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Ohio on board with regulating intoxicating hemp, but how remains unclear

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This story was republished with permission from Crain’s Cleveland Business.

Ohio is among a minority of states that have yet to regulate the sale of intoxicating hemp products, but there could be some growing momentum behind changing that.

These products include items like vape cartridges, edibles or gummy candies purportedly infused with compounds like Delta 8 THC extracted from legally grown hemp – the less intoxicating cannabis relative of marijuana – and THCA flower, all of which can be commonly found today at retail stores ranging from smoke or wellness shops to gas stations and purchased online.

Production of hemp, which is defined as having a concentration of less than 0.3% THC on a dry weight basis, was effectively legalized in the U.S. with the 2018 Farm Bill.

As Craig Schluttenhofer, a research associate professor at Central State University who specializes in hemp, explains, to make products with an intoxicating effect, manufacturers increase the volume of hemp-derived THC in those products to a level that could make the person using or consuming them feel a “high” that can be similar to the effects felt from marijuana.

Hemp-derived flower intended for vaping or smoking, meanwhile, often marketed as THCA flower, is a unique animal in its own right.

THCA is a compound – which can be extracted from hemp – that converts to THC once heated or combusted. But because current federal regulations do not consider THCA levels as a distinguishing factor between hemp or marijuana, these products exist in a legal gray area, enabling their sale by common retailers outside of the licensed marijuana industry.

Marijuana companies tend to want restrictions on intoxicating hemp because those products may undermine sales in their own industry, which is heavily regulated and intrinsically expensive to operate within.

The absence of relevant federal regulations or comparable state laws means that these intoxicating hemp products are not subject to the same testing and oversight compared to the licensed marijuana cultivators, processors and retailers.

There are also no age restrictions on these unregulated products, something that has been a concern for some lawmakers and Gov. Mike DeWine, who called for “quick action” to restrict the sale of intoxicating hemp to children nearly a year ago.

Jana Hrdinova, administrative director for the Drug Enforcement Policy Center at Ohio State University’s Moritz College of Law, which recently published a report with considerations for regulating intoxicating hemp in the state, feels like some regulations should be put in place to prevent minors from buying these products and to generally protect consumers as there presently no rules requiring hemp products to be tested to verify their contents or the presence of potentially harmful additives.

“At a minimum, we need to take care of the minimum age, and we need to take care of product safety, marketing to children and child-resistant packaging,” Hrdinova said. “To me, those are the basic four things the Ohio legislature needs to act on.”

Ohio is, in fact, behind on doing something here. According to the Reason Foundation, a California-based think tank, Ohio is among 21 states that don’t have some regulations on intoxicating hemp products. Those regulations vary by state and range from outright prohibition to regulating them similarly to marijuana.

“It is important that (intoxicating hemp products) stay out of the hands of minors, especially because, while we’re beginning to have some understanding of the long-term effects of THC, we don’t have that with these products,” Schluttenhofer said. “And it’s a very high risk for age groups that are still fundamentally developing physiologically as adults.”

There are currently four pieces of legislation in the Ohio statehouse aimed at regulating intoxicating hemp – two each in the House and Senate – but each varies in what they would accomplish.

One of those, Senate Bill 326, whose primary sponsor is Sen. Stephen Huffman, would outright ban the sale of intoxicating hemp in the state and set specific penalties for anyone caught selling the products to anyone younger than 21.

But Schluttenhofer cautions that an outright ban would have to be approached carefully as to not impact some other hemp-derived products.

“The challenge is, how do you balance (regulations) while – if they do decide to prohibit intoxicating products – not prohibiting some of these valid hemp products as well that people are buying and using for health purposes,” he said. “People don’t buy CBD products to get intoxicated, but for other health purposes.”

A group known as the Ohio Healthy Alternatives Association has voiced opposition to SB 326 based on concerns that it could impact small businesses and potentially result in the loss of some 20,000 Ohio jobs.

Not much is known about the OHAA, however. The organization seems to have only recently formed and has no website or readily available information about its purpose or members.

Crain’s reached out to the organization via email to learn more about it and request details around how it came up with its figures for potentially impacted jobs but has yet to hear back.

DEPC points out that there is “limited data on the intoxicating hemp industry in Ohio, though the Ohio Department of Agriculture reports that the number of farmers involved in hemp production is relatively small in the Buckeye State.”

And Schluttenhofer notes that while there are only a handful of hemp growers in Ohio, those who do grow the plant are primarily doing so for grain and fiber, not for the manufacturer of intoxicating products.

Whether any of the bills geared toward regulating intoxicating hemp gain traction before the end of this year, which will mark the conclusion of the current general assembly, is unclear.

“There are certainly competing interests in regulating hemp. You have a hemp industry and small businesses that sell hemp products, competing with a marijuana industry that sees themselves being undercut by intoxicating hemp products,” Hrdinova said. “But the thing I’m most concerned with is safety of products for anyone, whether 21 or 50 or 16. If you buy a product, it should be safe to use.”



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Massachusetts regulators order single-lab testing to combat cannabis lab shopping

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Massachusetts regulators will require cannabis businesses to use a single laboratory for all compliance testing in an effort to prevent companies from shopping around for favorable test results.

The state’s Cannabis Control Commission voted 3-0 to require licensed businesses submit testing samples to one independent laboratory starting April 1, 2025, according to an administrative order advanced Thursday. The new rule is meant to close loopholes that some say have allowed companies to shop around for labs to juice their numbers for market share.

