Published at JD Supra
Author: Heidi Urness
Tetrahydrocannabinolic acid (THCA) is one of the most misunderstood and controversial cannabinoids in the Cannabis sativa (cannabis) plant. While booming in popularity, THCA is also a high-risk cannabinoid from a legal standpoint.
Following the passage of the 2018 Farm Bill, the marketplace for “alternative” or “minor” cannabinoids – chemical compounds other than delta-9 THC (THC) – soared due to what some consider a “loophole” in federal law, which excluded hemp-derived cannabinoids from the definition of “marijuana.” THCA is one of these compounds.
A simple Google search for the term THCA turns up a myriad of misinformation. Misleading headlines read: “THCA is completely legal across the U.S.,” “THCA flower is fully legal,” and “It is legal to sell THCA.” However, this information is not necessarily correct, and as industry insiders have been warning clients for years – and as recent actions by both the federal government and the state of California demonstrate – following such advice can be costly, if not criminal.
Further, with the 2018 Farm Bill expiring at the end of September 2023, all eyes are on Congress, waiting to see whether and how the regulation of hemp-derived cannabinoids may change under the new 2023 Farm Bill.
What Makes THCA Controversial?
THCA is controversial for a number of reasons.
The so-called “loophole” making cannabinoids such as THCA legal comes from the 2018 Farm Bill, where Congress carved “hemp” out of the definition of marijuana under the Controlled Substances Act (CSA) and defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a [THC] concentration of not more than 0.3 percent on a dry weight basis.” Thus, cannabis that has been harvested is considered hemp (which is not a federally controlled substance) if it contains less than 0.3% THC, regardless of whether or not the same cannabis or product contains THCA, which will overwhelmingly be converted into the highly psychoactive cannabinoid THC once heated.
Because of the chemical nature and function of THCA, it may be best understood as a “precursor” to THC, the main psychoactive compound found in the Cannabis sativa plant. THCA is found in the flowers and leaves of the cannabis plant and can be converted into THC when it is exposed to heat, a process called “decarboxylation.” THCA also decarboxylates to form THC during storage and fermentation.[1]
However, claiming that THCA falls in a “loophole” may be a misnomer. THCA was contemplated by Congress and expressly incorporated into the 2018 Farm Bill through hemp testing requirements. This distinguishes THCA from other alternative cannabinoids such as delta-8, delta-10, or CBD because those cannabinoids are not considered in testing. In June 2023, the DEA acknowledged THCA when expanding the USDA-required post-decarboxylation testing requirement, writing, “Congress has directed that, when determining whether a substance constitutes hemp, delta-9 THC concentration is to be tested ‘using post-decarboxylation or other similarly reliable methods.’ 7 USC § 1639p(a)(2)(A)(ii); 7 USC § 1639q(a)(2)(B).” Both of these cited code sections apply to the “production” – that is, the growing – of hemp, not hemp that has already been harvested or products containing hemp derivatives. Thus, by the plain language of the relevant federal statute, the post-decarboxylation test does not apply to post-production hemp. In other words, hemp being grown must have a total THC (THCA + THC) concentration of 0.3% or less[2] in order to be harvested.
It also seems clear that Congress intended these legal distinctions to control the legal hemp versus marijuana markets in the United States. Indeed, not only Congress but also the DEA[3] and federal courts interpreting relevant federal laws have all determined: “[i]mportantly, the only statutory metric for distinguishing controlled marijuana from legal hemp is the delta-9 THC concentration level. In addition, the definition extends beyond just the plant to all derivatives, extracts, [and] cannabinoids.” 7 U.S.C. § 1639o (1). The use of “all” indicates a sweeping statutory reach. See Lambright v. Ryan, 698 F.3d 808, 817 (9th Cir. 2012).” AK Futures LLC v. Boyd St. Distro, 35 F.4th 682, 690-91 (9th Cir. 2022).[4]
How Do States Regulate Hemp?
Although Congress’s conduct was intentional in distinguishing controlled marijuana from legal hemp solely by the substance’s delta-9 THC concentration level as written in the 2018 Farm Bill, both federal and local lawmakers are becoming increasingly better educated on cannabis-related issues as compared to five years ago (when the 2018 Farm Bill was first passed). And these lawmakers’ attitudes appear to be increasingly hostile to THCA and other potentially intoxicating minor- or alternative-cannabinoids.
