Key points:
- Law enforcement officials across the country are raiding smoke shops and supposed hemp operators ahead of a new federal ban on most hemp products.
- The raids suggest a crackdown on hemp is already underway, with legal observers suggesting that state law is what should concern the $38 billion hemp industry – not the federal Farm Bill loophole.
- Hemp operators and industry advocates say law-abiding merchants aren’t the focus for law enforcement, which is alleging other, more serious crimes when raiding hemp shops.
With six weeks remaining before most of the $38 billion hemp cannabinoid industry becomes federally illegal, how the new prohibitions will be enforced – and what agency has the necessary resources and willpower available – remain open questions.
But a recent string of raids and arrests around the country of purported hemp sellers suggest a crackdown on hemp THC is already underway, attorneys and advocates contacted for this article said.
And instead of the U.S. Drug Enforcement Administration imposing the will of Congress, it’s local law enforcement and state-level bans spelling trouble for the hemp products scheduled to lose federal Farm Bill protections on Dec. 11.
“The FDA and the DEA lack the resources to enforce intoxicating hemp laws,” said Shawn Hauser, a Texas-based attorney with national law firm Vicente LLP.
“I don’t know if that’s going to change federally without funding,” she added. “But I think state authority is generally the first avenue (enforcement) will go.”
Is the government cracking down on hemp THC?
In contrast to the hemp boom’s early days, with confusion between hemp and marijuana the norm and terms like “tetrahydrocannabinolic acid” or THCA arcane concepts, even small-town police and rural county sheriffs are “educated on the issue in a way they weren’t before,” Hauser said.
Local and state law enforcement are “also updating their regulations in a way that does have teeth and enforcement dollars,” she added.
“That wasn’t always the case with hemp laws.”
The situation spells trouble for unscrupulous operators selling high-potency products or unregulated cannabis under the guise of “THCA flower” online and in brick-and-mortar shops without care for product testing or labeling – particularly those trafficking large amounts or also committing other crimes.
However, recent events also suggest there’s a path forward for some operators. Similar to the uneasy but stable status quo for the federally illegal, state-licensed cannabis industry, if local law is obeyed, trouble may not follow for hemp operators regardless of what federal law says.
That won’t sit well with the cannabis industry operators who have long demanded action on hemp, but it appears a much likelier outcome than a sweeping federal crackdown, observers said.
“I see state and local law enforcement taking the lead on these issues,” said Matthew Ginder, a partner at Greenspoon Marder who also sits on the legal committee of the Florida Hemp Council.
“And in that case, they’re going to be applying state law,” he added.
“Having the feds come in and raid a hemp shop is not something that’s going to be common where hemp products are regulated at the state level.”
What hemp THC operators are federal and state police raiding?
Hemp operators have been living with an existential threat for nearly a year.
A stopgap spending package signed into law by President Donald Trump last November closed the so-called “loophole” in the 2018 Farm Bill. Another emergency budget bill signed by the president last month delayed the closure’s effective date to Dec. 11, but absent more eleventh-hour wrangling, that’s when most hemp products sold in the U.S. lose federal protections.
Finished products can have no more than 0.4 milligrams of THC per package, and both synthetically derived THC and THCA flower become controlled substances.
Hemp advocates are still confident they can broker a compromise between now and Dec. 11.
But in the meantime, most states have also revisited the hemp question and imposed new potency restrictions, age-gating requirements and other rules independently of federal law.
These include:
- Virginia, where hemp products cannot have more than 2 milligrams of THC as of Aug. 15
- Texas, where THCA flower has been outlawed since March (though enforcement remains rare, Vicente’s Hauser said)
- Florida, where hemp operators must abide by strict state regulations including product testing, and where THCA flower is also prohibited
And it’s state law that appears to be at the heart of several recent law-enforcement operations, including:
- 12 people arrested in September a seven-county law enforcement sting in Pennsylvania for allegedly selling “high-potency THC products” in smoke shops and convenience stores
- 13 “ostensibly legal hemp” shops raided by North Carolina county sheriff’s deputies and local police on Oct. 14
- A Florida woman held in custody on a $20 million bond for allegedly running a network of warehouses in three states “to package and ship THC products to customers across the country,” according to the Palm Beach County Sheriff’s Office.
Are federal authorities raiding hemp THC shops?
When federal authorities are involved, other, more serious crimes are alleged that have nothing to do directly with hemp.
That includes the owner of the “first THCA dispensary” in Wichita, Kansas, who pleaded guilty to firearms charges as well as Virginia state Sen. L. Louise Lucas, whom the Department of Justice indicted last week for allegations of public corruption as well as drug charges in connection with “THC” sales at a Portsmouth, Virginia store she co-owned.
In the case of Lucas, a vocal critic of President Trump, Attorney General Todd Blanche and FBI Director Kash Patel announced the charges at a press conference. That’s not a likely outcome for other operators selling marijuana under the guise of hemp, attorneys said.
“We are seeing an uptick in enforcement,” Rod Kight, a North Carolina-based hemp attorney, told MJBizDaily.
“But I don’t think it’s centralized in any way,” he said. Most cases also allege money laundering or the sale of other drugs, he noted.
“It may be because of the upcoming change in the law, but it could also be because more stuff is happening – and we’re trying to make a connection (to the hemp question) that isn’t there.”
What happens if hemp products lose federal protections?
Some hemp operators say they would welcome a crackdown, whether it’s led by federal or state authorities – so long as it focuses on individuals breaking state as well as federal law now, before the Farm Bill loophole closes.
“There are federal laws that are largely, in my opinion, not being enforced to begin with,” Joe Gerrity, the CEO of Louisiana-based hemp-derived drinks company Crescent Canna, told MJBizDaily.
“You can go online right now and you can buy products that are not compliant under federal law,” he added. “A lot of people have been walking that line for a long time.”
“It doesn’t seem like they’re going into a random store and arresting people for products that are arguably compliant. It seems in these cases these products are blatantly not legal.”
Prominent hemp advocates such as the Washington lobbies pushing for another reprieve seem unconcerned about the recent spate of raids. After all, they’re happening now, while 2018 Farm Bill protections are still active.
“There’s only a crackdown when people are violating the law,” said Jonathan Miller, general counsel for the U.S. Hemp Roundtable, a major D.C.-area lobby for hemp operators.
States with strict or prohibitive hemp laws will likely see “more and more crackdowns,” he added.
“I think we’ll see problems with the states. That’s where the battle lines are.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
