The Path Forward: An Evolved Strategy for Cannabis Reform

In early June, I had the privilege of attending the Cannabis Regulators Association (CANNRA) External Stakeholder Conference in Minnesota in my capacity as Vice Chair of the National Cannabis Industry Association and for my perspective on the beverage category. Throughout this two-day event, a clear consensus emerged among participants: there's a pressing need for a “hard reset” in our regulatory frameworks to encompass a more holistic view of cannabis, integrating both hemp and marijuana. Achieving this is undoubtedly challenging, yet essential, driven by several compelling factors:

• Insights and Evolution: As we've developed the industry, we've gained valuable insights. There are successful practices and notable failures on both sides of the cannabis spectrum, enriching our understanding and shaping future directions.

• Regulatory Diversity: Across the states, the approach to cannabis regulation varies significantly—from stringent marijuana regulations reinforced by hemp bans to more integrated markets like Minnesota, to the confounding "Red State Weed" markets banning cannabis while supporting intoxicating hemp.

• Rope and Dope: It’s become increasingly clear to regulators and legislators that hemp transcends its traditional uses as 'rope' and steps into the realm of 'dope.' This shift challenges us to navigate the complexities of THC, moving beyond the safe confines of the hemp-CBD narrative to address consumer safety and clarity.

The conference brought together approximately 100 regulators from 35 states and the Netherlands, along with 200 external stakeholders including business leaders, professional and advocacy group representatives, FDA and TTB officials, and science and standards experts.

CANNRA’s Role: It’s worth noting—especially as this often arises in discussions—that CANNRA serves as a trade organization for cannabis regulators, including those overseeing hemp. While it doesn’t engage in lobbying, CANNRA provides a crucial platform for regulators to support each other and occasionally endorses collective positions through official communications. Importantly, these regulators implement and enforces rather than create laws. If you're upset about the laws, that's on the legislators and/or voters.

A unifying desire was evident among all attendees: to ensure safe access to cannabis and prevent the re-criminalization of naturally occurring cannabinoids.

As we confront the realities of legislative inertia and external influences such as the alcohol industry's lobbying efforts, a comprehensive understanding of these dynamics is crucial. Below, I outline my perspective on the evolving landscape and propose a strategic path forward, with a particular focus on the potential of low-dose cannabis beverages to lead the charge.

State of The Cannabis Union

In the realm of cannabis regulation, there's a persistent dialogue about the intent of the law versus its enforceable text—the letter of the law. As someone deeply engaged with the industry but not a lawyer, my understanding is straightforward: the letter of the law dictates current enforcement, while the intent reflects the legislative direction, pending persuasion otherwise. While the near term ambiguity often leads to lawsuits, the prevailing concern among many of my peers is the potential for a harsh legislative backlash if the alignment between intent and enforcement continues to lag.

Currently, our collective ecosystem is grappling with the implications of the last Farm Bill, transitioning from initial reactions to a deeper comprehension of its long-term effects. This shift from opinions to grounded observations is critical. Notably, FDA representatives at the conference reported a worrying accumulation of adverse events associated with hemp-derived cannabinoids. These incidents, while not catastrophic so far, signal a precarious position; we are seemingly just one serious incident away from prompting Congress to impose stringent measures and enforcement on the hemp sector.

During the discussions, two remarks from policymakers captured the prevailing sentiment:

1. "Look what happens when we’re not regulating the industry to the Nth degree." This comment reflects concerns over the hemp industry's current laissez-faire approach, suggesting that without tighter regulation, we might inadvertently push the pendulum towards an overly restrictive regime, mirroring the challenges faced by the more heavily regulated marijuana markets.

2. "Who are you standing next to?" This question underscores the importance of associations in this tightly scrutinized industry. It highlights the reputation risks and the perception challenges faced by groups advocating for the hemp industry's continued deregulation.

These insights underscore the critical need for a balanced approach to regulation—one that not only safeguards public health and safety but also fosters a stable, thriving industry.