Indeed, several states now expressly prohibit THCA flower, or certain products containing THCA, from being produced, sold, purchased, or consumed within the state. States have accomplished this through many methods. One method employed by several states – and, increasingly, private companies providing ancillary products and/or services to the cannabis industry, such as website hosting services, payment processors, and more – is to define legal hemp and hemp-derived products in the state by their “Total THC” levels.
For example, no legal hemp product in California may contain a “Total THC” concentration greater than 0.3%. Under current California law, “THC” includes “[a]ny tetrahydrocannabinol, including, but not limited to, Delta-8-tetrahydrocannabinol, Delta-9-tetrahydrocannabinol, and Delta-10-tetrahydrocannabinol, however derived […].” The term “Total THC” is defined in California Assembly Bill 45 as “the sum of THC and THCA.”[5] Thus, if the Total THC exceeds this limit, then such product violates California’s laws applicable to hemp and is deemed “adulterated” or is considered cannabis[6], which may only be sold within California’s tightly regulated market and under control of the Department of Cannabis Control (DCC).
Further, California law categorically prohibits the sale of inhalable hemp products within California until relevant regulations are developed, and the legislature imposes a tax on said product. Cal. Health & Safety Code § 111929 and 111929.2.
How Do You Solve a Problem Like THCA?
Learning that THCA may not be legal to produce, sell, possess, or consume in any particular state may be confusing to producers, retailers, and consumers alike. There is no dispute that THCA products can be purchased openly online and in brick-and-mortar stores, can be found in states with both legal and unregulated marijuana industries, and are displayed on shelves in marijuana dispensaries as well as in regular corner stores. This is true regardless of whether the state defines hemp by its delta-9 THC or Total THC content and regardless of whether the state expressly prohibits inhalable hemp products.
In such cases, the business conduct is in conflict with the “black letter” of the law; the relevant issue is one of enforcement. That is, while a company’s cannabinoid-containing product(s) may be illegal under state law, some companies still engage in the illegal conduct. Instead of complying with the relevant laws and regulations, these companies incorporate the enforcement practices of the relevant state and local jurisdiction in their risk assessments regarding their proposed and ongoing business activities. In other words, if a (federal or) state agency has not taken any legal action to enforce its laws or has only selectively enforced in egregious situations involving public health, a company may decide to engage in the otherwise illegal conduct after determining the benefits (e.g., profit) outweigh the costs (e.g., risk of enforcement, penalties if legal action is taken against the company, etc.).
Such risk-taking is not uncommon – and some believe it is necessary to succeed – in the burgeoning cannabis industry. However, it is little discussed. Cannabis journalist Rachelle Gordon recently reported for greenstate.com that, while researching an article addressing THCA, she was in contact with several brands producing and selling THCA flower for her piece. However, when questions about legality arose, according to Gordon, every one of these companies stopped responding to her emails.
Despite taking on these risks, many companies are operating without a strategy or exit plan should they find themselves on the receiving end of a government enforcement action (or, perhaps worse, a private lawsuit), and without any legal defense. An agency’s history of non-enforcement is not a defense to legal action. For example, just last month, the state of California began cracking down on inhalable hemp products, filing multiple claims against multiple cannabis businesses. While the facts involved in the litigation have not been fully fleshed out, the state alleges that the Defendants in the litigation were simply breaking the law by selling prohibited inhalable hemp products in the state, and also failed to comply with the warning provisions of Prop 65.[7] These companies now potentially face significant legal repercussions.
Anticipating Risks Before They Arise: Georgia as a Case Study
State legislatures are increasingly passing – and are prepared and poised to enact – new laws far more restrictive of hemp and hemp-derived cannabinoids. For example, under the law of the state of Georgia, the “federally defined THC level for hemp” means a THC concentration of not more than 0.3% on a dry weight basis. Therefore, under present law, as long as a hemp product in the state contains no more than 0.3% delta-9 THC (and is not a food product[8] infused with THC), it is considered a legal hemp product under both federal and state law.
