(Editor’s note: This column is part of a recurring series of commentaries from professionals connected to the hemp industry. Andrew M. Rosner and Kaelan Castetter are vice presidents of the New York State Cannabis Growers and Processors Association.)

Government officials nationwide are talking about banning the sale of hemp flower in the name of public health. But we know from experience that the prohibition could do more harm than good.

Three of the four most populous states – California, Texas and New York – have either passed smokable hemp bans or are considering them. New York provides a good case study to guide industry in addressing this issue.

In New York, the state Department of Health recently proposed regulations that ban the sale of hemp flower, which would result in harm to the many New Yorkers who prefer flower, a lower-cost item than other, more highly processed hemp products.

By permitting flower, states can address safety and access to this fast-growing market segment.

In fact, ensuring quality on unprocessed flower can utilize the same approaches for other manufactured products.

The New York Hemp Regulations require farmers and processors to maintain strict record-keeping and test their products for:

• Cannabinoids.
• Heavy metals.
• Microbial impurities.
• Mycotoxins.
• Residual pesticides.

Products sold in the marketplace must provide testing panels directly to consumers. Cannabinoid hemp products that contain levels that deviate from the allowable limits are considered adulterated and must be destroyed.

New York State can take a similar approach with smokable flower by creating testing panels and limits for combustible products.

Template for marijuana

As it works to legalize adult-use marijuana, New York will almost certainly adopt standards for smokable products. Smokable hemp can provide a template for adult use and begin developing the internal processes that marijuana will require.

The health department attempted to justify the smokable hemp ban by referring to its “efforts to reduce tobacco and smoking consumption.”

Surprisingly, the same proposed regulations allow for vapable products, and Gov. Andrew Cuomo’s recent proposal allows for smokable marijuana products.

New York’s health department rightfully took a harm-reduction strategy with hemp vaping products and should do so with hemp flower.

Public-health approach

Putting aside the current regulatory contradictions, a public health harm-reduction strategy should consider whether banning hemp flower will actually have any effect on people’s behavior. We know from studies of alcohol prohibition that consumption of alcohol remained steady over the period of the laws’ effect.

The banning of flower may actually lead to a rise in smoking tobacco — a known carcinogen with negative systemic health impacts.

Consumer data suggests that banning flower would likely increase tobacco use.

Market analytics firm Nielsen Global Connect found that 1 in 4 tobacco smokers consume hemp flower, while being three times more likely than the general population to purchase the product.

Whether this is due to familiarity of consuming the plant in its unprocessed form or accessible price point (on average one third the price of CBD oil), tobacco smokers are now spending on average $88 a year on hemp flower products, according to Nielsen.

These consumers will most likely shift that spending back to tobacco products, which lead to 480,000 American deaths annually and increased rates of addiction. Nicotine naturally occurs in the nightshade family of plants, such as tobacco, but not in hemp plants.

Importantly, the World Health Organization in 2018 cited studies supporting the non-addictive nature of cannabidiol, a naturally occurring compound found in hemp plants.

The report even goes so far as to mention the “possible therapeutic application” of CBD in addressing tobacco addiction in people.

In New York, state Assemblywoman Donna A. Lupardo recently introduced a bill to amend the public health law in relation to cannabinoid hemp.

As one of the authors of New York’s law giving the health department the role of regulating hemp, Lupardo understands the layers involved in hemp production and the legislative intent behind the original bill.

Her recent actions indicate that the health department went too far in banning smokable flower. The prohibitive stance against hemp flower undermines the purported mission of the state — to ensure that New Yorkers purchase tested, labeled and quality-controlled hemp products.

Lupardo recognizes the prevalence of people smoking hemp flower and wants to protect New York State residents.

Lessons for the industry

Using a multipronged approach, the hemp industry within states can play an instrumental role in opposing bans.

First, start early to advocate directly with state representatives on statutory and regulatory language. Support from elected officials can help in significant ways in applying pressure on administrative bodies that may go rogue.

Second, like in New York, consider independent legislation that legalizes smokable hemp flower. This can help prevent covert efforts to impose flower bans from outside sources.

Third, like in Texas and Indiana, industry representatives can bring a lawsuit against the state for harms caused by the ban.

