Back in May, the Ninth Circuit Court of Appeals wrote in an opinion that products containing delta-8 THC are generally legal because federal law defines hemp as “any part of” the cannabis plant. This includes all derivatives, extracts, and cannabinoids that contain less than 0.3 percent delta-9 THC by weight. Depending on who you are in the cannabis industry, this can either be good news or quite frustrating.
The reasoning behind this ruling is due to the 2018 Farm Bill, which holds the federal law defining hemp as mentioned above. Even though delta-8 THC is not accounted for in the bill, this loophole gave the Ninth Circuit room to determine whether the psychoactive cannabinoid is considered synthetic and illegal, or if it is a legal, hemp-derived substance. Technically speaking, since delta-8 THC is hemp-derived, that is why they decided it is generally legal. Taking it a step further, the Ninth Circuit concluded that if “Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”
What Does This Mean for Cannabis Retailers?
“The Ninth Circuit ruling is a court’s opinion on the legality of delta-8 under the Controlled Substances Act, and they did not get into the legality under different state laws,” Shawn Hauser, a partner at Vicente Sederberg and co-chair of the firm’s Hemp and Cannabinoids Department, said. “There are a number of bills establishing regulations on hemp-derived delta-8, but I do not think this case will impact the progress of those state bills. It is certainly possible that the 2023 Farm Bill will have relevant provisions that relate to the legal status of delta-8. Any congressional action or bill that passes in Congress could change the legal landscape from what was said in the case.”
With the FDA’s delay in regulating finished products, the hemp retail market includes the sale of cannabis items that often have some levels of THC. In order for dispensaries to stay competitive with their products and pricing, Hauser says they have to consider selling merchandise infused with delta-8 THC and other different cannabinoids since customers can easily find these elsewhere. There is an opportunity for stakeholders to have difficult conversations and figure out the framework for these products, but until then, it will be competitive.
What Does This Mean for the Industry as a Whole?
Depending on where you are in the industry, this ruling could have a few different impacts. For highly regulated cannabis companies, there is a negative view on unregulated delta-8 products since they are seen as synthetic and unsafe. According to Hauser, it was smart that the court called out the fact that it is Congress’s job to determine the legality of delta-8, which is critical given some of the ambiguous guidance it was given on the legality of certain synthetically manufactured cannabinoids and whether delta-8 might be controlled, but there are still outstanding issues on whether Congress intended for intoxicating cannabinoids to be legalized under the Farm Bill.
“This is something that Congress and the FDA should be more clear on in law and align the law with such intent, but I think there are many in the industry who will praise this ruling as a confirmation of the legality of hemp and its extracts,” Hauser said. “Others are critical in the position on its interpretation of synthetic or critical emission analysis of the Federal Analogue Act in determining controlled substances’ legality. Delta-8 is a derivative of hemp, which is only part of determining federal legality, and the FDA is the other part.”
Would Federal Legality Impact Delta-8?
If and when cannabis becomes federally legalized in the U.S., delta-8 would technically still fall under that category. When we see the potential regulatory frameworks for cannabis products, there has been debate among the appropriate framework for all marijuana, which typically includes intoxicating cannabinoids. Hauser thinks when Congress eventually does confirm its intent under the Farm Bill and the FDA ultimately establishes the framework for hemp ingredients, delta-8 and other synthetic cannabinoids will likely be regulated just like other marijuana goods.
As its basic core, the Ninth Circuit’s opinion says that delta-8 is derived from hemp, and since hemp is legal based on the 2018 Farm Bill, the cannabinoid is therefore legal. Until another law comes into place to provide more details on delta-8, this is the final ruling, according to Joshua Horn, a lawyer and co-chair of Fox Rothschild’s Cannabis Practice Group.