New Federal Legislation Targets Hemp-Derived Cannabis Products

Newly proposed federal legislation seeks to increase oversight over the growing (and largely unregulated) market for hemp-derived cannabis products. Like New Jersey’s recently enacted hemp law, the Cannabinoid Safety and Regulation Act (CSRA) would establish health and safety standards, as well as restrict access by minors.

“Just like the tobacco industry marketing cigarettes to young people, nobody should be slapping fun cartoons and glitzy candy wrapper packaging on cannabis products meant for adults,” co-sponsor Senator Ron Wyden (D-Ore.) said in a statement. “A federal floor for regulation of hemp products is non-negotiable to ensure that consumers aren’t put at risk by untested products of unknown origin. My legislation will ensure that adult consumers know what they’re getting, and that hemp products are never sold or marketed to children.”

Explosion of Hemp-Derived Cannabis Products

The 2018 Farm Bill cleared the way for a new and growing segment of the cannabis industry. Under the law, cannabis plants and derivatives that contain no more than 0.3% THC on a dry-weight basis are no longer controlled substances under the Controlled Substances Act (CSA). The 2018 Farm Bill also removed restrictions on the sale, transport, or possession of hemp-derived products, provided that such products are produced in accordance with the law.

Because they are derived from hemp rather than cannabis, intoxicating hemp-derived cannabinoids (IHDCs), a new type of psychoactive cannabis product, are technically legal under federal law. IHDCs, which include hexahydrocannabinol (HHC) and delta-8 THC, are currently infused into edibles, beverages, and other consumable hemp products and sold by convenience stores, liquor stores, and online retailers.

State Efforts to Regulate Intoxicating Hemp Products

Several states, including New Jersey, have taken steps to regulate the influx of intoxicating hemp products. As discussed in greater detail here, New Jersey recently enacted a new law that brings “intoxicating hemp products,” defined as those with a concentration of total THC greater than 0.5 milligrams per serving or 2.5 milligrams per package, under the oversight of the New Jersey Cannabis Regulatory Commission (CRC).

California also recently enacted emergency regulations to curb the sale of intoxicating hemp products. The new rules ban all hemp products unless they contain no “detectable levels of THC.” Hemp products that don’t contain THC are limited to five servings per package and may only be sold to adults 21 and older.

Members of the hemp industry have filed suit, challenging the need for sweeping emergency regulations when the state has regulated hemp since 2021. “Whatever the merits of the general issues addressed by these emergency regulations, the Department has acted entirely outside the boundaries of California’s applicable law to adopt and issue them,” the suit argues. “Plaintiffs and their members will suffer losses in the millions of dollars over existing products, pending manufacturing, and future sales of hemp and hemp products that legally contained THC, as per existing California and federal law, but have now been banned overnight by the emergency regulations.”

Key Provisions of the Cannabinoid Safety and Regulation Act 

The Cannabinoid Safety and Regulation Act would regulate the manufacturing, packaging, labeling, testing, and sale of hemp-derived cannabinoids and products that contain them. The legislation defines a “cannabinoid product” as a natural (non-synthetic) product (including an inhalable, food, beverage or dietary supplement) made or derived from hemp, that contains some form, type or amount of cannabinoid(s) and/or tetrahydrocannabinol (THC), that is intended for ingestion by, or use in or on the body of, human or animal.

The CSRA would expressly ban any product made with or from synthetically or artificially derived cannabinoids, including THC. Below are several other key provisions of the proposed federal hemp legislation:

• Minors: Cannabinoid products may not be sold to children under the age of 21. The CSRA would also require the U.S. Food and Drug Administration (FDA) to promulgate a rule regarding remote sales, promotion/marketing, and distribution of cannabinoid products in order to prevent youth access.

• Manufacturing: Cannabinoid products must be produced in regulated and registered facilities that allow FDA inspection. The FDA would be required to issue rules establishing good manufacturing processes for cannabinoid products within nine months of enactment.

• Testing: Products must be tested for contamination and potency by state-licensed and accredited labs, and comply with FDA-established levels of safety for heavy metals, byproducts, and the like. The FDA would be required to issue rules requiring testing of cannabinoid products within 18 months of enactment.

• Labeling: Cannabinoid products, regardless of their form, must have a label that meets the requirements set forth in the law.They also may not imitate or replicate products commonly associated with children, including commercially available candy, snacks or beverages, and may not have labels with cartoon or anthropomorphized figures.

• Registration: FDA registration would be required for any domestic or foreign entity that manufactures, prepares, propagates, compounds, processes, packages, packs, imports, labels or holds cannabinoid products.

• Cannabinoid Beverages: The Secretary of Agriculture, the FDA Commissioner, the Attorney General and the Director of the Alcohol and Tobacco Tax and Trade Bureau would be required to jointly publish a report recommending a federal regulatory framework for beverages that contain THC, which also addresses direct-to-consumer and distributor models of sale.

• Preemption of State Regulations: The CSRA would not preempt the states beyond standardized labeling and packaging.

So far, the hemp legislation has been endorsed by the U.S. Hemp Roundtable, the National Cannabis Industry Association, National Industrial Hemp Council, and hemp industry associations from California, Colorado, Arizona, Michigan, Illinois, Kentucky, Missouri, South Dakota, Virginia, and Texas.

What’s Next?

The CSRA is in its early stages, and its likelihood of passage is uncertain. Nevertheless, oversight over intoxicating hemp products continues to evolve, with developments at both the state and federal level.

Given the significant impact on the hemp, cannabis, and liquor industries, these legal developments warrant close monitoring. For guidance on how potential cannabis regulatory changes may impact your business, we encourage you to contact a member of Scarinci Hollenbeck’s Cannabis Law Group.