THCABC 123

Legal loophole language and the poetry of plants.
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The great, green hemp hope of legal cannabis hinges on one statement in the farm bill and requires for your hemp to be legal—you keep it as far away from a fire as you possibly can.

Around 18 months or so ago a colleague of mine reached out and asked if I could help her with a supply opportunity. She is a PhD, spent some time in the cannabis space, and then moved onto a successful career running a hemp farm with her family. As she is a reputable, upstanding, and bright lady, I always looked forward to any conversation with her because it usually left me some new tidbit of cannabis science info that I would question or integrate into my workflow. So when she reached out regarding a vague supply request I assumed it was regarding something related to the hemp world.

“Have you heard of THCa flower?” She asked when we finally got on a call.

“You mean weed?” I responded.

“No, it’s not weed, it’s THCa flower.” She replied. “It’s like weed, but it’s testing below 0.3% delta-9 THC so it’s not technically weed.”

She then went on to detail how all of the CBD stores in some of the states she sold CBD flower were now requesting high-end THCa flower. The wholesale prices were below what licensed cannabis flower would sell at but the buyer market seemed to be less discerning on quality and there was a high demand. At this point my brain began to melt. Could it be true that the copious oversupply of middling flower being produced from the West Coast has now found a way into the hemp industry through some language loophole? 

The answer was and is, clearly, yes. 

Things have gotten pretty reckless in the cannabis space when it comes to sales. The reigning sentiment for the last 4-5 years has been that the feds do not care about black market weed sales. Pop ups, Snapchat, Instagram, social club (lulz), and now Telegram have become open markets from everything cannabis to everything else and it is deeply unfortunate that cannabis still sits in an online ecosystem of larceny, opioids, meth, and other sorts of trafficking. It’s unfortunate because it doesn’t belong there any longer. It’s like cannabis had one leg out of the door of the more nefarious markets and some demon magnet started to suck it right back into a dark web vibration. Ultimately this has to do with two facts: First, cannabis is a recreational drug with medical benefits in some cases and legalization pitched it as a medical drug with some recreational benefits. Second, almost every state program has a series of dense and idiotically-written regulations and laws. So what could be expected? Exactly what we have now, and I can tell you for a fact that the federal government does still care about illegal cannabis sales. It takes 4-5 years to build a case and I still have close friends catching cases for what everyone else is so flagrantly doing. So don’t be the kid on fantasy island that turns into a donkey when the clock strikes midnight.

Maybe this whole THCa hemp loophole could possibly be the facelift cannabis needs so it is normalized into society and out of the cartel vibration, where we would all like it to be. After my call I spent a few weeks talking to lawyers, regulators, and hemp operators about the legality of the loophole. All of them said it was not legal and not a loophole but an error that was going to be corrected in the farm bill update, but the farm bill update did not come, and THCa flower sales exploded. Canopy in California also has continued to expand. You would think otherwise, based on how many grows have become distressed assets, but those distressed assets have been acquired by groups who have been able to use all sorts of financial instruments to scoop them up and continue to satisfy the international demand by operating within the corrupt and loosely-monitored regulations in some West Coast states. 

The reality is for 99% of the THCa flower that’s been sold, some sort of fraud must occur for it to fall within the loophole. Interestingly enough, all the legal counsel that I spoke to about this issue have now flipped the script, writing legal opinions on how THCa flower is legal by the language of the farm bill. You might believe these legal opinions but these opinions are based on poorly written regulations and ignore the intent of the regulations, which is to deter and enforce hemp farmers from growing cannabis flower with delta-9 THC levels that will get you high. Interestingly enough, that level determined to get you high, anything above 0.3% delta-9, was defined by Canadian regulations written into their law by the input of one person. U.S. authors of the farm bill just copied and pasted that number without any background research or understanding. 

If you were to identify the point of fraud, you would look no further than the flower testing. The hemp industry has some lenient testing when it comes to THC. Most hemp regulators take their field samples for compliance testing when the farm calls them out to do so. Most farms call the testing agent out a month before harvest. This provides a buffer for the farm in case their THC levels spike prior to harvest due to weather events, stress, or genetic expression. Without this window the hemp industry would have failed entirely during its startup. Hemp testing does require a multiplier to the total delta-9 to factor in the heating up or decarboxylation of the flower, but these samples are pre-harvest samples. The update on the farm bill will more than likely require a post-harvest test. Keep in mind that that the decarbed delta-9 multiplier was not instituted in the original farm bill and that many states were not decarbing the flower, resulting in a much lower delta-9 value that changed with the most recent farm bill update, but there was still ambiguity on the testing standard to make space for other methods. This is the language around testing with the farm bill. 