Ideally, the hemp industry within a state will use a number of the above approaches in tandem with a vigorous social media campaign.

Nothing beats getting the word out and letting other people know the impact of the ban on their family, friends and neighbors.

Ironically, New York’s proposed flower ban came a century after the U.S. Constitution was amended to ban alcohol.

Alcohol prohibition took 13 years to undo. We only hope that what started in 2020 with the release of the flower ban sees a much shorter period of prohibition and we learn from the mistakes of the past in creating hemp regulations that protect all New Yorkers.

Andrew M. Rosner can be reached at [email protected] Kaelan Castetter can be reached at [email protected]

To be considered for publication as a guest columnist, please submit your request to [email protected] with the subject line “Guest Column.”

Solar-powered vehicles built from hemp are being reserved from an automaker in San Diego, which expects to go into production by the end of 2021.

Aptera Motors, a startup, high-efficiency vehicle manufacturer, has developed a three-wheeled vehicle that can transport two people, and uses a solar array that can be supplemented with more solar panels on the hood and rear hatch to extend the car’s range to 1,000 miles.

The body is made of a composite of carbon, Kevlar and hemp – proven in racing cars to provide strength and safety, KGO-TV reported. The vehicle is designed to reduce wind resistance, which impacts range.

The manufacturer has already seen massive interest in its new Paradigm vehicle, and 8,000 people have paid deposits on the vehicle, which will be sold for $26,000 to $46,000, depending on features.

Comparatively, its two biggest competitors, the Tesla Model 3 and Lucid Air, sell for $36,000 and $77,400, respectively, according to International Business Times.

The emission-free vehicle also has a 100-kWh battery that can be plugged in to supplement solar power. On solar power alone, it can be driven 45 miles per day.

Aptera is building a factory in San Diego and the cofounders project sales of 2,000 vehicles per year to start, with a goal of 20,000 per year as it develops a fleet of models.

Hemp-derived CBD giant Charlotte’s Web Holdings is positioning itself to enter THC and marijuana markets.

The Boulder, Colorado, company says it has signed a five-year, $8 million purchase agreement option with a marijuana company started by its founders, Stanley Brothers USA Holdings Inc.

The deal allows Charlotte’s Web to take over the marijuana business after the U.S.  legalizes marijuana nationwide for a total price to be determined based upon revenue and EBITDA figures.

Charlotte’s Web CEO Deanie Elsner says the company made the deal because of signs that federal marijuana reform is nearing.

“Consumer attitudes, market trends and laws surrounding cannabis and its role within the wellness category continue to trend positively,” Elsner said in a statement.

Stanley Brothers founders Jared and Joel Stanley are also members of CW’s board of directors but will step away from those positions to oversee the future acquisition.

Stanley Brothers USA Holdings makes cannabis products that don’t qualify as legal hemp but are lower in THC than many formulations in adult-use cannabis markets.  The company has operations in Colorado, California and Florida.

Charlotte’s Web trades on the Toronto Stock Exchange as CWEB.

Sungrown Organic Hemp, a hemp producer California, says the county owes it $9.6 million for incorrectly sampling its 2019 hemp crop, which led to a false determination that the crop was marijuana.

The Watsonville farm filed the lawsuit on Tuesday in county court, claiming that the Santa Cruz County Department of Agriculture used faulty sampling that delayed the producer in harvesting the 15-acre crop until the issue was cleared up. By then 90% of the flower was spoiled due to moisture, according to the lawsuit.

After harvesting, Sungrown Organic Hemp recouped $300,000 of its $620,000 in costs, resulting in a net loss of $9.6 million.

Damages were calculated using the January 2020 Hemp Benchmarks Index, determining that the farm’s organic certification and biodynamic cultivation protocols would have yielded $675 per pound of hemp.

Sungrown Organic Hemp tested regularly throughout the season, with all tests showing a THC percentage below the 0.3% legal limit, according to the lawsuit, which included the producer’s certificate of analysis.

Tests from the county’s initial sampling resulted in a 0.44% THC concentration.

According to Jordan Levy, principal of Sungrown Organic Hemp, the county agriculture commissioner and another agent did the sampling incorrectly according to the state’s then-current regulations, defining sublateral branches as lateral branches, and taking less of the total plant and more of the concentrated tops of the plants than the protocol specified.

