States take aim at hemp

Blumenauer goes nuclear and Becerra forgets crucial facts

Good morning.

In loosely-related-to-cannabis news, the Fed decided to hold rates steady yesterday, and the market seemed to like it (or maybe it just likes J-Pow’s jokes at the press conference). 

We’ll see if that has any knock-on effects with cannabis stocks. 

And on the cannabis agenda, we’re sure many of you will be attending NECANN kicking off in Boston tomorrow. We wish you a happy conference. 

- Jeremy Berke & Jay Rosenthal

💡What’s the big deal?

20 state attorneys-general want a crackdown on ‘intoxicating hemp’ products

What happened: Twenty state attorneys-general wrote a letter to Congress, urging a crackdown on quasi-legal “intoxicating hemp” products, Politico reports

What they’re saying: “The reality is that this law has unleashed on our states a flood of products that are nothing less than a more potent form of cannabis, often in candy form that is made attractive to youth and children — with staggering levels of potency, no regulation, no oversight, and a limited capability for our offices to rein them in,” the letter reads.

Back up: Intoxicating, hemp-derived products are widely available at gas stations, grocery stores, and bodegas around the country. But they’re not legal — in fact, they’re basically just weed, with a few steps in between. 

Companies selling these products are taking advantage of a loophole created by the 2018 Farm Bill, which legalized hemp production, defined as less than 0.3% THC, in the US. The problem is, these classifications are strictly legal and not scientific as THC concentrations fluctuate wildly in cannabis plants even after harvest. 

Products that are labeled as hemp-derived THCa are basically just straight up intoxicating cannabis products that the federal government considers illegal. 

To back up, THCa is the compound present in raw cannabis. You have to add heat (fire), to turn the THCa into bioavailable THC. So these products are just that — illegal, and they’re often of far worse quality than legal cannabis. 

Our take: It’s not immediately clear what the attorneys-general want to see in the new Farm Bill, which may or may not get a vote in 2025. 

But we like to stick with the old-school weed. We’ll leave anything we see at the gas station labeled ‘hemp-derived THCa’ out of our bodies, thank you very much. 


🗯️ Quotable

“I'm gonna get it wrong. Five or one?,” Xavier Becerra, the Secretary of Health and Human Services said at a House Ways and Means Committee hearing yesterday

Becerra didn’t know what section of the federal Controlled Substances Act cannabis is classified as. It’s not a great look for a top political appointee to get this 101-level stuff wrong, especially for the head of an agency that will be instrumental in the cannabis reform process.

Secretary Becerra, if you’re reading this, it’s Schedule I. That’s kind of the whole thing your government wants, very publicly, to change. One cannabis-based epilepsy drug, Epidiolex, is classified as Schedule 5. 

The House’s outgoing cannabis champion laid it all out

What happened: Outgoing Oregon Democratic Rep. Earl Blumenauer, a longtime champion of cannabis reform, laid into Health and Human Services Secretary Xavier Becerra about the federal government’s inability to pursue any cannabis reform.

Blumenauer co-chairs the Congressional Cannabis Caucus, but he’s not seeking re-election after his term is up.

What he’s saying: “I think it borders on political malpractice and beyond. This is an area that just breaks my heart,” he said, discussing a cannabis research bill that President Biden signed into law in 2022 but has yet to be implemented. 

“We’re still waiting. Mr. Secretary. This is an area that is profoundly affecting millions of people in the United States,” he said. “We are denying opportunities for research that almost everybody agrees could be transformative, and we’re not in the forefront of this research.”

“There’s no excuse for our not being in the forefront for something that is now legal for 97 percent of the American public and, where people have a chance to vote, they vote to change the policies.” 

Why it matters: Blumenauer seems to be using his lame-duck Congressional term to go for broke on cannabis issues, which matter deeply to him. He has the platform, and the connections to hopefully make something happen. 

Many advocates and those in the industry are cheering him on. 


🎯 Quick hits

The White House Office of National Drug Control Policy submitted a report to Congress this week that says legalization has not diminished the market for illicit cannabis in areas where it was legalized. That said, much peer-reviewed literature isn’t settled on the issue

Ten New York hemp companies have refiled a lawsuit that alleges that the companies were wrongly targeted by the state and had thousands of dollars of inventory stolen. The original suit was dismissed earlier this month, per Green Market Report.

A top Democrat and a top Republican say they want the SAFER Act passed

Driving the news: Top leaders from both parties have indicated that Congress plans to move on the SAFER Banking Act, a narrow reform bill that would allow cannabis companies to access the financial system like any other legal industry. 

Senate Majority Leader Chuck Schumer called it a “very high priority,” earlier this month.

What happened: The chair of the Senate Banking Committee, Ohio Democrat Sherrod Brown, told a reporter that he hopes the SAFER Banking Act will get passed this year, per Marijuana Moment

And the Republican House Majority Whip, Minnesota’s Tom Emmer, told the American Bankers Association (ABA) early this week that he wants to see the bill passed

But: The ABA’s top lobbyist told Politico that the group is encountering “resistance,” to the banking bill and informed Rep. Emmer as such this week. Still, the lobbyist said that the bill has Republican fans in the Senate. 

Why it matters: The SAFER Banking Act, as you all know, is basically the narrowest possible cannabis reform bill that could feasibly pass this iteration of Congress. While it’s far from ideal, it would go a long way toward legitimizing the industry and would free up sources of capital to businesses that sorely need it. 

It would also allow cannabis businesses to move away from all-cash transactions, which is a clear security risk. 

The bill has passed the House nine times, by my count, but hasn’t been able to clear the 60-vote filibuster threshold in the Senate, though it passed through the powerful Senate Banking Committee last year.

Our take: While many cannabis advocates rightly decry that a banking bill is moving ahead of broader social-justice minded cannabis reform — or even just outright legalizing cannabis by removing it from the list of federally controlled substances — it is perhaps as far as Congress is willing to go. 

We say let’s get the bill passed. Show us Congress can pass something with widespread bipartisan support, however incremental. Then we’ll ask for the rest of the enchilada. 


📰 What we’re reading

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