How Can Hemp Beverages be Effectively and Safely Regulated?

Want to learn more about THC beverages? Visit: www.drinkhemp.com 

Hemp-derived THC beverages are having their moment in the sun: retail outlets like Total Wine and Spec’s are welcoming them alongside their alcoholic beverages, DoorDash is delivering them in select markets, and large organizations like national media outlets, BevAlc groups, and investors are taking notice.

Over the last few years, many of the biggest hurdles have been cleared, and there is just one thing left that could bring things to a grinding halt: government regulation. While the 2018 Farm Bill is what allowed THC beverages to ultimately flourish, it has left a lot of question marks:

When will the new farm bill be written, and could it affect hemp-derived intoxicating THC products? 

Who should eventually regulate this product category?

How do we prevent these products from getting into the hands of kids/minors?

Thankfully, it seems that the federal government and even many state governments (for the most part) have no intention of regulating this all away.  I believe some of this is due to the cannabis/hemp beverage industry possessing a group of hardcore, scrappy advocates who are willing to organize themselves into trade groups, set regulations for themselves, and make valiant efforts to proactively work with legislators to create the future they envision.

Over the past week, I spoke to a few of the leading advocates in the space to seek their opinions on how they see the future of legislation and regulation for this category.  I talked to Diana Eberlein (VP of Marketing/Business Development at Sorse Technology, President/Chair of the Cannabis Beverage Association), Christopher Lackner (Founder/President of the Hemp Beverage Alliance), and David Gonzalez (Founder of Fizzy THC, Head of Growth at Hemp House MN).

What do states/legislators seem to be most concerned about right now?

Eberlein, Lackner, and Gonzalez all touched on a similar range of topics: consumer safety, bad actors, and marketing to/access by children.

Consumer safety is probably priority number one across the board. Because these are unregulated products, there is no agency tracking dosing, the presence of heavy metals or other toxins, and whether correct manufacturing practices are being followed.  Essentially, they are worried about bad actors (the next topic of discussion).

Lackner said that there is a common concern with bad actors among gummy brands and that some of these products are often high-dose, untested, and not well-labeled. I have seen many local news stories about this myself, and this is definitely something that legislators are becoming more concerned about. Specifically with delta-8 THC products, which can produce a strange high and are more prone to the inclusion of heavy metals given their extraction process.  However, Eberlein said that thankfully this is less common in the beverage space “because you really have to have your ducks in a row to produce a beverage – you need emulsion technology, specific packaging, co-packers with bottling lines, and distributors. It’s much easier and cheaper to produce a gummy or traditional edible.”

Bad actors also unfortunately appear on the retail side of things too. Many smoke shops that are looking for an extra income stream are hawking low-quality products that many times come from overseas suppliers. As Gonzalez said “Just because laws exist doesn’t mean people follow them. Smoke shops, tobacco stores, etc all sell non-compliant products that put consumers at risk.”

Minors are also at risk, as the same smoke shops that have sold nicotine products to kids are now selling hemp-derived THC products in colorful packaging.  With an unregulated landscape, there is unfortunately room for brands to make packaging that appeals to kids, and for retail outlets to be lenient or unsure of the proper age of consumption.  A recent graphic was made by the Ohio Governor’s office showing these products:

Lackner affirmed that the Hemp Beverage Alliance is committed to making products “restricted to adults 21 years of older”, and that the group looks “forward to working with regulators to help create a framework that protects consumers and keeps products away from kids.”  Everyone I have talked to in the industry seems to share this sentiment, and I think you would be hard-pressed to find a true advocate of the space who doesn’t want to prevent these products from being accessed by kids.

What do you see as the most likely outcome for the new farm bill?

The 2023 Farm Bill has been pushed for one year and could be signed as early as this fall. Across the board, Eberlein, Lackner, and Gonzalez all believe that the new farm bill will likely go unchanged in regard to hemp.

Gonzalez thinks there could be a 5-year extension, and that “if anything, a raise to 1% THC instead of 0.3%.” For context, this would allow hemp farmers to grow more potent hemp, and allow operators to use less biomass when extracting for THC.

