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Issues with House Bill 1328

Executive Summary

House Bill 1328, filed by MO St. Rep. Kurtis Gregory (R-Marshall), would accomplish 2 things that would bankrupt Missouri’s emerging hemp industry:

  1. Define any THC product or “intoxicating cannabinoid” as marijuana under Article XIV of the Missouri Constitution

  2. Relegate the sale of any THC product or intoxicating cannabinoid solely to marijuana dispensaries, as licensed under Article XIV of the Missouri Constitution

This bill presents several serious issues:

  • It would represent a massive increase in the enforcement mandate of law enforcement by categorizing virtually every hemp federally legal hemp plant or product containing THC or any intoxicating cannabinoid as marijuana, subject to Missouri Constitutional possession limits and Constitutional and Statutory possession misdemeanors and penalties

  • It would unconstitutionally interfere with interstate commerce in federally legal hemp products

  • Prohibiting hemp products would raise the cost of hemp-derived THC products and other intoxicating cannabinoids, while also severely restricting consumer access, leading to an increase in the use of opiates for pain relief

  • The job of picking economic winners and losers in a federally legal hemp market should not be the State of Missouri’s position or responsibility, but MO House Bill 1328 would allow agents under the authority of the government to take that position.

  • It would destroy hemp industry expansion to commodity seed and fiber opportunities, which to date has been largely funded by hemp retail sales of legal THC and intoxicating cannabinoids

With the passing of Marijuana Legislation this last November, it’s clear Missourians largely support the legalization of Cannabis. It’s important to recognize hemp and all hemp-derived cannabinoids are federally legal products and not scheduled drugs. The hemp industry is a direct competitor to the marijuana industry by producing a variety of economically affordable goods. If these legal products were prohibited, consumers would be harmed. In a time of hardship and rising household inflation, this legislation will harm customers seeking low-cost, federally legal products that they need for their well-being.

Hemp, Marijuana, and (Legal) THC

Hemp and marijuana are the same plants, Cannabis sativa. Under state and federal statutes, hemp is defined as any cannabis plant with less than 0.3% delta-9 tetrahydrocannabinol (THC), with marijuana being defined as any cannabis plant with more than 0.3% delta-9 tetrahydrocannabinol.

The chemical formula for THC is C21H30O2. Delta-9 THC is a THC isomer with the chemical name (−)-trans-Δ 9 -tetrahydrocannabinol. An isomer is a molecule or a polyatomic ion with an identical molecular formula as another molecule; some isomers are defined by structural differences between the bonds of the atoms in the molecules and other isomers are defined by spatial differences, where the relative positions of the atoms in the molecule are different.

There are in the neighborhood of 120 phytocannabinoids produced by the cannabis plant; other plants, including rhododendron, licorice, and liverwort, also produce cannabinoids.

In 2018, President Donald Trump signed the 2018 Farm Bill, which fully removed hemp from scheduling under the Controlled Substances Act and allowed hemp production by the states under the US Department of Agriculture (USDA) or under state programs aligned with federal law. Prior to 2018, hemp production in the United States was legal through pilot programs authorized under the 2014 Farm Bill.

Since 2014, legal domestic hemp production has largely been focused on profitable cannabinoid products, with the prototypical example being cannabidiol (CBD).

Recall, hemp is defined as cannabis with less than 0.3% delta-9 THC. This means that hemp contains a small amount of federally legal delta-9 THC; manufacturers often extract this legal delta-9 THC from hemp for use in retail products. Additionally, numerous THC isomers have been identified in cannabis or derived from other legal cannabinoids, including CBD. The most common is delta-8 THC. Other cannabinoids with THC similar effects have also been derived from hemp. These products are commonly manufactured and sold at retail in the United States and represent at least $2 billion in domestic economic activity as of 2020.

