Army, the group of activists staged their protest on 4/20, the global cannabis community’s high holiday. The contingent of military vehicles including a tank traveled by the Sydney Opera House and Sydney Harbour Bridge, two well-known landmarks in the Australian city that served as the backdrop for a protest on April 20, 2022, that featured cannabis imagery projected on the iconic structures. 

The organizers of last year’s 4/20 protest, Alec Zammitt and Will Stolk, have been criminally charged for their actions under a law that bans the projection of commercial images on the Sydney Opera House. The pair are on bail pending prosecution for their actions, which they maintain are a constitutionally protected protest of cannabis prohibition in Australia.

For this year’s demonstration, the group of activists secured a fleet of armored military vehicles to travel throughout Sydney to deliver facts about cannabis directly to Australian news outlets. The protest also aimed to highlight the failures of the cannabis policy in the Australian state of New South Wales, which penalizes drivers who are found to have THC in their system. Under the law, drivers found to have THC in their system are subject to criminal penalties including license suspension or revocation, stiff fines and imprisonment. Zammitt said that the military-style action was designed to highlight the harmful policies of the failed War on Drugs.

“This visual statement aims to highlight the need for a new approach to drug-driving policy, one that prioritizes harm reduction and treatment over punishment and incarceration,” Zammitt said in a statement to the press. 

The activists note that a 2019 study by Sydney University’s Lambert Initiative, a research program investigating the medical potential of cannabis, found that while drivers under the influence of high-potency THC products exhibited more lane weaving, other measures showed that intoxicated drivers were somewhat safer. Intoxicated drivers tended “to leave a larger gap between them and the car in front” and showed “no tendency to speed,” according to the research.

“Driving with THC, shouldn’t make you an enemy,” Zammitt added. “Driving laws need change. Cannabis patients deserve equal range.”

The protest was also designed to educate the public about the benefits of cannabis legalization, including enhanced personal freedom and the potential for new sources of revenue for public services that could come with regulating and taxing commercial cannabis production and sales.

“We want to publicize the discussion around cannabis in Australia and ask the government, who would be hurt by an amnesty?” said fellow cannabis activist Stolk. “We also want to educate the Australian taxpayer on the benefits of fully legalizing cannabis in Australia. There is a huge amount of money that will flow into the coffers of the Australian government, for use in healthcare, schools, and roads, from the tax excise that will be taken from legalized cannabis.”

“We also want to highlight the fact that the 75-plus year war on drugs hasn’t worked and has cost the taxpayer billions of dollars fighting a war that cannot and will not ever be won,” Stolk continued.

The cannabis policy reform movement in Australia got a new boost recently when the Legalise Cannabis NSW party elected Jeremy Buckingham as its first member of Parliament. Buckingham, a former Green Party member, said that he will spend much of his time in office advocating for the legalization of cannabis and related policy reforms.

“I am honored to have been elected as the first MP for the Legalise Cannabis NSW party,” he said in a statement. “I am committed to advancing the cause of drug law reform and working towards a more just and equitable society. I look forward to working with my colleagues in parliament and with the broader community to make this vision a reality.” 

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Cannabis Scams 3.0

In an era of Theranos, Fyre Fest, FTX and WeWork, cannabis scams, frauds, and scandals probably pale in comparison. However, cannabis scams (and their evolution) are still worth noting, spotting, and avoiding at all costs. I’ve written about cannabis scams in the past (see here), and it’s one of my favorite topics given the still-emerging nature of the industry (plus, federal illegality attracts a lot of personalities and buyers should definitely beware). And since the cannabis economy is getting incredibly lean, scams are back on the rise. Even the Better Business Bureau has an alert out on dispensary scams. So, this is my update on cannabis scams 3.0.

Cannabis pump and dumps remain alive and well

In a pump and dump, fraudsters increase the demand and trading volume in a stock, and the new investors create a sharp rise in its price. Once the stock rises, the scammer group then sells its position at the peak to make a large short-term profit. So we’re talking about publicly traded companies here.

We have more publicly traded cannabis companies than ever thanks to continued state-by-state legalization and the 2018 Farm Bill. Back in 2016, I warned about pump and dumps with OTC-traded cannabis companies. Looks like not much has changed for some of these bad actors. Most recently, in March of this year, American Premium Water Corp. (a cannabis (technically CBD) water company) came under fire with the Department of Justice for allegations of a $10 million classic pump and dump. And don’t forget about Cannabiz Mobile where the company’s former, secret, owner just pled guilty to one count of securities fraud for a cannabis pump and dump and is now facing up to 20 years in prison and a $5 million fine.

