The Daily Hit is a recap of the top financial news stories for Wednesday, June 5, 2024.

On the Site

Report: Michigan overtakes California in number of cannabis products sold

California is still outselling Michigan on the revenue front, likely due to higher prices in the West Coast state.

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States, courts grapple with illegal hemp as they await new federal rules

Negotiations are underway on the 2024 Farm Bill, but intoxicating hemp products are already readily available.

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Green Thumb CEO confirms proposal to Boston Beer

Kovler waxed poetic of the potential benefits of a combination between the two companies.

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Safe Harbor expands cannabis services, lends $550k to three businesses

The three lines of credit didn’t require real estate collateral, “utilizing instead a flexible set of underwriting standards.”

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Ohio DCC publishes new license application documents earlier than expected

The DCC will begin accepting applications on June 7, and regulators must approve or deny them by Sept. 7.

Read more here.

In Other News

Acreage Holdings

Acreage Holdings, (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) entered into subscription agreements with certain institutional investors to issue units by way of a brokered private placement at a price of US$833.33 per unit, for gross proceeds $10 million.

Read more here.

Grown Rogue International

Grown Rogue International (CSE: GRIN) (OTC: GRUSF) received licensing approval with the New Jersey Cannabis Regulatory Commission and closed its first option to acquire 44% of ABCO Garden State LLC on May 31.

Read more here.

California recalls

California regulators are initiating more cannabis product recalls and health warnings to consumers. In the past month alone, the Department of Cannabis Control has issued six product recalls, and the California Department of Public Health issued a consumer warning regarding certain hemp-infused beverages.

Read more here.

While U.S. federal rescheduling talks dominate headlines lately, questions regarding its chemical cousins have also been taken to task across every level of government.

In Minnesota, regulators seized approximately $278,000 worth of raw cannabis flower from hemp stores selling intoxicating products, according to the MinnPost. The state recently created a legal workaround to enforce a ban on these products, with retailers caught selling them after August 1, 2023, facing the threat of exclusion from Minnesota’s upcoming recreational marijuana market.

Minnesota’s efforts to support its adult-use program come as state courts, lawmakers, and businesses alike continue to wrestle with the legality of intoxicating hemp products in their own ways. The proliferation of these products are the result of companies exploiting a loophole in the 2018 Farm Bill, which legalized hemp containing less than 0.3% delta-9 THC.

Squabbles hold up 2024 Farm Bill

At the federal level, Congress is considering stricter regulations on hemp-derived cannabinoids as part of the 2023 Farm Bill, which has faced delays in D.C. over non-cannabis disagreements, such as funding for the Supplemental Nutrition Assistance Program SNAP, commodity support programs, and  conservation program funding, as well as numerous proposed amendments and much political maneuvering.

One version of the bill recently underwent an hours-long mark-up process. The House Agriculture Committee approved an amendment to generally ban intoxicating cannabinoids like delta-8 THC, though some fear it could unintentionally criminalize many CBD products.

U.S. Hemp Roundtable General Counsel Jonathan Miller, who lobbied members of Congress before the hearing to vote against the amendment, said the measure would result in the “federal prohibition of 90-95% of all hemp products on the market” and “wreak havoc in the fiber and grain markets.”

Complicating matters further, prices for hemp-derived THCA flower have already converged with those of state-regulated marijuana, according to Hemp Benchmarks data reported by Green Market Report, making the products an attractive substitute for consumers and undercutting legal marijuana markets. And thanks to delta-8 and THCA, many are trying cannabis for the first time via intoxicating hemp, with preferences ultimately shaping medical cannabis channels.

Tackling intoxicating hemp

The debate over hemp-derived intoxicants is playing out in other arenas as well. The Drug Enforcement Administration recently ruled that THCA, a precursor to the psychoactive compound delta-9 THC, is not considered hemp under federal law.

In a May 13 letter recently obtained by Marijuana Moment, DEA Chief of Drug and Chemical Evaluation Terrence Boos wrote that “cannabis-derived THCA does not meet the definition of hemp” because “the delta-9 THC level must account for any delta-9 THCA in a substance.”

In Florida, Gov. Ron DeSantis plans to veto a bill banning products like delta-8 THC, a move that could boost the hemp industry while undercutting a recreational legalization ballot initiative he opposes.