The farm bill states with its scope for testing:

“Compliance tests shall measure the total THC concentration in a sample submitted to a laboratory for analysis. The laboratory will perform chemical analysis on the sample using post-decarboxylation or other similarly reliable methods where the total THC concentration level considers the potential to convert delta-9-tetrahydrocannabinolic acid (THCA) into THC.”

The loophole is right there in the statement “other similarly reliable methods.” This statement is the cornerstone for selling THCa flower. The reality in the industry is that cannabis testing in general is not reliable. It has not gone through the full process of being flushed out and standardized. There are two types of testing liquid and gas chromatography. Gas testing heats up the sample in its process but is not reliable because other constituents in the sample can appear as THC on the test when they are in fact not driving a higher delta-9 THC value. Liquid chromatography does not heat up the sample and is more accurate, but a multiplier to factoring in the heating up of the sample is used when the lab results are produced. It is very easy to pull a sample switch in this test and very hard to prove that a sample has been switched. So none of this is very reliable. You get a test, you stick it on your product, and you sell. It’s that easy because it’s a pre-harvest test, not a post-harvest test. A post-harvest test would look a lot like what we have in the licensed cannabis space. Post-harvest testing is more than likely going to gut the CBD hemp farms trying to play legitimately because many of the low-THC-testing CBD plants will still test over the limit of 0.3%. There is an unspoken threshold with regulators where as long as you are below 1.0% you are good to go, but still these are pre-harvest tests. That 1% could easily become 5% in a post-harvest test and then you are tits up.

The hyper-focus on THC becoming the only defining value metric when it comes to being able to sell your weed in the legal market or not sell your products in the hemp market has led to an incredible amount of fraud and misrepresentation. The irony is that the root cause of this focus and what has led to the lack of ethics when it comes to testing is because the state created an obtuse differentiation between cannabis and hemp based on chemistry. They are the same thing. They are the same genus of flowering plants. This fragmented view and the hyper-focus on the regulation of one cannabinoid has created the landscape for incredible fraud, because the fragmented legal definition is in fact fraudulent. Some of us deeply know that the value of a quality cannabis flower has little to do with one singular molecule. Maybe the government views the delta-9 molecule as something that needs to be regulated because the government spent years trying to weaponize it during the Cold War. The defense department was the first to isolate THCa, decarb it, and turn it into a gas weapon prototype to pacify an opposing force. It would not surprise me if the root of the regulatory philosophy is backed by some archaic Cold War weapons research, but I digress trying to justify fraud. 

So what happens now? Law enforcement at this point must know that this is a giant opportunity. Weed is in fact being sold under the guise of it being federally legally, and almost everyone is buying the argument. The ramp up with rescheduling talk is more than likely due to the THCa flower boom and its intertia. The federal government is more than likely going to go after as many visible larger player’s assets and fortunes prior to rescheduling. My thought on rescheduling is ominous. My hope is that we turn our energy back into the flawed and less prosperous licensed state markets and invest our attention and resources there, not THCa. I’ve been an avid critic of these programs, but I do believe that the state programs could be the last buffer from a larger pharmaceutical play that will ultimately take out the small and medium size businesses that are better suited for innovation and producing quality products. I also believe that continuing to hustle poorly-written regulations and laws creates a toxic precedent for the long-term average business owner trying to have a legal cannabis business. It will lead to higher bars of entry and continue to support the proliferation of illicit markets in an increasingly unstable world and marketplace. That’s not good. To those of you who still believe that flagrant sales of cannabis will come to no consequence, maybe you won’t serve time if you get pinched, but you will bleed a lot of money making a legal argument. The lawyers have flipped the script because they know there will be cases to fight; they’ve felt the same recession in cannabis, and this is a goldmine for their firms. You need lawyers; but don’t get it twisted, they are in this space for the same reason most people are: easy money. The lawyers might be the worst part of this equation. 

A close friend of mine said to me once that there are really only two types of cannabis: the type that turns you off, allowing an escape out of the world, and the type that turns you on, bringing you closer to the world. At this moment, I do not believe we have discovered the molecular compounds that create the illuminating effect, but I am positive we have figured out which ones mirror the numbing effects of pharmaceuticals. I hope that we will collectively start making long-term decisions that will keep the spirit of the plant alive and vibrant without having to manipulate loopholes in language, but I am an idealist in a failing world, which might make me more of a donkey than the vape shop owner down the street, hawking last years’ outdoor laced with a terp spray in a bag labeled THCa hemp—at least for the moment.

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