However, multiple new bills proposed in Georgia’s House of Representatives and Senate seek to impose drastic restrictions on the state’s hemp industry. By way of example, SB 22 – proposed earlier this year – sought to (among other things) remove the reference to Delta-9 in state code. In other words, if adopted, the state would define products by their Total THC. Indeed, “[t]he intention of that is to broaden it to cover any product that has that THC concentration,” said sponsor of the bill and East Cobb Republican Sen. Kay Kirkpatrick. “So that would be Delta-8, Delta-10, Delta-omega, Delta-whatever it is next year, so that all of those will come under the same testing and labeling requirements as Delta-9.” Such legislative action was not limited to the state of Georgia, and similar laws are expected to be passed in several states in the near future.
Takeaway
The 2018 Farm Bill expired at the end of September 2023. Industry insiders expect an influx of attention – not to mention lobbying efforts – dedicated to Congress throughout the next several months, waiting to see whether (and, if so, how) the regulation of hemp-derived cannabinoids may change under the new 2023 Farm Bill.
We will see whether Congress will attempt to implement changes to the definition of hemp in the 2023 Farm Bill, impose new or ongoing testing requirements, or enact other mechanisms to close the so-called “loophole” that resulted in the multi-billion dollar[9] marketplace in the United States for hemp-derived cannabinoids.
Participants in the federally legal hemp industry are required to navigate a complex web of federal and state laws and should be prepared to pivot on a moment’s notice should the law and/or enforcement risks relevant to their business change. In the case of THCA and inhalable hemp products, this is inevitable – whether due to the action or non-action of Congress, state legislators, local regulators, state agencies, or even the filing of, or a court’s resolution of, a relevant public or private lawsuit. Failure to follow such advice can be costly, if not criminal, under the laws and regulations applicable to hemp-related business activity.
[1] Can You Pass the Acid Test? Critical Review and Novel Therapeutic Perspectives of Δ9-Tetrahydrocannabinolic Acid A – PMC (nih.gov)
[2] THCA is multiplied by 0.877 under the formula set forth by the United States Department of Agriculture (USDA) for the testing and determination of “Total THC” in a pre-harvest analytical test. The remaining 0.123% is intended to account for the weight of the carboxyl group that is lost once the THCA is converted to THC.
[3] On June 24, 2021, Sean Mitchell, Chief of Intergovernmental Affairs for the DEA stated: “I’ll be very, very deliberate and clear. At this time, I repeat again, at this time, per the Farm Bill, the only thing that is a controlled substance is delta-9 THC greater than 0.3% on a dry-weight basis” “Town Hall with USDA and DEA” conducted by the Florida Department of Agriculture and Consumer Services (FLDACS) on June 24, 2021
[4] GreenLeafBrief: “Federal Court Rules Hemp-Derived Delta-8 THC is Lawful,” May 25, 2022
[5] Thus, “Total THC” in California is currently defined as (THCA) + (Delta-8 THC) + (Delta-9 THC) + (Delta-10 THC). Cal. Health & Safety Code § 111920 (l) and (m).
[6] Unlike federal law, California uses the term cannabis in place of marijuana.
[7] This is a well-settled issue in California. It pains us to learn that cannabis companies may not have been advised to comply with these oft-litigated requirements. Indeed, the Plaintiff’s bar in California began cracking down on Prop 65 violations in the cannabis industry nearly a decade ago, settling numerous cases for tens of thousands of dollars starting around the year 2015. See, DiPirro v. Grass Roots Nonprofit Collective, Inc., 11/06/2015, $33,000; DiPirro v. The Vapor Room Cooperative of San Francisco, Inc., 11/06/2015, $ 8,500.00; DiPirro v. The Love Shack Cooperative, Inc., 05/27/2015, $ 26,500.00; DiPirro v. LA Wonderland Caregivers Inc., 11/06/2015, $ 33,000.00; CAPA v. Telegraph Patients Group, Inc., 10/17/2017, $ 85,000.00; CAPA v. The Richmond Patient’s Group, Inc., 10/17/2017, $ 85,000.00.
[8] Unless approved by the FDA, which no product presently is.
[9] In the U.S., nearly $6 billion of products containing CBD were sold in 2021. CBD is a chemical compound naturally produced by the cannabis plant that does not cause the euphoric feeling, or “high,” that can result from more psychoactive compounds found in cannabis.
Source: https://www.jdsupra.com/legalnews/is-thca-legal-the-state-line-is-the-3420549/
