Cannabis Control Commission Staff Release Legal Memo Suggesting A New Law Allowing Local Hemp Companies To Sell Their Products To Cannabis Delivery Companies And Retailers Cannot Be Implemented As Intended, Leaving The Local Hemp Industry Fuming.

The BACKGROUND:

Last year, a group of local hemp advocates got together to address a problem in state law; cannabis licensees in Massachusetts, regulated by the Cannabis Control Commission (CCC), were unable to utilize and/or sell products containing cannabinoids that weren't produced under a CCC license - preventing them from sourcing hemp and hemp-derived products, including from local, hemp producers licensed by the state's Department of Agriculture (MDAR) .

MDAR limits what its licensees can produce and sell, and while CBD edibles, beverages and even smokable flower are found in non-dispensary retail environments all over the state, those products are not allowed to be produced in-state by companies regulated by the Massachusetts Department Of Agriculture (MDAR).

MDAR licensed hemp farmers and producers, advocates said at the time, deserved an opportunity to sell their approved hemp products to CCC-licensed companies, including hemp extracts that could be incorporated into other products by a CCC licensee

Existing state law, however, limited those CCC regulated companies to only purchasing products containing cannabinoids (including the CBD that is derived from the hemp plant, even though it does not contain THC) from other license holders overseen by the Cannabis Control Commission such as cultivators, product manufacturers or, crucially, other retailers.

That all changed, or so the local hemp industry thought, when a budget amendment sponsored by State Senator Ryan Fatmann passed into law in the spring of 2020.

In short; the former relevant section of state law said that CCC licensees could only touch cannabinoids grown under a CCC license, whereas the amendment expanded that wording to say that those CCC licensees may touch cannabinoids produced under a CCC license OR hemp/hemp products cultivated AND manufactured under an MDAR license

Speaking at the time in the article linked above, advocates noted the amendment, if it became law, "would help give hemp farmers a new market, give dispensaries new products, and help consumers find a more diverse array of products."

THE MEMO:

But, those behind the law say, the promise of that bill was directly threatened by an advisory memo released Thursday by Cannabis Control Commission staff, providing legal guidance to the state's five Commissioners as to how that new hemp law should be implemented.

A memo of this kind, in many ways, should have been an important moment for advocates; the process of implementing the law they worked to hard to create can only begin after such legal guidance is obtained.

In this case, however, the message sent from the Commission's Legal Counsel, Christine Baily, and to be presented at tomorrow's monthly agency meeting by Executive Director Sean Collins (beginning on page 54 of this Commission document), left those who worked to pass the law in a state of shock.

The Amendment that passed last year, as noted above, was supposed to allow regulated cannabis establishments to purchase hemp or hemp products from MDAR licensees so long as those products are produced in compliance with state and federal law. The legal advice on offer to the CCC, however seems to limit which hemp products could be purchased and also questions if processing of raw hemp, by CCC-regulated companies, would even be legal.

The memo to Commissioners, labeled as routine, indicates manifold "issues" with the new law;

"First, the Legislature established an option for Marijuana Retailers to purchase consumer-ready processed hemp products from MDAR Manufacturers, however, there are a limited number of products that federal regulators and MDAR approve for retail sale." (Memo page 1)

"Second" the memo continues, "although this legislative amendment allows [Marijuana Establishments] to use cultivated or processed hemp, the Commission’s licensees that process hemp, including incorporating hemp into a marijuana product, may be subject to MDAR’s statutory licensing requirements to the extent that they are processing a regulated substance." (Memo page 1)

After identifying those issues, Commission staff went on to explain; "[a]lthough this legislative amendment made it an option for our licensees to acquire hemp or hemp products, there is no mandate. In addition, the Legislature did not integrate hemp into the section establishing the Commission’s legislative mandates to regulate adult-use marijuana and marijuana products." (Memo page 2)

As a result, the anylasis concludes, a certain list of MDAR hemp products may be considered "consumer ready" and thus potentially eligible for sale through CCC companies (including hemp seed, hemp seed oil, hulled hemp seeds, hemp seed powder, hemp protein and, in compliance with FDA rules, cosmetic products containing hemp or CBD." (Memo page 5-6)

Another list of products, however, would be prohibited including; "any food product containing CBD...any product containing CBD derived from hemp that is a drug or makes therapeutic/medicinal claims...any product that contains hemp in a dietary supplement, animal feed that contains any hemp products...unprocessed or raw plant material, including the flower meant for end use by a consumer...any product that was obtained through interstate commerce that contains CBD or that is adulterated, misbranded, or prohibited under the FD&C Act, 21 U.S.C. § 381(a)(3)." (Memo page 6)

These issues, in turn said CCC staff, lead to a set of five questions that the Commissioners are being asked to consider as to implementing the hemp law;

1. Whether Marijuana Product Manufacturers can lawfully purchase hemp flower from MDAR Cultivators or Producers without being licensed.