In May 2022, a three-judge panel of the US Ninth Circuit Court of Appeals ruled that Delta-8 THC was plainly lawful under the purview of the 2018 Farm Bill as a “derivative, extract, or cannabinoid originating from the cannabis plant.”1

While Congress has removed hemp and hemp-derived cannabinoids from federal drug scheduling, the hemp industry has faced significant regulatory uncertainty due to a determination by the US Food & Drug Administration that it does not have a legal framework for regulation of hemp-derived cannabinoids in food or beverages. In an effort to address this issue, US Representatives Morgan Griffith (R-VA) and Angie Craig (D-MN) have recently filed the ‘‘Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2023’’ 2 , to allow FDA regulation of hemp-derived products as dietary supplements.

A regulatory framework allowing hemp products to be considered dietary supplements would address many concerns about hemp-derived products, including product testing and consumer safety issues. The Missouri Hemp Trade Association supports these efforts to create a uniform national regulatory framework and urges the Missouri General Assembly to defer to these federal legislative efforts in considering hemp-derived product regulation.

HB 1328 Attempts To Regulate Missouri Hemp Under A Framework That No Outside Stakeholders Were Allowed To Have Input On

HB 1328 attempts to redefine and regulate Missouri hemp under the Missouri Constitutional Framework of Article XIV, enacted by the passage of Amendment 3 on the November 2022 ballot. Amendment 3 was backed almost exclusively by MOCannTrade, the industry group representing Missouri’s marijuana operators.

In 2022, Missouri State Representative Ron Hicks (R-St. Charles) proposed legislation (the Cannabis Freedom Act) that would legalize marijuana in Missouri. This proposal was lauded by many groups, including Americans for Prosperity, as a just and fair approach to marijuana legalization. However, MOCannTrade opposed this legislation fundamentally because of its free-market approach to marijuana licensing. Ultimately, MOCannTrade and their lobbyists prevented the enactment of this legislation largely through the influence garnered by massive campaign contributions.

MOCannTrade then campaigned for Amendment 3, telling voters that Missouri’s General Assembly would never support legalization and that Amendment 3 was the only option for marijuana legalization. MOCannTrade specifically disparaged Missouri Republicans who were supportive of Rep. Hicks’ legislative effort in a play designed to appeal to partisan voters in St. Louis, Columbia, and Kansas City, who ultimately carried Amendment 3 over the line in November 2023.

Former Chief Justice of the Supreme Court of Missouri Michael Wolff and former Boone County Circuit Judge Chris Kelly wrote in April 2022 that “In our opinion the constitutional scheme is an effort by large money interests seeking to lock up the profitable marijuana trade for themselves. The government would pick winners and losers.” In August 2022, Missouri Governor Mike Parson also criticized Amendment 3 on the basis that it would benefit a small group of large corporations to the exclusion of ordinary Missourians.

In drafting Amendment 3, MOCannTrade deliberately excluded numerous stakeholder interests, including those of Missouri hemp producers, manufacturers, and retailers. It would be manifestly unjust for Missouri hemp operators to be regulated under the Article XIV framework they did not have input on, and that cannot be modified by the General Assembly.

HB 1328 Increases Price & Decreases Access To Hemp-Derived Products, Leading To Increased Rates Of Use Of Opiates & Other Addictive Drugs

A primary justification for marijuana legalization has been the extensively documented capacity of delta-9 THC to relieve pain and reduce the use of opiates, methamphetamine, alcohol, and other addictive drugs. THC isomers derived from hemp vary in potency relative to delta-9 THC, but exhibit similar qualities, and consumers report use of hemp-derived THC isomer products to reduce use of opiates and other addictive drugs.

Currently, marijuana products in Missouri are expensive. Recent media indicates, the marijuana industry is facing significant product shortages and price increases in the neighborhood of 40%-50%. States like Oregon, Washington, and Oklahoma, where production is cheap and markets are competitive. By comparison, one can easily find an ounce of legal marijuana for $20-$50 in Oregon or Washington State - the equivalent product in Missouri would be $150-$200 or more.