Spotting a pump and dump in cannabis means looking for: a) drastic upticks in stock price on the back of b) highly concentrated stock promotion with c) no real commercial reason to justify the rise. This is the “pumping”, and in cannabis elevated social media interactions and unsolicited promotional emails from thinly traded cannabis companies may also be a tell. You may also see unregistered, unlicensed, anonymous “advisors” come out of nowhere to promote the stock.

Burner licenses and illegal operations

I recently wrote about the scourge of burner licenses plaguing California’s cannabis industry. And I have no doubt that California cannabis product is winding up in a multitude of states, not just New York. Burner licenses are symptomatic of another grand cannabis scam: straight up illegal operations. Investors and buyers need to be so, so careful when evaluating state-licensed cannabis companies. Due diligence is specialized and obviously key. And even if you do your homework, you should ensure that you have enough control rights to keep an eye on day-to-day management.

A couple of times now, I’ve had clients come to me saying that revenue doesn’t add up for the amount of product that apparently went out the door. Or track-and-trace records don’t make sense compared to inventory that’s left the building. If you’re seeing these issues in your cannabis business operations, someone may be illegally diverting product out the back door (and likely not paying the corresponding taxes). That’s a huge no no, which can land the entire operation in hot water with the state and Feds.

Cannabis crowdfunding

Some years back, the SEC released new crowdfunding rules designed to let the small fry swim with the sharks. Today, companies can solicit $2,500 from anyone (and more in many cases) in exchange for an equity stake in their business. Companies can raise up to $1,235,000 (adjusted up from $1 million due to inflation) annually through these offerings, which fall under Title III of the 2012 JOBS Act. As we have written before, the SEC does not care whether your business is a cannabis business, so long as you follow its offerings rules.

Though the SEC’s rules for crowdfunding advertising are incredibly strict, be mindful that the emerging nature of cannabis breeds some bad behavior that may fall through the cracks. Take, for recent example,  TruCrowd Inc. That crowdfunding platform hosted two crowdsource offerings for cannabis and hemp companies, which sold up to $2 million of unregistered securities. The funds were then diverted for personal use by the scammers.

Cannabis and crypto

For some reason, certain cannabis companies and investors believe that crypto is the way for cannabis companies to solve their inability to access financial institutions (guess they’ve never read the 2014 FinCEN Guidelines?). In any event, no, crypto cannot and will not answer the issue of federal illegality when it comes to banking. In fact, some states have even banned its use altogether when it comes to cannabis commerce because it can defeat the purpose of traceability and uncovering illegal conduct altogether. (See here for a recent account in Washington State regarding illegal sales of cannabis and the use of crypto to assist.)

If you’re seeing investment offers from cannabis companies claiming they can solve their banking woes with crypto, definitely think twice. One of the bigger scandals I’m watching is what’s happening with JuicyFields, which appears to be a ponzi, crypto, and crowdfunding cannabis scheme all wrapped into one. You can’t make this stuff up.

Bank fraud

Somewhere up there with crypto cannabis frauds is bank fraud. Cannabis businesses are so desperate for financial relief and ease of business, that they’ll try their hands at a lot of nonsense, including bank fraud, and including defrauding credit card companies. The credit card-related fraud is nothing new where cannabis companies (and even ancillary cannabis companies) will lie to the credit card companies about their line of business, or they’ll even use third party management or consulting companies to access some credit.

Back in 2021, the former CEO of Eaze pled guilty to “one count of conspiracy to commit bank fraud in connection with an alleged scheme to deceive banks into processing more than $100 million worth of credit and debit payments for marijuana purchases.” And don’t forget your run-of-the-mill bust-out schemes either. The credit card companies always eventually figure out this low level scheming, which is why, one day, you may be able to pay your dispensary with a credit card and the next day it’s back to cash.

The other interesting kind of fraud–at least related to financial institutions–is that, as a cannabis business, you may be solicited for banking-like services in order to make your operational life easier. I wrote about this back in 2018, and not much has changed since then. We have no federal changes around cannabis banking after all. Accordinly, cannabis businesses need to be mindful of these roundabout “banking solutions”, and make sure that they’re not getting the slip on what’s actually a fraudulent enterprise designed to steal their money.

