Cannabis and delta-9-THC

Cannabis can be grown in the ground, water (i.e., hydroponically), or pots outdoors, indoors, or in a greenhouse, a structure made of transparent material enabling natural sunlight and fresh air cultivation. Whether deemed medical – purchasable only with state-issued card to treat residents’ statutorily defined covered medical condition – or adult-use – purchasable by anyone over 21 from any state with a valid identification – cannabis takes four forms: 

• Flower that is smoked
• Oils ingested by vaporizing
• Concentrates consumable after being heated to a high temperature
• Infused products ranging from eye drops to edibles  

Those cultivating, processing, infusing, transporting or dispensing cannabis are deemed to be “plant-touching” marijuana-related businesses (MRBs), and despite being legal in 38 American states, cannabis remains federally illegal.   

The Controlled Substance Act, 21 U.S.C. §§ 801, Et. Seq (1970) (“CSA”) currently lists marijuana next to heroin as a Schedule I controlled substance having “a high potential for abuse” and for which there’s “no currently accepted medical use in treatment” and “a lack of accepted safety for use” “under medical supervision.” The CSA prohibits marijuana’s cultivation, distribution, dispensation and possession, and pursuant to the U.S. Constitution’s Supremacy Clause, state laws conflicting with federal law are generally preempted and void. U.S. Const., Art. VI, cl. 2; Wickard v. Filburn, 317 U.S. 111, 124 (1942)(”[N]o form of state activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress”).  

Because the CSA prevents cannabis from being sold outside of each respective legalized-marijuana state, and thus no “interstate Cannabis commerce” can occur, state regulators like California’s Department of Cannabis Control, and not federal agencies like the Drug Enforcement Administration, issue licenses and regulate MRBs.  

According to spot-market-index tracker Cannabis Benchmarks, marijuana’s wholesale price-per-pound has dropped 40% over the past two years from $1,658 a pound to $955, with pricing currently at $1,284 a pound for indoor-grown flower, $688 a pound for greenhouse-cultivated cannabis, and $424 a pound for outdoor grown Marijuana.

Because an MRB’s entire business model hinges on receiving a set price-per-pound, plummeting wholesale prices are causing havoc across the entire cannabis supply chain. For example, envision a recently licensed grower building its operation and raising funds, using 2019 price-per-pound market price as the foundation for its projections to construct a $23 million indoor grow facility. Regardless of its markup, when the per-pound wholesale price drops 39% to 57%, a grower’s ability to sell its product, subsidize its operations, service its debt, remunerate its investors and raise additional capital is severely impaired.  

Sources of delta-8-THC

A fast-growing, sustainable and inexpensively produced plant, hemp is a variety of Cannabis sativa L. containing less than 0.3% plant chemical delta-9-THC. Agricultural Act of 2014, 7 U.S. Code §5940. Hemp yields more than 25,000 oil and fibrous products, including cannabidol (CBD), which offers broad health and wellness uses, serves as a food additive and is contained in many beauty items. 

The Agriculture Improvement Act of 2018, also known as the Farm Bill, both legalized hemp and its derivatives and removed plant Cannabis sativa L. containing no more than 0.3% delta-9-THC on a dry-weight basis from the CSA and DEA’s purview. 7 U.S.C. §1639o(1). The Farm Bill permits importing, exporting and transporting hemp and hemp-derived products like any other crop, and tasks the United States Department of Agriculture with promulgating hemp regulations, and charges states, territories and Indian tribes with submitting hemp-growing regulations plans to the USDA, including THC testing procedures. Id.

A cannabinoid of the THC family of compounds commonly derived from the cannabis plant, delta-8-THC is a double bond isomer of delta-9-THC, the federally illegal, psychotropic effect-producing cannabinoid sourced from cannabis. An isomer is a type of chemical analog comprising one of two or more compounds containing the identical number of atoms of the same elements but differing in structural arrangement and properties. There are 30 known THC isomers, and delta-9-THC and delta-8-THC differ regarding the single double bond’s location.  Stated another way, while similar in molecular structure, delta-8-THC is a different molecule than delta-9-THC.