Lackner shared that the Hemp Beverage Alliance has been in touch with the USDA, which also predicted it will remain unchanged. Here is a direct quote from an email that Lackner received earlier this month:

“There are a lot of rumors swirling around about possible amendments, including testing exemptions for fiber and grain hemp, removal of the background check requirement, and the raising of the THC limit to something higher than 0.3%. However, there is also some chance no new Farm Bill will be approved again this year as well and since things are always changing in the hemp landscape by the time a Farm Bill is close to approval – who knows what the issues will be at that time. So, long story short, it’s probably too early to say.”

If there were to be a dosing cap set, how would you like to see that implemented?

Gonzalez, a Minnesota resident, believes that the state’s model has proven well so far, which is 5mg per serving for edibles and beverages and no more than 2 servings a container, for a total of 10mg. He said that 10mg  “might not be strong enough for some people but for the sake of liquor stores and on premise expansion” it works well.

Eberlein had an identical view and said that there should be a 10mg cap which could consist of 2 maximum servings of 5mg. She thinks multi-serve options should have a 100mg cap, and should encourage individual doses of 10mg or less.

Lackner stated that the Hemp Beverage Alliance has no official position on dosing caps, but that consumers should have the choice to find the right level for them. He pointed to the beer market as an example, where ABV is typically between 2.5% - 6.5%, and consumers are empowered to make the right choice for themselves.

I think it will take some time for the market to settle on a “standard dose”, but if I had to bet money on it, it would end up being somewhere in the range of 2.5mg - 5mg.  For most people, this seems to be pretty comparable to a beer / standard alcoholic drink. Gonzalez is correct that some people already grumble about low-dose options not getting them high enough, but I believe that once per-can costs come down this will be a thing of the past. When was the last time someone complained that just one Coors Light wouldn’t get them drunk?

Does the TTB make the most sense for THC beverages? If not, what agency would you like to see them regulated by?

Many of the big trade groups like the Cannabis Beverage Association and the Hemp Beverage Alliance have talked about the concept of the TTB (Alcohol Tobacco Tax and Trade Bureau) eventually overseeing THC beverages since they are a similar vertical to alcohol.  While the government has yet to comment on this, in theory, it makes a lot of sense. Gonzalez, Eberlein, and Lackner are all aligned on this front.

Eberlein and Lackner both said that the TTB would be the most seamless way to run it because the manufacturing, distribution, and retail already exist and would only need slight alterations to work for THC beverages. Eberlein pointed out that “if we have to build a new infrastructure, it will take years to build and implement - and there is no guarantee that system would be better than the existing 3 tier system.”  Gonzalez also made his case as to why a scenario outside of TTB regulation could be costly “The FDA would not be good - they have the stance that even CBD in food and beverage is illegal. Only one CBD product has been approved by the FDA.”

If there was one main argument about why THC beverages should be more normalized that you could deliver to top legislators, what would it be?

Gonzalez: “Healthier alternative to alcohol with clear demand, which translates to added tax revenue for the state.”

Lackner: “The main argument is that these products are already normalized. Adults are increasingly looking for alcohol alternatives, technological advancements have resulted in higher quality and consistent products, and the beverage distribution network is already in place. The only missing piece is sensible regulation that will not only protect consumers but allow the industry to take off.”

Eberlein: “With legislators, I don’t think they need to be educated on normalization as much as they need to understand how low dose THC beverages can be effectively regulated through the existing TTB infrastructure. Because low dose beverages encourage sessionable experiences (because of the consistent onset/offset times), emulating traditional alcohol, similar regulations will allow the TTB to seamlessly enforce the regulations effectively while also maintaining consumer safety.

We will need to outline dosage caps, why low dose drinks need to be sold outside of the dispensary channel, and the potential tax revenue at the state and federal level (which if they are sold through the dispensary channel, those tax dollars would be substantially lower).  The comparison of low dose beverages to their alcohol counterparts* will also be helpful with legislators and regulators becoming more comfortable with the beverage category. Approximations, such as 2.5 mg serving being similar to a beer will be helpful in their understanding of the low dose category.”