Because hemp-derived THC isomers are produced from legal hemp or manufactured (not synthetics) from legal hemp, which is almost exclusively grown in outdoor fields without the high costs related to indoor marijuana production, (with most indoor marijuana grows topping over $500,000 in monthly electric costs) they are extremely cheap relative to marijuana. Additionally, because hemp-derived THC products are legal federally and in Missouri, they are pervasively available at grocery stores, convenience stores, gas stations, and other retail outlets (we estimate there are approximately 5000+ retail outlets selling a legal hemp THC product in Missouri).

Redefining hemp and hemp-derived THC products as marijuana and restricting them to licensed marijuana dispensaries (there are only 200 or so dispensaries in Missouri) would drastically increase the price of hemp-derived THC products and restrict the geographic access currently available to consumers. Denying consumers access to these products would send many Missourians back to the addictive drugs (that are currently being adulterated with fentanyl or worse substances) they are trying to escape, worsening our opiate and methamphetamine overdose and fatality crises.

HB 1328 Creates Massive Costs and Burdens on Law Enforcement

Missouri House Bill 1328 effectively makes thousands of retail establishments and tens of thousands of employees felons for possession and sale of a Schedule 1 Narcotic. This was not the intent of the 2018 Farm Bill nor the intent of the Missouri State Legislation when it enacted hemp regulation. House Bill 1328 makes hemp a scheduled drug, thus adding to law enforcement duties.

In 2022, Missouri voters barely approved Amendment 3, which legalized recreational marijuana on a limited basis. Amendment 3 sparked significant controversy over the continuation of a licensing monopoly for marijuana production and sales. Several large marijuana legalization activist groups campaigned against Amendment 3, citing numerous concerns, including a Constitutional prohibition on consuming marijuana in public areas, Constitutional possession limits, a Constitutional misdemeanor penalty for possession of over 3 ounces, the continuation of statutory felony possession charges (under Amendment 3, 6 or more ounces would trigger statutory felony charges), and the continued Schedule 1 designation of marijuana under RsMO chapter 195.017.

Amendment 3 was opposed by law enforcement interests for a variety of interests, including lack of funding for law enforcement training. Some members of law enforcement cited concerns that continued possession limits and criminal possession penalties would pose a burden on law enforcement to continue identifying and investigating marijuana use. Additionally, some members of law enforcement advocated for a complete end to marijuana possession limits and criminal possession penalties on the basis that Missouri voters did not want to continue criminalizing marijuana possession - but unfortunately, Amendment 3 did not present that option. Since the passage of Amendment 3, law enforcement has expressed concerns over lack of funding for retraining officers, lack of clarity on the details of Amendment 3, and lack of flexibility to change or modify the Constitution to address evolving issues with marijuana use.

As previously noted, the 2018 Farm Bill fully federally legalized hemp and hemp-derived products without possession limits or law enforcement mandates of any kind. Hence, defining hemp-derived products as marijuana under Missouri law would significantly depart from Congressional intent. Defining hemp-derived products as marijuana would also create mandates for law enforcement to enforce marijuana possession limits for hemp products, exposing consumers to arrest, prosecution, and incarceration for a federally legal product. Hemp-derived THC products are cheap and accessible relative to marijuana. HB 1328’s ban on current manufacturing and sales would increase the value of these products, creating a black market where it doesn’t exist, increasing crime and violence related to access of previously legal products.

Bottom Line: defining hemp-derived products as marijuana would require significant training for every law enforcement officer in Missouri to recognize and identify hemp-derived products in an investigatory capacity. It would additionally burden law enforcement at a time of increases in rates of crimes of violence and property, challenges in recruitment and retention, and overdose/fatality crises related to opiates and methamphetamine.

HB 1328 Would Destroy Missouri Hemp’s Expansion To Industrial Seed & Fiber Commodity Opportunities And Impact The Livelihoods Of Thousands Of Missourians

Most of the excitement and potential of American hemp legalization revolves around future commodity opportunities for seed and fiber hemp products.