When the county tested 10 days later, county agents did the sampling correctly, according to Levy, and a county agent admitted that she took sublateral branches in the first test. The second test yielded a 0.3% THC concentration.

Levy claims that it is possible that other farmers in Santa Cruz County had false positives that season and destroyed their crops.

A trial date was not indicated.

California lawmakers will be faced again with the long-debated question of whether to allow hemp extracts in food and beverages in the state when the legislative session opens Monday, but this time the proposal comes with a twist: The measure would also ban smokable hemp flower – an increasingly popular and unregulated segment of the industry.

The ban would be a big concession to make to pass a measure that has pitted marijuana and hemp operators against each other over the regulatory scrutiny each faces.

“It’s one of the worst horse trades I’ve ever seen,” said Chris Boucher, CEO of California-based Farmtiva.

Assemblywoman Cecilia Aguiar-Curry, a Democrat, carrying the bill, said Gov. Gavin Newsom’s administration requested the prohibition on smokable hemp.

“I need to be mindful that if the administration doesn’t buy in and we go through committees, I don’t want my bill vetoed,” she said.

Aguiar-Curry has touted her bill as a much-needed economic driver during the pandemic. She introduced a similar measure without the smokable hemp ban last year, but it failed in September because lawmakers ran out of time to consider it as they worked on pandemic-relief measures.

“We were so overcome by all the bills that the administration didn’t want to move anything forward (on hemp) at that time,” Aguiar-Curry said.

In addition to allowing CBD in food and beverages, the bill would also set testing requirements for safety and to ensure products don’t have more than 0.3% THC.

Boucher said the bill does has some merit, since it would open the door for CBD products to go be sold legally across the state – sales which are now largely unregulated. But he views the proposed ban on smokable flower as a way to appease California marijuana businesses that face strict regulations while competing with hemp-derived products that have proliferated on store shelves across the state.

“We’re selling it in grocery stores and gas stations and headshops – unregulated. And you flip the page over to marijuana and they’re selling cannabinoids, too, but theirs are all regulated,” he said.

Boucher said banning smokable hemp flower could hurt small farms that have come to rely on the money it generates. But others argue the bill is a major step forward for the industry.

“Regulating hemp manufacturing will lead to a mainstreaming of hemp products in California creating increased demand for hemp materials and raise farming prospects,” Patrick Goggin, chief lawyer for the California Hemp Council, said in a statement. “Additionally, regulations will bolster consumer safety and confidence in the quality of consumable hemp products.”

Goggin said smokable hemp “almost requires its own set of regulations.”

“We will continue to address this issue during the legislative session with rolled-up sleeves,” he said.

A version of this story first appeared at Marijuana Business Daily.

California’s hemp-derived CBD manufacturers are at risk of legal “whiplash,” one industry attorney says, after a new mandate requiring health warning labels for all cannabis products sold in the state took effect on Sunday.

The labels have legal roots dating back more than three decades.

Under Proposition 65, a state law passed in 1986, California is required to:

• Publish a list of chemicals known to cause cancer or birth defects.
• Call for the placement of consumer warnings on all product labels that contain any of the chemicals on the list.

The state mandate took effect on Sunday, meaning all products that create marijuana smoke or contain delta-9 THC –  essentially every cannabis product on the market – must have a Prop 65 warning label.

Lara DeCaro, a San Francisco attorney who represents a number of marijuana businesses, says the mandate applies to hemp producers who make products with even trace amounts of THC.

“It’s really the hemp-derived CBD products you’re going to see a lot of whiplash around, because I don’t think they understand they need to list THC as a reproductive toxin under Prop 65,” DeCaro said.

“They’re probably the ones who are going to be caught unaware by this.”

Legal experts said such a mandate is often enforced by private plaintiffs and attorneys, not state regulators. The practice has morphed into a cottage industry in California targeting cannabis manufacturers and some retailers.

“The bounty hunters will be able to start regulating and enforcing those,” Anne Marie Ellis, an Orange County attorney who specializes in product liability, said during a webinar in early December.

“We will definitely see the same people, over and over again, represented by the same lawyers.”

Wide-ranging implications

The labels in question can come in two formats: a standard warning or a short-form version.

