Published in Food/Agribusiness
Proposed state regulations would create a pathway for hemp growers to process their harvests into synthetic marijuana products. Proposed state regulations would create a pathway for hemp growers to process their harvests into synthetic marijuana products.

State proposes guidelines for hemp farmers eyeing synthetic marijuana products

BY Sunday, March 27, 2022 06:41pm

State cannabis regulators are formulating rules for hemp farmers seeking to convert their harvests into synthetic marijuana products that produce similar highs to THC-laden products.

However, cannabis retailers, growers and processors in Michigan’s regulated adult-use and medical marijuana sectors are pushing back against the draft rules, claiming they would open the floodgates for hemp growers — potentially even from out of state — to saturate the market and further depress crop prices. They also argue that a proliferation of synthetic marijuana alongside typical cannabis products found in retail stores would confuse consumers.

Michigan Marijuana Regulatory Agency Director Andrew Brisbo says the regulations are necessary to provide oversight over what’s currently a gray or even illegal market for synthetic marijuana, popularized by products known as Delta 8 tetrahydrocannabinol (THC). 

Delta 8 is a psychoactive substance in cannabis plants. Although it is one of hundreds of cannabinoids and not found in significant amounts in cannabis plants, it can be concentrated from hemp plants.

Brisbo said Michigan has state regulations allowing for research and development on converting hemp products, “but we don’t really have a pathway for how these products could get to the market. We wanted to ensure any process of developing cannabinoids (from hemp) had clear delineated rules as to how that approval process would look.”

Delta 8 products technically fall under the state’s definition of marijuana now, “but there’s no legal pathway to make them because there is no approval process for an agency to sign off on them.”

A Feb. 11 executive order by Gov. Gretchen Whitmer, which will rename the agency to the Cannabis Regulatory Agency on April 13, would bring these synthetic products made from hemp under the new Cannabis Regulatory Agency.

Meanwhile, the agency is proposing administrative rules to oversee the conversion process, marketing and retail sales of THC products converted from hemp. While hemp farmers would continue to be licensed through the Michigan Department of Agriculture and Rural Development, processors of industrial hemp would be licensed by the Cannabis Regulatory Agency.

The state held a public hearing in February to get feedback on the proposed rules, which will ultimately go to the legislator-run Joint Committee on Administrative Rules. Brisbo said the timeline for finalizing the rules, as well as whether significant changes are coming, remains unclear.

While the commercial opportunities for hemp farmers also is unclear, Brisbo said the regulations “would certainly create a new pathway for hemp products to have commercially viable output. It provides a pathway for those folks.”

David Crabill, board president of iHemp Michigan, a statewide trade group for hemp farmers, said the vast majority of Michigan-grown hemp is used to produce CBD products, which doesn’t contain psychoactive properties. He also noted that Michigan had a “glut” of hemp supply in 2019.

“A lot of growers got hurt with the collapse of the market,” Crabill said. “This is an opportunity for them to realize some profits.”

Still, Crabill’s bigger focus is on hemp varieties that produce fiber and grain, which could provide more viable market opportunities for hemp growers.

“I just don’t see it being feasible to grow hemp to feed the THC market. It’s just not realistic,” he said. “(Regulated marijuana growers) are still going to be able to out-produce any hemp crop for any THC product, so I just don’t see that as a major issue.”

‘Sub-par product’

Still, the proposal is drawing opposition from the state’s regulated adult-use and medical cannabis operators who fear a potential flood of synthetic marijuana products in the market, taking the form of edibles, concentrates or other products.

“We are vehemently opposed to this conversion rule because it kind of feels like they’re putting this synthetic product on the market,” said Narmin Jarrous, chief development officer at Exclusive Brands, which has various cannabis operating licenses across the state. “From a retailer’s standpoint: How am I supposed to convey that to my patients? How am I going to know how to be transparent with my patients when I’m not sure that I’m comfortable with the products?”

Brisbo said the state also has concerns about the as-yet-unregulated nature of synthetic mairjuana products.

“We have a great deal of concerns about products available in unregulated spaces that don’t necessarily have the health, welfare and safety controls we have on the regulated side of the market,” Brisbo said. “As we look to open potential pathways to new processes, at the forefront is doing our best to protect consumer safety.”

Exclusive Brands also has state commercial growing and processing licenses. Large, Class C outdoor growers, in particular, would likely compete with hemp growers, Jarrous said.

“We’re going to be allowed to bring in this really cheap hemp oil — it will effectively wipe out the ability of growers to provide the same product. They will have to bottom out their prices, and it’s a sub-par product,” Jarrous said.

Meanwhile, prices in Michigan’s cannabis market have fallen to their lowest point since early 2020, according to the most recent state data. The average price per ounce of recreational smokable flower was just $153 in January compared to $516 in December 2019, Bridge Michigan reported.

“I understand those are valid concerns,” Brisbo said. “The status of the market in Michigan has been pretty dynamic in the last couple of years with prices coming down substantially and understanding how that impacts business plans.” 

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