Hemp seed is extraordinarily nutritious, containing all 20 amino acids necessary for human life, fiber, protein, and many vitamins and minerals. Opportunity already exists for hemp seed products in the human nutrition market and FDA approval for hemp seed in animal feed is likely a year away; when this happens, the expansion of hemp seed crops will lead to the transition of millions of acres of farmland.

Hemp fiber, which can be a dual-crop product along with the seed, also represents opportunities for the production of tens of thousands of industrial products, including building materials, bioplastics, and textiles.

However, due to the fact that hemp production is relatively new in the United States, hemp seed and fiber producers face significant barriers related to banking, lending, and transportation, largely as a result of confusion over hemp’s legal status and the fact that marijuana continues to be classified as a Schedule 1 drug. These barriers have made the transition to commodity seed and fiber crops nearly impossible, as significant processing and infrastructure investments must be made to make these opportunities viable.

Currently, Missouri hemp industry operators are largely funding expansion to hemp seed and fiber through wholesale and retail sales of cannabinoid products.

Although data is hard to come by, we estimate:

  • Around 60% of retail hemp product sales in Missouri are derived from hemp-derived THC products

  • The 10 largest hemp manufacturers in Missouri engage in $200+ million in economic activity annually

  • 5000+ retail operators currently sell a hemp-derived THC product

HB 1328 would likely put thousands of Missourians out of work, impact the livelihoods of tens of thousands more, and deal a crushing blow to the expansion to hemp seed and fiber crops, allowing other states to leapfrog Missouri in the development of these opportunities. It would further be manifestly unjust to destroy businesses that have made tens of millions of dollars of capital investment in our state by changing the rules of the game after these investments were made.

A similar proposal in Kentucky was shelved after Kentucky Hemp Association President Katie Moyer testified that a ban on Delta-8 THC would "probably end Kentucky's hemp industry as we know it." Since then, Kentucky has chosen to enact sensible regulations on Delta-8 THC, protecting Kentucky’s hemp farmers, manufacturers, and retailers. Missouri lawmakers should do the same - and reject efforts by Missouri’s marijuana monopoly to gut Missouri’s hemp industry.

Appropriate Regulation

Hemp-derived THC products have been sold legally in Missouri since at least 2018, and possibly earlier. To date, there has been little to no controversy about these products; a handful of retailers have faced legal issues due to the confusion over the legal status of hemp vis-a-vis marijuana. We have not heard any concerns from law enforcement over impaired driving or sales to minors.

  • Missouri Hemp Trade Association supports sensible consumer safety regulations, including Prohibiting sales of THC or “intoxicating” cannabinoids to minors

  • Standardized product testing

  • Limits on THC or “intoxicating” cannabinoids in products

In an effort to ensure product safety and regulatory certainty, the Missouri Hemp Trade Association is in consultation with dozens of academics, scientists, trade associations, and other stakeholder interests to propose a regulatory framework, which we are attaching as an addendum to this document. Additionally, the Missouri Hemp Trade Association is working with members of Congress and federal regulatory stakeholders to ensure Missouri regulation is aligned with federal law and regulation.

HB 1328 concedes that hemp-derived THC and “intoxicating” cannabinoids can be produced and sold safely. The Missouri Hemp Trade Association agrees – our members have been doing this for years and urges the Missouri General Assembly to ensure our hemp industry has the continued opportunity to support our state in this market.

Missouri Hemp Trade Association members have been legally and safely growing, manufacturing, and retailing hemp and hemp-derived products for years. However, House Bill 1328 does not allow for equal competition, although it fundamentally concedes that hemp-derived THC and “intoxicating” cannabinoids can be produced and sold safely.. The Missouri Hemp Trade Assn urges the Missouri General Assembly to ensure our hemp industry has the continued opportunity to support our state in this market.

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