The former is wordier and more explicit, while the latter is shorter and intended for smaller products that don’t necessarily have space on the packaging for lengthy disclaimers.

The short-form warning reads, “WARNING: Cancer and Reproductive Harm – www.P65Warnings.ca.gov.”

If a product doesn’t have the warning on its actual packaging, then the alert must be placed somewhere visible to consumers, Ellis said, such as on the store shelf where the product is displayed.

Because both marijuana smoke and THC are about to be triggers for Prop 65 requirements, she said, literally every company that does business in California needs to comply with the law – not just companies that produce smokable products.

“With respect to this industry, we have so many different products that are potentially implicated,” including edibles, topicals and vapor products, Ellis said.

Prop 65 lawsuits aren’t new to California marijuana businesses: California added marijuana smoke to its list of carcinogens in 2009, and THC wasn’t added until 2018.

A January 2020 ruling by the state Office of Environmental Health Hazard Enforcement listed both as potential reproductive toxins and spurred the new Jan. 3 deadline.

Possible liabilities

The primary concern for businesses now, according to Ellis and two other cannabis industry attorneys, are “bounty hunters” who will shop for marijuana and hemp products with the aim of finding products that fail to comply with the mandate.

These individuals can file a notice of violation and push for an out-of-court settlement.

“This is low-hanging fruit for lawyers who want to make a quick buck and don’t want to do a lot of work,” said Lara DeCaro, the San Francisco attorney.

DeCaro said all her clients – and probably most of the legal marijuana industry – are already complying with the Prop 65 labeling mandate because such requirements have been on most companies’ radars for a long time.

But she’s still expecting a wave of legal complaints, noting there will inevitably be industry stragglers who put off complying until the last minute.

Some attorneys already make a living exploiting Prop 65 violations in other industries: The statewide law covers all consumer goods, and the state lists more than 1,000 chemicals that require Prop 65 warnings.

“They will go around, much like they do under the (Americans with Disabilities Act) and find violations and then file numerous complaints,” DeCaro said. “Whether or not those complaints end up having merit, they’re going to name a bunch of people, and defendants will throw a few thousand dollars at it just to make it go away.

“It’s a cost-benefit analysis at that point. Am I going to spend $20,000 on a lawyer to fight it and get it kicked out, or am I just going to spend $3,000 at it and make the person go away?”

Ellis said that roughly 90% of the Prop 65 cases she was involved with settled out of court, but she warned that the associated costs can be high.

In 2018, Ellis said, there were 829 Prop 65 settlements in California that added up to $35 million in payments, with another $27 million in attorney’s fees and costs.

“It is a big business,” Ellis said.

State law also allows for fines to be levied against companies whose products violate Prop 65 mandates. Those fines can run up to $2,500 per product per day, though Ellis said that provision is rarely enforced.

Who’s at risk

Although most of the responsibility for Prop 65 warning labels falls on the manufacturers of those products, the legalities can easily rope in retailers who aren’t on their toes.

So DeCaro and Ellis recommend that all retailers begin using indemnification agreements or clauses in their contracts with distributors to ensure they’re not held legally responsible for a product that might be labeled improperly.

“If they don’t have good indemnification clauses in their supplier agreements … that could be problematic for some retailers,” DeCaro warned.

For the most part, though, word has spread around the marijuana industry, and most operators seem to be prepared for the Jan. 3 deadline.

“The industry is aware. There’s been a fairly good job of discussing the need for Prop 65,” said Pamela Epstein, attorney for Oakland-based Eden Enterprises and a board member of the California Cannabis Industry Association.

“Prop 65 is generally on most checklists for incoming and outgoing product at the manufacturing and distribution and retail level, so they should be ready.”

Bryce Berryessa, who runs several marijuana companies in Santa Cruz, including manufacturing brand La Vida Verde, said his sense is that many cannabis businesses have already prepped for the new labeling requirement.

“I think most companies are using the short form Prop 65 requirements so the changes do not pose too much of an issue,” Berryessa wrote in an email to Hemp Industry Daily.

“I do think it would have been nice if the regulatory bodies spread the information a bit better, as I think it may catch some companies off guard,” he added.

“Particularly flower and vape companies, as they are less likely to use the short from Prop 65 requirements.”

John Schroyer can be reached at [email protected]