Ohio lawmakers are moving to tighten hemp regulations following Governor Mike DeWine’s call to “regulate intoxicating hemp” and close legal gaps that may allow the marketing and sale of hemp products to minors. Senators Shane Wilkins (R) and Stephen A. Huffman (R) have introduced Senate Bill 86 (S.B. 86), which would ban the sale of intoxicating hemp products in gas stations and vape shops while permitting hemp beverages in certain establishments with alcohol permits.
Hemp, like marijuana, comes from the cannabis plant but contains less than 0.3% of delta-9 THC. The 2018 Farm Bill exempted hemp from the definition of marijuana in the Controlled Substance Act largely based on the understanding at the time that delta-9 THC was the intoxicating cannabinoid in the cannabis plant and it was not feasible to concentrate such trace amounts for hemp-derived products. As such, the 2018 Farm Bill legalized hemp and hemp-derived products at the federal level, leading many states to regulate it separately from marijuana. Governor DeWine’s recent call to revisit Ohio’s hemp regulations is partly due to new production techniques that have led to the availability of hemp-derived products with intoxicating levels of THC. For example, Ohio consumers may be familiar with delta-8 THC, a hemp-derived cannabinoid that can have intoxicating effects similar to those of delta-9 THC. S.B. 86 does not just regulate intoxicating hemp products; the bill also proposes changes to the Ohio hemp-beverage market.
S.B. 86 introduces two new categories of hemp products:
1.) Intoxicating Hemp Products: Defined as ingestible hemp products that contain any amount of synthetic THC, more than 0.5 mg of delta-9 THC per serving, more than 2 mg of delta-9 THC per package, or more than 0.5 mg of any non-delta-9 THC per package.
- Changes Proposed Under S.B. 86:
- Retail sales of such intoxicating products would be illegal unless transacted by a licensed marijuana dispensary where sales must be to individuals aged 21 or older.
- These products would be subject to the same standards as adult-use cannabis, including mandatory lab testing, clear labeling, and marketing restrictions.
2.) Drinkable Cannabinoid Products: Explicitly excluded from the definition of intoxicating hemp products. They are beverages that contain solely hemp-derived cannabinoids, no more than 0.3% of any THC, no more than 0.4 mg of any THC per fluid ounce, and a total volume of no more than 48 fluid ounces per package.
- Changes Proposed Under S.B. 86
- These beverages may only be sold by businesses with specific alcohol permits and cannot be sold to individuals under 21.
- Subject to the Department of Commerce, requiring manufacturers to register with the Department of Commerce and contract with testing laboratories to ensure compliance.
- Labels for drinkable products must include the THC content in milligrams and state, “This product is a drinkable cannabinoid product.”
Additional Restrictions on Distribution and Sales of Hemp Beverages
S.B. 86 imposes further regulation on distributors, retailers, and consumers of drinkable cannabinoid products:
- manufacturers would be limited to assigning a single distributor to a specific sales area or territory for each brand of beverage;
- beverages could only be sold and purchased for cash; and
- open beverages would be illegal in most public places without the requisite permit.
If S.B. 86 is passed, manufacturers, distributors, and retailers of drinkable cannabinoid products should review their corporate finances to ensure they do not maintain impermissible financial interests in one of the other entities within the distribution chain.
Tax Implications Under S.B. 86
Furthermore, the bill, as introduced, also imposes new tax measures, including:
- A 15% sales tax on dispensary receipts of hemp products
- A $3.50 per gallon excise tax on manufacturers of drinkable cannabinoid products, credited to the Ohio’s general revenue fund.
The bill’s proposed tax scheme stands in contrast to the 10% sales tax adult-use cannabis currently carries with revenue directed to fund specific programs like addiction treatment.
Concerns over hemp regulation are not unique to Ohio. Many states have grappled with how to regulate hemp, with some going as far as banning the sale of products containing any amount of delta-8 THC. Other states, such as Minnesota and Tennessee, have passed laws prohibiting the sale of certain hemp products to residents under 21 and increasing oversight of the hemp market, including stricter regulations on packaging and labeling. Colorado, partly because of the number of hemp growers and processors in the state, continues to allow intoxicating hemp products to be manufactured within its borders, but such products must be sold out-of-state.
While the success of S.B. 86 is uncertain, Ohio’s hemp market is set to face stricter regulations in the near future.
https://www.jdsupra.com/legalnews/proposed-senate-bill-86-seeks-to-9209080/