“This administrative order continues our mission of being a strong regulator,” Acting Executive Director Debbie Hilton-Creek said in a statement.

Under current rules, companies can split testing among multiple labs. The practice has led some facilities to report suspiciously high THC levels or overlook contamination to attract business.

The commission’s enforcement team said the changes would reduce risks of noncompliant products reaching consumers and improve audit capabilities. The move follows a November listening session in which testing concerns were raised, according to the announcement.

If an original testing lab needs to subcontract work, they must first obtain commission approval and demonstrate they are “incapable of performing certain required tests due to a hardship.” Labs also can only subcontract with one other facility at a time.

“The commission shall only approve subcontracting agreements when the Originating Independent Testing Laboratory is incapable of performing certain required tests due to a hardship relative to its facilities, instrumentation, personnel, or required consumable materials or in the event of an actual or potential conflict of interest,” according to the order.

Results must be uploaded to the state’s tracking system within 72 hours, with all certificates of analysis containing the complete testing results, including any subcontracted work, it said.

The commission will also begin publishing THC test results on its public data platform and establishing regular meetings with licensed laboratories to improve oversight.

The commission thus far has struggled to implement effective testing oversight. Earlier this year, the agency contracted with a private lab for a “secret shopper” program to verify retail products’ test results, Green Market Report previously reported. Unlike other major cannabis markets such as California and Colorado, Massachusetts lacks a state reference lab to independently verify commercial lab results.

Analysis of testing data by MCR Labs found that across multiple states, laboratories reporting higher THC concentrations tend to increase their market share while those reporting average failure rates lose business, according to Chemical & Engineering News.



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Cansortium completes merger with RIV Capital, plans to scale up in New York

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Florida-based Cansortium (CSE: TIUM.U) (OTCQB: CNTMF), which does business as Fluent, has finalized its megamerger with New York-based RIV Capital, (CSE: RIV) (OTC: CNPOF), creating a new multistate operator that has a footprint in four states with 42 operational dispensaries.

The move gives Cansortium immediate access to New York, one of the fastest-growing legal marijuana markets in the nation, along with its existing portfolio of cannabis shops and grows in its home state, Pennsylvania and Texas. The company now owns eight total cultivation and processing facilities, which it said in a press release would allow it to bolster the Fluent brand even more going forward.

The company reportedly has $33 million in the bank with which to finance further acquisitions, it said in a Thursday announcement.

Another major winner in the deal is Scotts Miracle-Gro, which has a sizable stake in RIV Capital through its subsidiary The Hawthorne Collective. Existing shares will be converted into 1.245 shares of the newly formed Fluent, eliminating $160 million in company debt.

Shareholders of Cansortium will own 51.25% of the new Fluent, while shareholders of RIV Capital will own 48.75%, the company said. The company will continue trading under Cansortium’s existing ticker symbols on the Canadian Securities Exchange and the Over-The-Counter markets.

Cansortium CEO Robert Beasley will continue to lead the new company, and RIV Capital interim CEO David Vautrin will serve as the new company’s chief commercial officer.

Beasley said in the release that Fluent intends to scale up wholesale operations in New York to boost its Moods brand of marijuana products and “gain additional shelf space in dispensaries across the state,” which he said has “immense potential.”

The merger could prove key to the long-term prospects for both Cansortium and RIV Capital. Cansortium posted an $11.7 million net loss for the third quarter of 2024, and RIV Capital reported a $63.4 million net loss for the same period.

“Looking ahead, we remain focused on sustainable, long-term growth and will continue to drive efficiencies across all areas of the business to achieve our profitability and cash generation goals,” Beasley said.



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The Daily Hit: December 19, 2024

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News from: US Farm Bill, Fluent Cannabis, Massachusetts and more.

The Daily Hit is a recap of the top financial news stories for Thursday, December 19, 2024.

On the Site

Farm Bill extension leaves hemp industry rules intact for now, including intoxicating products

The farm bill extension would run through March 2025.

Read more here.

Cansortium completes merger with RIV Capital, plans to scale up in New York

Scotts Miracle-Gro, which is a major investor in RIV, also benefits from the deal.

Read more here.

Massachusetts regulators order single-lab testing to combat cannabis lab shopping

The rule change follows growing evidence of inconsistent testing practices in the state’s $7 billion cannabis industry.

Read more here.

Nine New York social equity retailers ask to join lawsuit halting cannabis licensing for 3rd time

A court filing argued that the group of CAURDs are in danger of bankruptcy if the injunction is not removed soon.

Read more here.

In Other News

Greenway Greenhouse Cannabis Corp.

Greenway Greenhouse Cannabis Corp. entered into an asset purchase agreement to acquire all of Choice Growers’ consumer packaged goods brands, SKUs and listings of the brands, trademarks, goodwill and other associated intellectual property. This acquisition encompasses all of Choice Growers’ brands, including Grapefruit God Bud (also known as Grape God), The Jeffrey, Watermelon Pebbles, Pink Lemonade, Duke Nukem, Tangerine Dream and Blackberry Cheesecake.

Read more here.

Innocan Pharma Corp.

Innocan Pharma Corp. intends to complete a non-brokered private placement of up to 3.5 million units of the company at a price of C$0.20 per unit for gross proceeds up to C$700,000 plus 15% overallotment options. The offering is expected to close on or around Dec. 31.

Read more here.



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