How a hemp exec could decide the future of THC regulation in North Carolina
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North Carolina House Rules Chairman Rep. John Bell, who is also the president of a hemp manufacturing and distribution company, has been the point person in his chamber on several proposed bills making their way through the legislature that could impact his company. He also has the power to determine their fate.
Why it matters: One proposal, the "Protecting Our Community Act," could give Bell's company, Asterra Labs, a leg up on competitors who may not be able to comply with testing, packaging and other requirements outlined in the legislation. Another, House Bill 328, passed by the state Senate Thursday, would force him to close Asterra and lay off all 20 of his employees, he said.
Driving the news: HB328 now goes to the House, where Bell has the power to block it from ever coming to a vote. Alternatively, he could aid in transforming the legislation into something more favorable to the state's hemp industry.
The big picture: Bell, who is among the most powerful elected officials in North Carolina, is uniquely positioned to shape the laws that could be of significant financial gain — or detriment — to the company he leads.
- Though allowed under state ethics law, his work on the legislation, which has been playing out behind the scenes for months, calls attention to the ethics of a dilemma that plays out often in the halls of the legislature, where lawmakers often work in the private sector to supplement their legislative income.
- In an interview with Axios, Bell pointed to a host of other teachers, lawyers, doctors, realtors, retired state employees and law enforcement officers who, as lawmakers, work on, run and vote on bills that pertain to their professions.
- "We've got a car dealer piece that's going on right now, back and forth. How many car dealers do we have in the General Assembly?" Bell said. "Does anybody say shit about that?"
Catch up quick: A growing push to regulate hemp has emerged in recent weeks, with Republicans and Democrats alike highlighting the need for age restrictions and limits for psychoactive hemp-derived cannabinoids, including gummies and vapes.
- Though marijuana remains illegal in any form in the state, North Carolina is among the most lenient states in the country for hemp-derived consumables.
- With only a few weeks left before lawmakers wrap up the bulk of their work for this year's session, Senate Republicans unveiled and rapidly advanced this week the most restrictive hemp bill proposed yet. If the bill becomes law, it would ban all forms of hemp-derived THC, including CBD, with the exception of delta-9, the psychoactive component of marijuana.
Threat level: That proposal would wipe out the hemp industry in the state, Bell said, and eliminate thousands of jobs, including in his own company.
- "If you intended to go after the bad actors, what you just did with this legislation is you eliminated all the good players, but kept the bad actors in place," Bell said he told the bill sponsor this week.
- He also asked the sponsor whether, if the bill becomes law, "would they like to come with me to my facility and tell 20 people they have to find another job."
Behind the scenes: Bell has been a key player in hemp legislation proposed this session as a participant in several meetings and discussions about the legislation in recent months, two sources familiar with his involvement tell Axios.
- Bell sought an opinion from the legislature's nonpartisan staff attorney on the ethics of working on the legislation. In a letter dated June 18, the attorney outlines the state ethics law concluded that "conflicts of interest" don't "prohibit service as a legislator."
- "The general scenario of a legislative action that legalizing and establishing a process for marijuana, medical marijuana, CBD products, hemp, or THC products to be produced, sold, or consumed in this State does not raise red flags of required recusal, provided that legislative action is not in some way authorizing only the business with which you are associated to be the grower, producer, seller of the product," read the letter, which Bell provided to Axios.
Zoom in: State law bars elected officials from using their position to financially benefit themselves or their business, unless it also benefits the rest of their profession, occupation or general class.
- "As long as I'm not doing something exactly for Asterra Labs and my business, there's no ethical challenges there," Bell told Axios in an interview Wednesday.
Of note: Asterra is a subsidiary of private equity firm RISE Capital, which is owned by former University of North Carolina System Board of Governors chairman Harry Smith. Smith is one of just a few in the state who have vocalized discontent with longtime Republican Senate leader Phil Berger, who backed the Senate's latest hemp restrictions bill.
Between the lines: Though North Carolina's session requires that lawmakers spend a significant amount of their year in Raleigh, the legislature is technically part-time. Lawmakers are paid less than $14,000 a year, making it nearly impossible for those who are elected to the position to serve without working an additional job.
- "I don't think you could have a functioning legislature if you made everybody recuse themselves every time there was a bill that might affect their pay," Andy Jackson, director of the Civitas Center for Public Integrity at the conservative John Locke Foundation, told Axios.
The other side: Bell is in a "comfortable position" as far as the law stands, Jackson said.
- What the law doesn't address, however, is what should happen if the legislation helps Bell "and a handful of other people in the industry essentially corner a market because they're already established," Jackson said.
- "Is it something that maybe he should recuse himself? That's more of an open question."