The Farm Bill Today

For those following legislative developments, the passage of the Farm Bill out of the House Agriculture Committee, with the inclusion of the controversial Miller Amendment, marked a significant moment. This amendment seeks to reconfigure the hemp regulatory framework—potentially killing the hemp industry according to leading industry advocates. Yet, the legislative journey is far from over. Historically, the shortest time for a Farm Bill to be enacted was nine months, with the longest stretching nearly two years. This iteration is particularly complex and arrives at a time when Congress faces numerous challenges.

The Miller Amendment emerged not from initiatives by groups like the US Cannabis Council (USCC) or the American Trade Association for Cannabis and Hemp (ATACH), nor from prohibitionist movements lime many think, but as a congressional response to the actions of the least scrupulous operators within the hemp industry. This resonates deeply amongst operators, highlighting a longstanding fear of being defined by the industry's worst participants.

Advisors at the conference cautioned that opposition to the Miller Amendment, if perceived as mere obstinacy, might actually strengthen its chances of passing. The more constructive approach would involve forming coalitions to offer thoughtful compromises, crafting a unified response that acknowledges the amendment's intentions while proposing viable alternatives to the Senate (more to come on this later).

Understanding the Farm Bill’s role is crucial—it lays groundwork for a legal cannabis framework but does not encompass the full legalization and regulation needed. The Bill should aim to clarify definitions around hemp, perhaps distinguishing between industrial hemp and varieties intended for cannabinoid extraction, without expecting to address all aspects of cannabis legalization.

Echoing a recent CANNRA position, it's vital to advocate for state autonomy in cannabis regulation, recognizing the benefits such flexibility has historically provided the cannabis sector. This stance opposes federal preemption, an approach reinforced through my discussions with ATACH leaders, especially concerning controversial measures in states like Arkansas. Stated simply, we generally should not want federal law to overrule state law.

To advance the broader dialogue, we must resolve the ongoing "civil war" between marijuana and hemp sectors. Achieving alignment might be daunting, but the THC beverage sector presents a promising arena for consensus and actionable steps. The remainder of this article will explore how this specific focus can serve as a blueprint for wider industry strategies, emphasizing the need for precise actions over broad discussions at this critical juncture.

Why THC Beverages? 

For those who haven't followed the progression of this article series, I recommend starting with the initial piece, "Low Dose Beverages Will Pave the Way for Legalization." This foundational article and the seven-part series that followed sets the stage for the arguments presented here, sparing the need to revisit all the details in this already expansive article. However, to emphasize why THC beverages merit particular attention, consider the following key points:

1. Cross-Industry Fluidity: THC beverages provide a unique opportunity for synergy between the hemp and cannabis sectors. Their market dynamics allow for easier alignment across different regulatory environments, and they stand distinct from the complexities of the THCA conversation. Many brands in the market already operate across multiple regulatory structures.

2. Accessibility and Safety: Low-dose THC beverages are designed to be approachable and manageable, significantly reducing the risk of adverse reactions. The fast onset and the form factor make it much easier to titrate one's experience. This approachability enhances their potential for broader normalization and social acceptance within the regulatory frameworks, while also building familiarity with THC consumption for new consumers.

3. Strategic Industry Partnerships: The beverage alcohol (Bev-Alc) sector shows a substantial interest in THC beverages, bringing powerful advocacy and lobbying capabilities with little objection to the proposals outlined below. These partnerships can leverage existing distribution networks and market familiarity, presenting a robust case for inclusion in mainstream commerce.

With these compelling reasons in mind, let's delve into the strategic implications and actionable steps necessary to advance the THC beverage sector.

Self-Regulation Inspires Legalization, but Health and Safety Must Come First

Our journey toward regulatory acceptance must begin by recognizing our current position. In the hemp marketplace, the industry's expectations of perpetual growth may soon face reality checks. Congress has shown a predominant interest in community health and safety over mere commerce. As such, any attempt to preserve the status quo could be perceived as ignoring broader societal concerns, potentially leading to stricter regulatory responses. The imperative for the cannabis sector is to offer viable alternatives that emphasize the benefits of thoughtful regulation over mere commercial gain. Immediate efforts should focus on robust self-regulation practices.

