Is Virginia Really for (hemp) Lovers?

Virginia House Bill 2294 (Bill) recently passed through both the House and Senate of the Virginia General Assembly. This Bill, which can be read in its entirety here, has the potential to severely alter the landscape surrounding hemp-derived products in the Commonwealth of Virginia.

Unfortunately, and as mentioned above, the Bill has already passed through both Chambers of Virginia’s General Assembly and is headed Governor Youngkin’s desk for signature. It is expected the Governor will sign the Bill in an effort to chill the fervor of the hemp-derived products industry in Virginia, an industry which has enjoyed immense success while Virginia wrestles with its ability to make good on its promises for an adult-use marijuana marketplace by 2024. This blog is intended to provide information about the Bill, as well as what manufacturers and retailers of these products need to address or be aware of moving forward.

As a threshold matter, the Bill mandates that every industrial hemp extract product offered for retail sale contain no more than 0.3 percent total tetrahydrocannabinol (THC), and that products containing industrial hemp extract contain no more than 2 milligrams of total THC per package.

For reference, the Bill defines “tetrahydrocannabinol” as: “any naturally occurring or synthetic tetrahydrocannabinol, including its salts, isomers, and salts of isomers, whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation and any preparation, mixture, or substance containing, or mixed or infused with, any detectable amount of tetrahydrocannabinol. For the purposes of this definition, “isomer” means the optical, position, and geometric isomers.”

Also, the Bill classifies “total tetrahydrocannabinol” as: “the sum, after the application of any necessary conversion factor, of the percentage by weight of tetrahydrocannabinol and the percentage by weight of the tetrahydrocannabinolic acid.”

The Bill defines “industrial hemp extract” as: “an extract (i) of industrial hemp, (ii) that is intended for human consumption, and (iii) except as otherwise provided in subsection M of § 54.1-3442.6, when offered for sale, that (a) contains a total tetrahydrocannabinol concentration that is no greater than 0.3 percent and (b) contains no more than two milligrams of total tetrahydrocannabinol per package. “Industrial hemp extract” is not a hemp seed-derived ingredient that is approved by the U.S. Food and Drug Administration or is the subject of a generally recognized as safe notice for which the U.S. Food and Drug Administration had no questions.”

In addition to providing these clarifying definitions, the Bill states that any person who “manufactures, sells, or offers for sale an industrial hemp extract or food containing an industrial hemp extract shall be subject to requirements of the Bill and regulations adopted pursuant to the Bill.”

Alarmingly, the Bill states:

“Any person who (i) manufactures, sells, or offers for sale an industrial hemp extract or food containing an industrial hemp extract without first obtaining a permit to do so from the Commissioner pursuant to § 3.2-5100, unless exempt from a permit pursuant to subdivision C 6 of § 3.2-5130; (ii) continues to manufacture, sell, or offer for sale an industrial hemp extract or food containing an industrial hemp extract after revocation or suspension of such permit; (iii) fails to disclose on a form prescribed by the Commissioner that he intends to manufacture, sell, or offer for sale a substance intended to be consumed orally that contains an industrial hemp-derived cannabinoid; (iv) manufactures, sells, offers for sale a food that (a) has a total tetrahydrocannabinol concentration that is greater than 0.3 percent or (b) contains more than two milligrams of total tetrahydrocannabinol per package; (v) manufactures, offers for sale, or sells in violation of this chapter or a regulation adopted pursuant to this chapter a substance intended to be consumed orally that is advertised or labeled as containing an industrial hemp-derived cannabinoid; or (vi) otherwise violates any provision of this chapter or a regulation adopted pursuant to this chapter, in addition to any other penalties provided, is subject to a civil penalty not to exceed $10,000 for each day a violation occurs.”

To be clear, violations of this new Bill carry with them a $10,000 per day fine for each day the violations occur. In addition to these steep monetary penalties, the Bill also states that in addition to any other penalties, any violation of the Bill also carries with it a Class I misdemeanor and that each day in which a violation occurs shall constitute a separate offense.

The Bill also imposes strict labeling and packaging requirements for products containing industrial hemp extract. These products must be contained in “child-resistant packaging”. Each industrial hemp extract or food containing industrial hemp extract must be packaged and equipped with labels that satisfy all Bill criteria. In addition to font-size requirements and a mandate to include each ingredient in the product, these product labels must also state that the industrial hemp extract or the food containing the industrial hemp extract contains tetrahydrocannabinol. Finally, the Bill mandates that these products cannot be sold to persons younger than 21 years of age.

Moreover, industrial hemp extract or foods containing an industrial hemp extract, when offered for sale, must be accompanied by a certificate of analysis, produced by an independent laboratory that is registered with the U.S. Drug Enforcement Administration and is accredited pursuant to the standard ISO/IEC 17025 of the International Organization for Standardization by a third-party accrediting body; that states the total tetrahydrocannabinol concentration of the substance or the total tetrahydrocannabinol concentration of the batch from which the substance originates.

In addition to other requirements that mandate identifying batches for traceability, the Bill specifically prohibits the inclusion of claims “indicating the product is intended for diagnosis, cure, mitigation, treatment, or prevention of disease, which shall render the product a drug, as that term is defined in 21 U.S.C. § 321(g)(1). An industrial hemp extract or food containing an industrial hemp extract with a label that contains a claim indicating the product is intended for diagnosis, cure, mitigation, treatment, or prevention of disease shall be considered misbranded.”

The Bill places limitations on the ability to sell hemp-derived products intended for smoking to persons over the age of 21. Along with these limitations, penalties for violations of these provisions have increased from $50 to $500. Keep in mind these restrictions apply equally to sales online and in brick-and-mortar locations. Online sales must be done using a commercially available database that verifies the age of the purchaser, as well as a delivery service that ensures the person signing for the package is over the age of 21.

While a great deal of the Bill’s new regulations are aimed at increasing safety and transparency of the hemp-derived products industry, others seem to be specifically targeted at regulating an industry out of existence. Instead of establishing a regulatory framework surrounding adult-use marijuana, lawmakers instead focused their efforts on bullying hemp-derived product manufacturers and retailers.

Regardless of legislative intent or ultimate outcome, industry participants need to be aware of the Bill’s impact on their business. Finally, industry participants who are residents of the Commonwealth, or who know residents of the Commonwealth, should speak up by voting this year as all seats in Virginia’s General Assembly are up for election in 2023.

For more information on Virginia’s new hemp-derived product regulations, or for questions regarding cannabis laws across the country, please contact Kight Law today.

February 27, 2023

This article was written by attorney Philip Snow. Kight Law represents hemp businesses in the US and throughout the world. To schedule a consultation please click here and mention this article.