Synthetic THC from hemp may soon compete with marijuana in Michigan
There’s a process that turns extracted hemp concentrate that doesn’t get you high into synthetic concentrate that does, similar to THC naturally produced by marijuana.
The Marijuana Regulatory agency (MRA), soon to be renamed the Cannabis Regulatory Agency (CRA) by Gov. Gretchen Whitmer’s Feb. 11 executive order that takes effect April 13, will assume oversight of processing, distribution, licensing, safety compliance and sales of hemp, currently regulated by the Department of Agriculture and Rural Development (MDARD).
Hemp growers may be allowed to sell to marijuana processors, who could then synthesize it to THC for use in edibles, vaping cartridges, tinctures or other products already being sold in the licensed marijuana market, based on draft rules proposed by the MRA on Jan. 27.
The changes present new market opportunities for hemp farmers but also new competition for growers in the state’s existing marijuana industry. The rules require any new products being sold using synthesized THC to be clearly labeled as such.
The Marijuana Regulatory Agency is holding a public comment session on proposed rules to increase its oversight at 9:30 a.m. Wednesday, Feb. 16 at its offices located at 2407 North Grand River Avenue in Lansing. Public comment during the meeting is restricted to in-person attendees, but the MRA is accepting written comments sent by email to MRA-legal@michigan.gov until 5 p.m. on Feb. 16.
Whitmer’s executive order already transfers MDARD’s oversight of hemp processors to the MRA, now tasked with creating the administrative rules that guide them. MDARD will continue to oversee licensing for hemp farming.
Howell-based marijuana attorney Denise Pollicella said the proposed rules, combined with currently easy-to-obtain, “cheap” hemp farming licenses, will cause hemp to proliferate across the state.
“Michigan’s municipalities will be covered in fields of hemp that looks and smells exactly like marijuana,” Pollicella said.
It currently costs $100 for an annual hemp farming license and $1,350 for hemp processing license. In comparison, Michigan marijuana grow facilities pay $6,000 for application processing and up to $40,000 in annual license fees. Those same fees are paid by licensed marijuana processors.
The 2014 U.S. Farm Bill authorized state departments of agriculture to implement agricultural pilot programs for hemp, which Michigan did in 2019. There were 631 state-registered hemp growers and 517 hemp processors in 2020, according to the 2020 pilot program report. So far this year, MDARD has issued 175 grow licenses and 297 processing and handling licenses.
Also giving hemp a competitive edge over Michigan grown marijuana: it can be imported, according to the proposed rules.
If implemented, the rules will “induce a huge amount of hemp importation from all over the country into Michigan, which will drop the price of marijuana and hemp down to almost nothing,” Pollicella said. “The profit margins on marijuana products will be so low that this will, in turn drive the dispensaries out of business.”
Hemp and marijuana are the same plant: cannabis. Except, the government defines hemp as cannabis with less then .3% THC, the psychoactive compound produced in marijuana at much higher levels.
Hemp has traditionally been grown for its cannabidiol, more commonly referred to as CBD, an extract that can be added to oils, lotions, food and drink, used as a natural remedy for anxiety, insomnia, depression and pain; but also for use as a livestock feed grain, textiles, an alternative to plastics and even building materials, said David Crabill, president of the hemp farming trade group iHemp Michigan and a hemp farmer himself.
In recent years, hemp conversion to synthetic THC has increased in popularity, including to what’s known as delta-8 THC. Delta-8 THC induces similar effects to delta-9 THC that is produced by marijuana, the compound that induces the high, and was unregulated in Michigan until a package of bills were signed into law last July, granting the MRA regulatory powers.
“The Department of Agriculture really doesn’t have the resources to do the compliance on the consumable (hemp) products, was the biggest issue,” Crabill said. “And (the MRA) is better suited to do that kind of compliance because they’re already doing it for marijuana.”
Crabill said he interprets the proposed rules to mean that CBD, which hasn’t previously been regulated by the MRA, may now come under the agency’s control.
Crabill said there is likely going to be a tradeoff for the new market opportunities within the existing marijuana market in the form of higher regulatory fees for hemp farmers.
“We haven’t had a market,” he said. “Well, now we have a market if we can sell to marijuana businesses I’m sure we’re going to see movement in the licensing fees because some of these large outdoor grows for marijuana, they’re not going to be sustainable at their current expense level.
“They’re not going to be able to compete with hemp, so I can just see the state going after the hemp growers for more money.”
Crabill, who identified himself as a “free-market guy,” said it’s just important that any fees imposed on Michigan hemp farmers are in line with other states.
