Shutdown compromise could kill Minnesota's THC seltzer/edible industry
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Minnesota's booming low-dose THC industry will be effectively killed if a provision in the U.S. Senate's compromise to end the federal shutdown passes, according to industry experts.
Why it matters: Low-dose THC seltzers have been a lifeline for struggling craft breweries, and a 2021 Minnesota law created a boom of companies that grow, manufacture and sell edibles.
- "This is a poison pill for Minnesota," Carol Moss, a cannabis attorney for Hellmuth & Johnson, told Axios.
Catch up quick: The 2018 Farm Bill created a loophole for intoxicating THC to be sold in low doses. The shutdown deal would ban those THC products and also non-intoxicating CBD products, Moss said.
- Businesses could go for one of the state's limited number of new adult-use licenses, but that would mean much higher taxes and additional banking hurdles, and for breweries it would mean no longer being able to sell beer, Moss said.
Zoom in: Minneapolis-based Indeed Brewing's chief business officer, Ryan Bandy, said his understanding is that breweries would still be able to sell their seltzers in the state in which they're made, but not across state lines.
- Indeed Brewing has built up a large business of its own THC beverages, as well as producing them for other companies on contract. About half of its products are sold outside Minnesota and Wisconsin, where it operates breweries.
The other side: Kentucky Sen. Mitch McConnell, who authored that 2018 Farm Bill, has been a leading proponent of closing the loophole, arguing that companies have exploited it to create intoxicating substances.
- Thirty-nine state attorneys general signed a letter asking Congress to outlaw intoxicating hemp products at the federal level, including Minnesota's Keith Ellison.
What we're watching: The Minnesota Craft Brewers Guild's director of government and industry relations, Bob Galligan, agreed that closing the loophole would effectively kill the THC seltzer industry, but he noted that there's still room to negotiate.
- His group continues to speak with Minnesota's congressional delegation, and he applauded Minnesota senators Tina Smith and Amy Klobuchar for voting against the Senate provision.
- He said his group is "making sure elected officials know how important this market is. Not just to brewers, but to retailers, wholesalers, and above all, our communities."
The intrigue: McConnell's fellow Kentucky Sen. Rand Paul has said he will obstruct passage of legislation that takes aim at the hemp industry in his state, according to Politico.
Leili Fatehi, consultant and owner of THC edible and beverage maker Crested River Cannabis, said she wishes the federal government would use Minnesota's model because it bans synthetic-derived cannabinoids.
- "Our law allows only naturally derived, low-dose, clearly labeled hemp-based THC products," she said. "These products are responsibly regulated, tested, and sold through licensed channels. Our standards have kept the market safe and legitimate while supporting local manufacturing and agriculture."