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Louisiana Legislators Say They Unknowingly Legalized Hemp Products With THC

Louisiana state Sen. Stewart Cathey and Sen. Jay Morris stated in a recent Senate Agriculture Committee hearing on April 18 that legalizing hemp products with THC was unintended. “Last session we unknowingly created a recreational THC market in Louisiana,” Cathey said at the meeting, according to The Daily Advertiser. “It was not the intent of the Legislature to authorize a statewide flood of unregulated THC psychoactive drug marketplace.”

Cathey introduced Senate Bill 219 on April 10, and the most recent meeting held on April 18 was the first time the bill was discussed. SB-219 proposes to change state law that allows up to 8 mg of THC in a hemp product. Instead, it proposes a maximum of 2 mg THC. “If we’re going to legalize [recreational THC], it needs to be done openly and honestly, which wasn’t done,” Morris explained. “It was sold to the Legislature as if we weren’t allowing psychoactive materials.” As of the April 18 hearing, the bill was approved by the committee to appear before the Senate.

While Senators such as Cathey and Morris are working to amend the state’s current law, advocates and business owners spoke about the detrimental effects that amending the law will cause.

Business owners like Jason Garsee who owns Str8W8 Cannabis and is also the president of the Gulf South Hemp Association spoke publicly regarding how changes to current law will only hurt their businesses. “This bill would absolutely gut this industry,” Garsee said. “This bill you’re carrying right now is putting people out of business in your town, state and district. It would decimate my investment and my business.”

Likewise, Black Farmers Hemp president John Ford Lafayette shared similar concerns. “This doesn’t make any sense,” Lafayette said. “We’re trying to grow an industry.” Casey White of Pippi’s Purpose said that they’ve spent their life savings to open their storefronts. Another business owner, Virgin Hemp Farms owner Blaine Jennings, described the bill as “a direct attack on the thousands of business owners in this booming industry.”

Louisiana House Speaker Clay Schexnayder also recently introduced a bill (House Bill 605) to amend current hemp law, but not to the extent of Cathey. Schexnayder has introduced four hemp-related bills since it became federally legal in 2018.

In March, Schexnayder blamed the Louisiana Health Department for mishandling the implementation of the hemp bills. “It was crystal clear in what we wanted as a Legislature,” Schexnayder described.

On April 10, the Louisiana Legislative Auditor released the details of its audit of the Louisiana Department of Health (DOH). Entitled “Oversight of consumable hemp products,” the report found that 36 of the 2,564 registered consumable hemp products approved by the DOH were “prohibited.” Additionally, 198 edibles products surpassed the 8 mg THC limit, among other examples of not complying with state law.

Louisiana’s medical cannabis industry has become successful but recreational cannabis is not currently legal. Cannabis flower sales began in January 2022.

Also in January 2022, Louisiana Senate Candidate Gary Chambers smoked a blunt in a campaign video speaking about the failed War on Drugs and how it has affected people of color. “Every 37 seconds, someone is arrested for marijuana. Since 2010, state and local police have arrested an estimated 7.3 million Americans for violating marijuana laws, over half of all drug arrests,” Chambers said in his video. “Black people are four times more likely to be arrested for marijuana laws than white people. States waste $3.7 billion enforcing marijuana laws every year. Most of the people police are arresting aren’t dealers, but rather people with small amounts of pot, just like me.”

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Cannabis Collections Headaches and What to Do

On this hallowed 4/20, while consumers and businesses celebrate cannabis near and far (which is great!), it’s important to be mindful that the cannabis industry is getting financially pummeled nationwide. For the cannabis companies able to survive this rocky time, cannabis collections are becoming an increasing headache as other cannabis businesses fold and/or just ignore payment obligations. Hopefully, cannabis companies have persisted in getting their intra-industry agreements in writing, through which there’s a clear path to recourse against either licensees who can’t or (more likely) won’t pay their bills. In any event, the cannabis collections process is no easy task.

What to do if you’re owed money by a cannabis company

Whether you’re a manufacturer, grower, distributor, retailer, or something else, you’re likely seeking payment from another cannabis licensee for whatever exchange of value went down in the past. For example, retailers sometimes have fee slotting agreements where they charge wholesalers for prime shelf space. Or perhaps you’re an intellectual property licensor that’s licensed your intellectual property to a cannabis company for a royalty. Or you might be a distributor that distributes product to retailers on net terms. Chances are at this point, regardless of the commercial relationship, the party that owes you money can’t or won’t pay, and they’ve maybe even started to ignore you. In that case, turn to your agreement with the other side and go straight to the breach or event of default section. That’s your roadmap for recovery.

