Jun 30, 2023 - News

Advocates say Virginia's new hemp rules will push people to black markets

Illustration of a marijuana leaf on a scale

Illustration: Sarah Grillo/Axios

New legislation aimed at cracking down on stores that sell intoxicating THC products like Delta-8 goes into effect tomorrow.

What's happening: The legislation hopes to close a loophole that allowed the sale of products containing THC, the intoxicating ingredient in marijuana, as long as producers distilled and synthesized it from low-THC cannabis plants, i.e., hemp.

Why it matters: Hemp industry advocates warn that the new law will push consumers to the black market and force some small businesses to close.

Zoom in: Two major changes are going into effect.

  1. The legislation requires any hemp products for sale to contain 25 times as much CBD as they do THC. The goal was to limit THC content without unintentionally banning the sale of CBD products, which producers say typically contain trace amounts of THC.
  2. It requires anyone who sells hemp products to pay a $1,000 annual fee, and there will be steep fines for any retailers caught selling illegal products.

What they're saying: "All this is going to do is push people to the black market," Jason Amatucci, president of the Virginia Hemp Coalition, tells Axios.

The hemp industry has been filling the void for Virginia consumers as the state continues to exist without a legal marijuana retail market, despite legalizing recreational possession two years ago, Amatucci says.

  • "It's as bad as you can get when it comes to policies," he says.

State of play: Virginia's legislature legalized possession of marijuana in 2021, but still hasn't provided a framework for selling it. Without that, Amatucci says, three markets have emerged: the gray market, which includes hemp-derived products, the "monopoly" medical market and the black market.

  • "The black market is already beating out all markets," Amatucci says.

In fact, it's flourishing in Virginia, the Times-Dispatch reported this month, with marijuana sales in the state expected to hit $2.4 billion this year, all but 1% sold illegally.

Meanwhile, some hemp businesses are moving to other states, and others are closing their doors altogether as a result of the new regulations, says Dylan Bishop, a lobbyist who represented an array of hemp businesses that opposed the legislation.

  • The businesses likely affected include retailers that sell CBD products, manufacturers of hemp products, the labs that test the products and commercial landlords who may have to fill those retail spaces, Amatucci says.

The other side: Proponents of the new legislation argue that the changes were needed amid a THC market that is "growing out of control" and an increase in poisonings and hospitalizations of children from ingesting these products, per the Virginia Mercury.

Yes, but: It remains an open question how effective the new enforcement regime will be.

  • Bishop says he suspects enforcement on the new THC limits would mostly target food products that contain THC, like gummies, which have been a focus for the state agency tasked with enforcing the regulations, the Virginia Department of Agriculture and Consumer Services.

Go deeper: New Virginia laws going into effect Saturday.


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