Meanwhile, the California Department of Public Health took the step of warning the public that Jones Soda Co.’s hemp-infused drinks are “unsafe” and contain illegal THC additives.

The House Committee on Agriculture approved an amendment to the new Farm Bill that would effectively ban intoxicating hemp products nationwide, drawing strong opposition from hemp industry advocates who warn that could devastate the nascent market.

The amendment, introduced by Rep. Mary Miller, an Illinois Republican, seeks to change the definition of legal hemp to exclude products with detectable amounts of THC or any synthesized THC isomers.

The move comes amid a growing debate over how to handle intoxicating hemp products, which have grown into a multibillion-dollar industry with minimal regulation. Some marijuana companies and anti-legalization groups have pushed for Congress to close what they see as a “loophole” in the 2018 Farm Bill that allowed for the sale of hemp-derived products like delta-8 THC and THCA hemp, which can have psychoactive effects similar to marijuana.

The hemp industry, however, wants the federal definition of hemp to remain unchanged.

After the House Agriculture Committee spent 11 hours on Thursday marking up the Farm Bill, the fate of the hemp amendment still remains up in the air in ways. There was no roll call vote on the amendment. Instead, House Agriculture Committee Chairman G.T. Thompson grouped it with several other amendments and subjected them to a voice vote, which passed.

Reactions to the amendment and committee vote were mixed. Proponents argued the amendment was necessary to curb youth access and regulate a market that had spiraled out of control. But opponents warned the language would devastate the nascent hemp industry.

Rep. Van Orden, R-Minn., said, “Congress created this problem in the 2018 Farm Bill” and was now going to “destroy an industry that was allowed to be created legally,” putting “tens of thousands of Americans’ jobs at risk.”

Even within the hemp and marijuana industries, divisions remain. Some hemp advocates are pushing for more regulations on intoxicating products without an outright ban, while some of the biggest cannabis companies and brands are embracing hemp-derived THC products. Intoxicating hemp product habits have even made their way into medical cannabis channels as folks use the chemical cousins as stepping stones into the regulated industry.

Rob Pero, founder of the Indigenous Cannabis Industry Association, said in a statement that the amendment “poses a significant threat to the U.S. hemp industry and our communities’ interests in advancing wellness, industry, and economies.” He warned it would “effectively eliminate 90-95% of the hemp products market, jeopardizing the livelihoods of countless farmers, entrepreneurs, and Indigenous communities.”

SōRSE Technology, a water-soluble emulsion supplier for the industry, urged opposition to the amendment.

“Hemp has helped us deliver on that mission,” the company said in an email, referring to its efforts to make low-dose THC beverages accessible to consumers. “Please join us in fighting against this amendment to the Farm Bill.”

The company linked a portal for those able to complete a form provided by the U.S. Hemp Roundtable to send to lawmakers, telling the reader to share “with your networks and customers.”

In a statement, the national advocacy organization, which strongly opposed the amendment, called the Thursday vote “very dispiriting news.”

“This is especially disappointing because we were confident that on a roll call vote, we would win,” it said in a statement online. “We had been assured on several occasions by committee staff and the Chairman personally that they would not support any effort to kill the hemp industry. But unfortunately, the decision was made by the Chairman to use a procedural tactic to avoid a separate vote on the issue.”

The organization believes that even if the bill manages to pass the House, allies among Senate Democrats will hold the line.

The organization’s general counsel, Jonathan Miller, lobbied members of Congress before the hearing to vote against the amendment, calling it a “cynical effort that places government in the role of choosing winners and losers – killing one industry at the behest of its rivals.”

Miller said the measure would result in the “federal prohibition of 90-95% of all hemp products on the market” and “wreak havoc in the fiber and grain markets.”

“While we have for years strongly supported efforts to regulate hemp and CBD – even testifying to that effect before Congress – the Mary Miller Amendment throws the baby out with the bathwater, devastating a vibrant industry, killing tens of thousands of agriculture and retail jobs, and denying access to popular products that Americans count on for their health and wellness,” Miller said.

Hemp stakeholders vowed to fight interests supporting what Miller called “hemp-killing language,” as the legislation makes its way through Congress and state legislatures elsewhere. The battle lines have been drawn for a while now.

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