Compound produces a high that may be legal
Texas has one of the most restrictive medical marijuana laws in the country, with sales allowed only by prescription for a handful of conditions.
That has not stopped Lukas Gilkey, CEO of Hometown Hero CBD, based in Austin. His company sells joints, blunts, gummy bears, vaping devices and tinctures that offer a recreational high. And business is booming online as well, where he sells to many people in other states with strict marijuana laws.
But Gilkey said he is no outlaw and that he is not selling marijuana, just a close relation. He is offering products with a chemical compound — Delta-8-THC — extracted from hemp. It is only slightly chemically different from Delta 9, which is the main psychoactive ingredient in marijuana.
And that small distinction, it turns out, may make a big difference in the eyes of the law. Under federal law, psychoactive Delta 9 is explicitly outlawed. But Delta-8-THC from hemp is not, a loophole that some entrepreneurs say allows them to sell it in many states where hemp possession is legal. The number of customers “coming into Delta 8 is staggering,” Gilkey said.
“You have a drug that essentially gets you high but is fully legal,” he added. “The whole thing is comical.”
The rise of Delta 8 is a case study in how industrious cannabis entrepreneurs are pulling apart hemp and marijuana to create myriad new product lines with different marketing angles. They are building brands from a variety of potencies, flavors and strains of THC, the intoxicating substance in cannabis, and of CBD, the nonintoxicating compound that is often sold as a health product.
With Delta 8, entrepreneurs also believe they have found a way to take advantage of the country’s fractured and convoluted laws on recreational marijuana use. It is not quite that simple, though. Federal agencies, including the Drug Enforcement Administration, are still considering their options for enforcement and regulation.
“Dealing in any way with Delta-8-THC is not without significant legal risk,” said Alex Buscher, a Colorado lawyer who specializes in cannabis law.
Still, experts in the cannabis industry said Delta 8 sales had exploded. Delta 8 is “the fastest-growing segment” of products derived from hemp, said Ian Laird, chief financial officer of New Leaf Data Services, which tracks the hemp and cannabis markets. He estimated consumer sales of at least $10 million, adding, “Delta 8 has really come out of nowhere over the past year.”
Marijuana and hemp are essentially the same plant, but marijuana has higher concentrations of Delta-9THC — and, as a source of intoxication, it has been a main focus of entrepreneurs as well as state and federal lawmakers. Delta 8, if discussed at all, was an esoteric, less potent byproduct of both plants.
That changed with the 2018 Farm Bill, an enormous piece of federal legislation that, among other things, legalized widespread hemp farming and distribution. The law also specifically allowed the sale of the plant’s byproducts; the only exception was Delta 9 with a high-enough level of THC to define it as marijuana.
Because the legislation made no mention of Delta 8, entrepreneurs leapt into the void and began extracting and packaging it as a legal edible and smokable alternative.
The legal landscape is contradictory at best.
Many states are more permissive than the federal government, which under the Controlled Substances Act considers marijuana an illegal and highly dangerous drug. In 36 states, marijuana is legal for medicinal use. In 14 states, it is legal for recreational use.
But in a flip, under the farm bill, the federal government opened the door for the sale of hemp products even in states that have not legalized the recreational use of marijuana. Only a few states ban hemp altogether, but in others, entrepreneurs of Delta 8 are finding a receptive market.
Lawyers for Gilkey believe the farm bill is on their side.
“Delta 8, if it is derived from hemp or extracted from hemp, that is considered hemp,” said Andrea Steel, co-chair of the cannabis business group at Coats Rose, a Houston law firm.
She emphasized that the legality also depends on whether Delta 9 exceeds legal limits.
Steel noted that when making a Delta 8 product, it can be hard, if not impossible, to filter out all the Delta 9 from hemp.
“Adding another wrinkle,” she said, “a lot of labs do not have the capability of delineating between Delta 8 and Delta 9.”
Lisa Pittman, the other co-chair of the cannabis business group at Coats Rose, said that in her reading of the issue, the authors of the farm bill may not have contemplated the consequences of the law.
Pittman said the ultimate question of a product’s legality may be dependent on other factors, including how the Delta 8 is produced and sourced. Specifically, the lawyers said, the DEA’s rule on the issue seems to suggest that Delta 8 could be illegal if it is made “synthetically” rather than derived organically.
There are currently lawsuits pending over interpretation of the DEA rule.