Breach of contract

Once the other side is in breach of whatever performance obligation (here, timely payment), your agreement will tell you what you can and cannot do. Most agreements will have some kind of grace period for a default in order to allow for a cure. If you’ve given any relevant notices and are past the cure period, or there isn’t one, next look to see if you have grounds to terminate the agreement (and, even better, if there’s a liquidated damages provision that favors you).

Even if you don’t have termination rights, if the other side is in breach and there’s no cure, you typically don’t have to continue performance under the agreement. If the company on the other side breaches regarding non-payment, be sure to look for any other breaches they’ve committed (like representations and warranties, a “change in control”, an invalid assignment, etc.).

Demand

Now that you’re armed with your evidence of breaches, it’s time to make a demand for cannabis collections. This is the part where you write a demand letter to the other side laying out the breaches and failure to pay, demanding that the other side make payment by a date certain, or face court action. Recognize that in this part of the cannabis collections process, the other side doesn’t necessarily have a legal obligation to respond to you or even negotiate. When times are financially tough like they are now, the recipient will likely take their chances with just ignoring the demand, hoping that you’ll go away since you don’t want to throw good money after bad.

Cannabis collections

If the other side ignores your demand, you may consider sending the matter to a debt collection agency (the alternative is to sue; see below). As a last-ditch effort before suing, collection agencies will take a portion of the amount owed as their fee (and, usually, if they don’t recover, you don’t pay). This is not ideal, but it could be faster and cheaper than suing depending on the amount you’re owed. Aggressive collections agencies are going to pursue the other side with calls, notices, and emails (within the bounds of the law) in order to get the other side to pay. And we’re to the point in the industry where at least one cannabis-specific collections firm exists.

Suing

Pretty much no one but litigators (and not even all litigators!) want to be in court. However, there are times where suing is your only option if you have any intention of recovering your financial damages. We break down in great detail here all of the elements of a breach of contract claim (in California, but the elements are relatively universal). If the other side ignored your demand, blew off your collections agency, and appears to be somewhat in the wind, it may be time for the power of a lawsuit.

Once served with a complaint for a breach of contract claim (or any claim), the other side must respond within a certain amount of time or face a default judgment. If you secure a default judgment, you can start attaching and seizing personal and real property belonging to the judgment debtor. If the judgment debtor is a business, that means real property, equipment, lease interests, inventory, etc. If the judgment debtor is an individual (or maybe an individual guaranteed the breached contract), you can attach personal property and even garner wages with that judgment.

The lawsuit is the ultimate power tool to get someone’s attention, and the ultimate hammer to really make them hurt financially. The filing of the lawsuit could even hasten settlement negotiations more so than a demand letter or a threatening call from a collections agency.

Do regulators matter at all with cannabis collections?

The short answer is typically no. Failing to pay bills when due (other than tax) usually isn’t going to amount to an actionable regulatory violation with which you can approach regulators for help. However, in California at least, the state is contemplating the passage of AB 766, which would provide some relief to licensee debtors in these situations (at least after January 1, 2024). The summary of that bill reads:

This bill would, except as specified, require a licensee to pay for goods and services sold or transferred with a total value of at least $5,000by another licensee no later than 15 days following the final date set forth in the invoice or invoices. The bill would require a licensee who sold or transferred goods to another licensee and who has not received payment in full 15 days after the final date set forth in the invoice to report the unpaid invoice to the department, as specified. The bill would require the department to notify a licensee of this report, issue a notice of warning, or, in its discretion, issue a citation or commence a disciplinary action against the licensee if the licensee fails to pay the outstanding invoice in full by 30 days after this notification, as specified, and, for multiple failures to comply with these provisions, commence a disciplinary action, as specified.  The bill would prohibit the licensee from purchasing goods and services from another licensee on credit until the licensee pays the outstanding invoice in full. The bill would, for purposes of these provisions, prohibit the final date set forth in an invoice for payment of the invoice from being later than 30 calendar days from the date the goods or services are sold or transferred. The bill would specify that these provisions do not apply to an invoice for a sale or transfer made before January 1, 2024. 

We’ll blog more about AB 766 soon, so stay tuned.

In the end

As industry attorneys, we don’t want to see cannabis businesses cannibalize each other. At the same time, businesses need to honor their agreements or plan accordingly in a way that promotes settlement and continued performance without leaving anyone empty handed. We know it’s tough times out there right now, and we sincerely hope that you don’t find yourself on either end of cannabis collections.