Delta-8-THC is derived either directly from the hemp plant or converted from the CBD isolate. Because hemp cultivars do not express delta-8-THC in sufficient concentrations or quantities to be economically viable to extract for commercial purposes, and CBD is cheap and abundant, deriving delta-8-THC by converting from CBD isolate is the faster, cheaper and more popular method.  

Because it is less regulated, cheaper and, unlike delta-9-THC, can be sold virtually anywhere (including online), hemp-derived THC is available in consumables such as smokable flower, vapes and edibles. Sales are exploding and severely cutting into the legalized cannabis market.

Delta-8-THC’s murky legality

Presently legal in the majority of the states, these THC-alternative-intoxicant products’ federal legality appears to hinge on whether derived directly from hemp or converted from CBD.  

At the state level, delta-8-THC products are as follows:

Legal: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland. Massachusetts, Mississippi, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma (explicitly excludes delta-8 from marijuana’s legal definition), Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington D.C., West Virginia, Wisconsin and Wyoming

Illegal: Alaska, Arizona, Colorado, Delaware, Idaho, Iowa, Missouri, Montana, Nevada,         New York, North Dakota, Oregon, Rhode Island, Utah, Vermont and Washington 

Legal but restricted or regulated: 

• California (products with more than 0.3% delta-8-THC are state regulated)
• Connecticut (only purchasable from a licensed cannabis retailer)
• Hawaii (except for edible/inhalable products such as gummies, vape, flower and drink, delta-8-THC is legal)
• Louisiana (while barring inhalables like flowers and vapes, consumable delta-8 products like tinctures and gummies up to 8 mg THC per serving allowed)
• Michigan (only purchasable from licensed cannabis retailer)
• Minnesota (delta-8 plants may contain up to 0.3% of any THC type and consumables up to 5 mg THC/serving allowed)
• Virginia (except for food/drink THC-containing product)

Whether federally legal depends on if it is derived directly from hemp or converted from CBD. Because the 2018 Farm Bill’s hemp definition encompasses cannabinoids and derivatives of hemp, hemp-derived delta-8-THC is probably not prohibited by the CSA and delta-8-THC derived from CBD is probably also exempt (if not containing delta-9-THC concentrations exceeding “0.3% by dry weight” legal limit).

First, because the Farm Bill’s hemp definition distinguishes it from illegal marijuana, hemp falls outside of the CSA, which, in turn, excludes “hemp, as defined in section 1639o of title 7”, from its “marihuana” definition. 7 U.S.C. § 1639o(1); 21 USC §802(16)(B). Further, because, under the Farm Bill, hemp-derived “cannabinoids”, “derivatives”, “extracts”, and “isomers” are themselves “hemp”, delta-8-THC comprises Farm Bill defined “hemp” beyond the CSA’s scope. Id. 

Second, while clear that delta-8-THC naturally expressed in the hemp plant is not a controlled substance, the legal status of delta-8-THC derived from CBD or other hemp-derived cannabinoid requires satisfying the Farm Bill’s broad “hemp derivative” definition. Stated another way, is a derivative of a derivative included in the Farm Bill’s hemp definition or is it a “synthetic,” falling out of this CSA “safe harbor”?

Pennsylvania seizure and DEA opinion letter’s impact

Although delta-8-THC’s federal legality remains unclear, with the DEA’s Feb. 13 opinion letter criminalizing THC acetate ester (THC-O) and Pennsylvania prosecutors confiscating over-the-counter “heroin and fentanyl containing delta-8-THC gummies” from three smoke shops, the sun is starting to set on these THC-alternative-intoxicants.   

First, the opinion letter sets forth that, because they are not naturally occurring in the cannabis plant and only obtainable synthetically, delta-8-THC-O and delta-9-THC-O fall outside of the Farm Bill’s hemp definition, and because their chemical structures and pharmacological activities mirror delta-9-THC, are synthetic cannabinoids regulated under Schedule I of the CSA.  

Second, in light of the product seizures, THC-alternative-intoxicants sellers must focus on whether items are derived from cannabis (i.e., containing delta-9-THC concentrations exceeding “0.3% by dry weight” legal limit) or hemp. Producing or selling delta-8-THC-O or delta-9-THC-O products without a permit to produce or sell THC violates the CSA and risks criminal and civil sanctions from the DEA, USDA, Federal Trade Commission and state law enforcement and regulators.