A cannabis industry leader is calling on New Mexico’s marijuana regulators to stop the sale of intoxicating hemp products in the state. But the regulators say their hands are tied as long as those products contain levels of delta-9 THC that are below the legal threshold.
Last month mega-operator Ultra Health sent a letter to leaders at the New Mexico Cannabis Control Division (CCD), demanding that the agency step in and halt the sale of intoxicating hemp products in head shops and gas stations.
These unregulated products are available thanks to a hemp law loophole.
Hemp was legalized when Congress passed the 2018 Farm Bill, which defined “hemp” as marijuana with less than 0.3 percent delta-9 THC concentration by dry weight. New Mexico’s recreational and medical laws use the same definition.
But in recent years, hemp manufacturers have discovered that delta-9 THC isn’t the only intoxicating cannabinoid in weed. Delta-8 THC and THCA have been found to have some psychoactive effects, and since they aren’t specifically named by state and federal hemp laws, including them in unregulated products is technically legal.
According to the letter, Ultra Health representatives gathered a variety of hemp products and brought them to Rio Grande Analytics lab, where tests showed that although the products were labeled as containing hemp-derived THCA or delta-8 THC, the majority of the samples also contained concentrations of delta-9 THC that were over the legal limit for hemp.
“Ultra Health urges the Division to devote attention to this emerging crisis,” wrote Ultra Health Chief Legal Officer Kristina Caffrey. “Ultra Health is willing to share the details of the products it purchased, the locations where it purchased them, and the detailed test results. Ultra Health is willing to go along with Division employees to these locations.”
The letter says the problem is growing as time passes. “They have access to a network of smoke shops and gas stations,” Caffrey wrote. “They can evidently move bulky materials efficiently from state to state. And they are hydra-like: If one head gets cut off, the criminal endeavor just sprouts two more.”
But the CCD says that it has no jurisdiction over hemp products. In an email to The Paper., the division said: “The CCD’s regulatory jurisdiction is limited to overseeing cannabis and cannabis-related products as defined under [cannabis and hemp laws] … Regulation and enforcement related to hemp-derived products falls under the purview of the New Mexico Environment Department (NMED), which oversees compliance under the Hemp Manufacturing Act. Facilities involved in hemp processing, transportation and sales are required to adhere to NMED’s permitting, testing and labeling requirements.”
The CCD goes on to say that it may seek to impose civil penalties for unlicensed activity on businesses that produce products containing higher levels of delta-9 THC than the law allows. “However, to take such action, the CCD would be required to have sufficient evidence to support the claim, such as laboratory confirmation of THC content exceeding 0.3 percent on a dry weight basis,” writes the division.
Regulators would also have to offer due process to suspected violators, “including the opportunity for an evidentiary hearing pursuant to the Uniform Licensing Act before a regulatory order may be issued.”
When it comes to seizing suspected illegal products, the CCD says it has not been given the authority to do so. In fact, the agency has been asking lawmakers for the power to embargo, seize and destroy illicit, adulterated or misbranded cannabis, a request that is expected to go before the legislature this year.
The CCD says that if anyone suspects a business is selling illegal cannabis products, they should report it to law enforcement for investigation and action. “The CCD works closely with other state agencies, including the NMED and law enforcement, to address potential risks associated with unregulated and mislabeled products,” writes the division. “Ensuring consumer safety and preventing underage access to intoxicating substances remains a top priority as we fulfill our statutory responsibilities.”
“The CCD/RLD is passing the buck to another state agency while simultaneously claiming they need expanded ‘police powers,’” says Ultra Health president and CEO Duke Rodriguez. “This is a perfect example of not enforcing the laws on the books that already exist.”
Rodriguez says the law is clear on how these products are defined. “In this case it’s not hemp,” he says. “It’s cannabis, and the CCD/RLD has the statutory duty to enforce the law.”
Rodriguez has been one of the most prominent voices sounding the alarm about market oversaturation in New Mexico. In the past he and other operators have called for a temporary pause on issuing new cannabis licenses as a way to ease pressure from weed businesses as the market stabilizes. Advocates of a moratorium have cited the unique hurdles faced by cannabis industries, including lack of access to banking, an inability to file business tax deductions and competition with tax-free illicit cannabis.
Intoxicating hemp products represent a new vector of competition to an already shaky foundation.
“Look at the nature of the industry—a perishable commodity product with high fixed costs, high exit barriers and near-perfect substitutes (hemp and the illicit market),” says Rodriguez. “That is a perfect storm for a huge bust.”
Rodriguez says the state needs to do something about these alleged illegal products before they do irreparable harm to the state’s licensed industry.
“Unlicensed operators, untested products, untaxed sales leaves a race to the bottom the only possible outcome,” he says.