Intoxication

The industry needs to confront the stigma around the term 'intoxication.' Evading this term with euphemisms or obscuring the psychoactive properties of THC does a disservice to the discourse. Acknowledging and addressing the intoxicating effects head-on will foster more honest and progressive discussions, especially as low-dose beverage aligns with the alcohol industry.

Standardization and Labeling

Uniform labeling is crucial for consumer safety and industry transparency. This includes clear indications of a product's intoxicating potential (see Pamela Epstein's efforts with ASTM International and TICC) or its absence (THC-free), alongside standard nutritional information (not supplement) and precise ingredient disclosures. These measures are fundamental to building consumer trust and regulatory compliance.

Derivation and Dosing Limits

Regulatory middle ground can be found in reasonable dosing limits and clear definitions of allowable cannabinoids, whether naturally expressed or derived. Federal regulators want to know what low-dose means. Proactively establishing these parameters, as we are doing through the Cannabis Beverage Association, can preempt arbitrary and stricter impositions from regulatory bodies and accelerate harmonization across states.

cGMP and Testing Requirements

Manufacturing standards must exceed current norms. Compliance with Current Good Manufacturing Practices (cGMP)—more common in beverage manufacturing than other product categories—stringent control of ingredient sources, and thorough stability testing of product potency are essential to ensure quality and safety. Much like we've done internally at Vertosa, we should harmonize the stringent testing requirements across all markets and supply chains.

21+ Age-Gating

Aligning with alcohol regulations, implementing a 21+ age requirement for THC product purchases offers a straightforward regulatory framework that mirrors existing systems for alcohol sales. This not only simplifies enforcement but also ensures a uniform approach to age-sensitive product distribution. If we seek to maintain DTC channels, more effective age-gating than clicking 'yes' or 'no' must be implemented.

Funding Studies

Investment in economic and harm reduction research is critical. Drawing from historical precedents like John D. Rockefeller’s commissioning of "Toward Liquor Control," the industry must take the lead in funding studies that support policy changes and highlight the benefits of regulated cannabis access.

The expansion of hemp products has notably enhanced access for medical patients and veterans, particularly in regions previously underserved by regulated cannabis markets. Quantifying these benefits will further strengthen the case for continued product availability and expansion.

Economics and Tax Parity

Financial incentives play a significant role in shaping regulatory landscapes. Demonstrating the tax benefits derived from hemp and cannabis sales can align federal and state interests with industry growth, promoting a balanced approach to excise taxes and economic integration. In the state markets with established excise taxes for regulated cannabis, a strategy for tax parity should be considered, but also how a hemp tax can help reduce the collective cannabis tax. Again, why low-dose beverage? The tax revenue opportunity is a unique proposition as I explain in my article "Policymakers and Regulators: Low-Dose THC Beverages Create Public Health and Economic Opportunities."

Social Equity

The hemp industry has been accused of ignoring the social justice component of the cannabis conversation. How is hemp helping to right the wrongs inflicted by the failed war on drugs? We've seen equity licensees struggle in the regulated markets, not to mention the limited scope of impact. A better alternative is to pool tax revenue from successful businesses with lower barriers to entry and support effective programs that create a platform for success. We need to reduce barriers to entry for small businesses, implement business incubators and job training programs, and realize that not all social equity efforts should be focused on business ownership and generational wealth.

Next Steps

As we navigate this rapidly evolving landscape, the need for decisive action and collaboration has never been more urgent. I extend my gratitude to all who have already responded to our calls to action, contributing their insights to shape a balanced legislative approach, and my fellow beverage operators taking the necessary steps to make this a reality as we move ahead.

The emerging coalitions and proposed regulations will reflect our collective motivations: to ensure broad and safe access to cannabis with an initial focus on low-dose beverage. This is not a "carve-out," but a focused effort with aligned interests.

At this critical juncture, transparency and inclusivity are paramount. We must engage openly with all parties involved, acknowledging that strategies based on obfuscation or avoidance will ultimately hinder rather than help our progress. As we move forward, let us remain committed to fostering an industry that operates with integrity and foresight with the confidence that we can legalize the whole plant in a framework that makes sense.

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