2. Whether Marijuana Product Manufacturers can lawfully purchase processed hemp from MDAR Processors and further process that hemp to produce hemp/marijuana products.

3, Whether the FDA’s jurisdiction over food and beverages would control under the Supremacy Clause [of The United State Constitution], given our Legislature’s decision to treat marijuana differently under G L. c. 94G, § 1.

4. Whether Marijuana Retailers can purchase hemp flower, whole plants or leaves from MDAR Cultivators or Producers without being licensed, given MDAR’s restrictions on their Cultivators or Producers creating consumer-ready products.

5. Whether Marijuana Cultivators and Manufacturers can lawfully purchase flower from MDAR Cultivators or Producers without being licensed, and test and package and label the flower.

THE REACTION:

That framing of the issue, in turn, left those who worked to get the hemp amendment passed to begin with fuming.

Hillary King, a grassroots hemp activist and advocate who played a central role in the hemp amendment becoming law, said after reading the memo, "I'm beyond disappointed to see the Commission deem this "Importance Level: Routine." It was called the Survive and Thrive Amendment for a reason."

"There is even an error right in the first few lines of the memo", fumed another hemp advocate while pointing to a section of the letter that says CCC regulated companies "may purchase hemp or hemp products, including hemp-derived CBD, cultivated OR manufactured by licensees of the Massachusetts Department of Agriculture (MDAR)."

"It should say 'cultivated AND manufactured'." they said, concerned that such an error had the potential to allow hemp products sourced from outside of Massachusetts to make their way into the supply chain, despite specific legislative intent to the contrary.

Julia Agron, director of the Northeast Sustainable Hemp Association, said the memo as a whole had left an already vulnerable industry in a state of apoplectic panic;

"Hemp farmers and processors really saw this amendment as a last chance to hang in and develop a real program for hemp in our state" Agron told me, "...and legislative inaction has shrunk the Massachusetts program down to a handful of licensees. A number of them, my farm included, relicensed this year because the budget amendment led us to believe this state valued us a farmers and small business people, as revenue generators and job creators. Now licensees are texting me in a panic, feeling abandoned and shut out before we even get heard. Its beyond frustrating and I really don't think our Hemp program will survive another year of being both squashed and neglected by our government."

Agron also took issue with the section of the memo that suggested the hemp amendment created an "option" but not a "mandate" for MDAR regulated hemp products to be sold, telling me, "[a]s far as "not a mandate" ...Question 4 [the ballot initiative that legalized the adult use cannabis market in the Commonwealth in 2016] established a hemp industry in Massachusetts, our government has had a mandate since then to help us establish hemp as a legitimate agricultural resource in our state."

While the process that the CCC will undertake to implement the new hemp rules is only just beginning, this reception from the advocacy community most certainly raises the prospect of trouble going forward.

With little support, and staring at the potential of financial ruin, many MDAR operators are wondering if they will be able to continue operating long enough for these discussions to play out.

FRIDAY'S CANNABIS CONTROL COMMISSION HEARING:

Today's legal memo is only a framework for what will be, as is routine, an extended Commission discussion at tomorrow's (4/16/2021) 10:00AM monthly public meeting.

I will be hosting a pre-show starting at 9:15AM tomorrow, to discuss the very issues covered in this article, with Laura Beohner from The Healing Rose and John Nathan from Bay State Hemp Company.

Following the pre-show, I will then transition directly into coverage of the CCC hearing at 10AM. The hemp agenda item is listed early on the agency's agenda, and I imagine the issue to be covered sometime between 10 and 11AM.

Coverage can be found live via either;

Facebook.com/TheYoungJurks

Or

Facebook.com/GrantSmithEllis