In the meantime, if you haven’t seen it, be sure to watch our law firm webinar about distressed assets in the cannabis industry. We covered receivership, bankruptcy (or lack thereof), assignments for the benefit of creditors, and secured interests. And don’t skip the follow-up takeaways either.

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Colorado Lawmakers Introduce Delta-8 THC Regulation Bill

Two Colorado lawmakers have introduced bipartisan legislation to regulate intoxicating hemp-derived cannabinoids including the increasingly popular compound delta-8 THC. The measure, Senate Bill 271, was introduced earlier this month by Republican Senator Kevin Van Winkle and his Democratic colleague, Senator Dylan Roberts.

Last year, Colorado lawmakers passed legislation authorizing the Colorado Department of Public Health & Environment (CDPHE) to begin the process of regulating hemp with intoxicating cannabinoids including delta-8 THC, a compound that can be produced from CBD. Although not as potent as delta-9 THC, the cannabinoid associated with the classic marijuana high, the legality of delta-8 under the 2018 Farm Bill has led to products with the compound being sold at retailers including convenience stores and smoke shops. Often, the products are marketed without restrictions such as maximum potency or a minimum age for purchasers.

The legislation passed in 2022 also established a task force to investigate intoxicating hemp cannabinoid products and to make recommendations for legislation and administrative rules. The recommendations made by the task force were then used as the basis for Senate Bill 271, according to the sponsors of the measure.

“Super potent products can be purchased online by anyone, including teenagers,” said Truman Bradley, a member of the task force and the executive director of the Marijuana Industry Group, a trade association for regulated cannabis businesses in Colorado.

Bill Regulates Delta-8 THC Serving Size

Under the new legislation, hemp products with more than 2.5 milligrams of delta-8 THC would be regulated and sold only at licensed cannabis dispensaries in the state. Sales of delta–8 THC products through unregulated outlets such as convenience stores or online retailers would be prohibited. 

Senate Bill 271 also tasks the CDPHE with regulating and registering hemp products, including certain intoxicating hemp products. The state Department of Revenue’s Marijuana Enforcement Division would regulate intoxicating products through administrative rules that would either authorize or prohibit the chemical modification, conversion or synthetic derivation of hemp compounds to create certain types of intoxicating cannabinoids. The agency would also be responsible for establishing labeling and advertising requirements, production and testing rules, and inspection and record-keeping standards.

Van Winkle said that he has some concerns about the legislation, which may be subject to amendments as the bill makes its way through the legislative committee process.

“The current legislation comes directly from the task force largely,” said Van Winkle. “Now we’ll need some changes to it. Right now, I believe that the limits are a little too high.” 

“That is probably enough to get people in Colorado high, especially kids,” Van Winkle added. “So we might need to be lowering that limit and then put an overall package size limit.” 

Senate Bill 271 also does not contain any limits on the number of servings that can be contained in a package, leading to the possibility of products that contain a high amount of delta-8 THC in one package.

“Right now, the bill doesn’t include a maximum package limit on THC,” Bradley said. “So you could have an unlimited amount of gummies, each 2.5 milligrams. That’s a problem.” 

In a statement released last week, the Marijuana Industry Group said the intoxicating hemp market is “selling hundreds of millions of dollars in completely unregulated, untaxed products annually without ID checks, purchase limits, or safety restrictions. Under current law, kids can purchase these products, often shaped like popular candy, online and have them shipped anywhere or even pick them up at a local gas station or grocery store.”

In 2021, the Colorado Department of Health and Environment, in collaboration with the Marijuana Enforcement Division and Department of Revenue, issued a policy memo to clarify that chemical modification or conversion of cannabinoids from industrial hemp is not allowed. But Robert Hoban, an attorney specializing in cannabis law, said that the policy is not enforceable.

“The state of Colorado issued a policy statement last year that said you can’t sell these compounds in the state,” said Hoban. “That’s not the law. That’s merely a policy memo.”

Bret Worley, the CEO of hemp-derived cannabinoid wholesaler MC Neutraceuticals, said that he supports the current version of Senate Bill 271.

“I don’t truly believe that there’s any risk or concern at two and a half milligrams for a hemp-derived cannabinoid product,” said Worley, adding that he believes parents have to take responsibility for the children’s well-being.

“I believe, just like any medications, they should be locked up somewhere where a kid cannot reach them,” he said.

Senate Bill 271 has been assigned to the Senate Finance Committee, which scheduled a hearing on the legislation for April 18.

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