Lukas Gilkey, a veteran of the U.S. Coast Guard who founded Hometown Hero, one of the largest Delta-8-THC product distributors in the country, says his industry is under attack.
Last year, the Austin, Texas-based company distributed products containing Delta-8-THC, the most exciting, and most psychoactive compound in the hemp industry, to 44 states. Now, as lawmakers around the country ban the cannabinoid, Gilkey’s company only distributes to 39 states.
“I see it as a fight for the future of cannabis,” he says. “For anyone trying to limit this, taking on that prohibitionist stance—whether they’re motivated by business interests, political or religious—is really just fighting against cannabis.”
Hometown Hero almost lost its largest market, Texas, this summer when the state legislature introduced a bill that would’ve outlawed Delta-8. Gilkey teamed up with the Texas Hemp Federation to fight the bill, which was being supported by one of the medical marijuana companies in the state, and it died while being debated in the House and Senate. But Gilkey’s fight is not over: lawmakers will be sure to revive the bill during the next legislative session.
During a hearing, Senator Scott Perry gave a warning: “I believe Delta-8 probably falls under controlled statute. It’s up for debate, but we can pretty much start enforcing it if that’s where people want to go,” he said.
Texas is not the only theater where a battle between the country’s largest cannabis companies and small hemp companies is under way. About a dozen states, including Colorado, Oregon, New York and Washington, have banned hemp-derived Delta-8 and more states will consider bills to outlaw the legal high next legislative session.
Back in April, the Drug Enforcement Administration added Delta-8 to its list of controlled substances, but thanks to the Farm Bill of 2018, which legalized industrial hemp and all hemp-derived cannabinoids, extracts and derivatives with no exceptions, there remains a good-faith argument that Delta-8 is currently legal in the states that have yet to pass laws against it.
The fate of Delta-8, which is a cousin compound to Delta-9-THC, the chemical in cannabis responsible for getting people stoned, and the companies that sell it, is not certain. And America’s largest cannabis companies, with help from lobbyists, are working to convince lawmakers that hemp-derived Delta-8 should be illegal once and for all.
Joe Bayern, the CEO of Curaleaf, which is one of the world’s largest cannabis companies, says he thinks Delta-8 products, many of which are untested and sold in gas stations and smoke shops, pose a major public safety issue. A report published by the policy and advocacy group U.S. Cannabis Council found that some Delta-8 products on the market contained heavy metals, pesticides and even illegal levels of delta-9 THC. Hometown Hero tests its products, but many companies do not.
“I think it should be framed as one of the most high-profile health risks available in the marketplace today,” says Bayern. “The fact that these products are showing up completely unregulated and untested in mainstream channels, available to anybody, including children, is an incredibly dangerous proposition that needs to be addressed.”
The effect of the Farm Bill is that hemp-derived products, including Delta-8, are not regulated by state marijuana programs, and are not required to be tested and sold through cannabis dispensaries. This is why bodegas and smoke shops sell these products.
Bayern believes that what delta-8 companies are doing is flatly against the law.
“There’s no discrepancy about it—it’s illegal,” says Bayern.
Nicholas Warrender, who founded Zion, Illinois-based Delta-8 company Lifted Made, doesn’t see it that way.
“The law is very clear. People call it a grey area; it’s not,” says Warrender. “I get it, big cannabis companies are upset because of the competition, but at the same time they’re also a very elite group of special interests that have almost monopolized these states. Small entrepreneurs, who couldn’t participate in the industry because of all the expensive requirements, are also upset.”
Steve Hawkins, director of U.S. Cannabis Council, says what the cannabis industry really wants is more regulation.
“I see this ultimately as a battle for the future of cannabis reform,” says Hawkins. “This cries out for the need of federal regulation for the plant. The piecemeal approach around cannabis will not be workable at the end of the day. So long as there’s not a comprehensive regulatory framework, we’re going to see things fall through the cracks like Delta-8.”
The fact that marijuana companies are fighting for more regulation is a sign that the industry, which grew out of the illicit market, is growing up.
It’s not lost on Warrender that his company is making hay while the sun shines. About 70% of the company’s products contain Delta-8 and it’s unlikely to be unregulated forever. Lifted Made’s parent company Acquired Sales Corp, which is traded over-the-counter, said in its quarterly report that one of the big risks to the company is the fact that Delta-8 is illegal in certain states and a federal ban could come soon.
But the company has a backup plan if it needs to get out of the hemp-derived Delta-8 business: it recently struck a deal to buy a company that’s building a cannabis dispensary in Palm Springs, California for $2 million.
“This is our first move into full-blown cannabis,” says Warrender. “A hedge is a good way to put it. If we’re required to operate with cannabis licenses, that will protect us.”
