In 2015, Alejandro Bergad and Jacob Goldstein cofounded what would become Sunsoil, a Hardwick company that grows, processes and sells organic, hemp-derived products. The new company burned down an old shed on its property to make room for a new, large barn for drying hemp — and within a few years had become a major manufacturer of cannabidiol, or CBD, wellness supplements. Its certified-organic products are sold in 2,500 stores nationwide and through direct-to-consumer marketing. But Sunsoil could soon see its business razed, as it and other CBD companies face the biggest threat to their livelihood since Congress legalized hemp production in 2018. A new federal law, scheduled to take effect on December 11, closes a legal loophole that inadvertently allowed hemp companies to sell products that contain intoxicating tetrahydrocannabinol, or THC, with few, if any, restrictions or oversight. THC is the primary component of cannabis that induces a user’s high and the one that distinguishes recreational weed from CBD and hemp products. With a deadline looming, Vermont’s hemp businesses are weighing whether to stay the course — or reformulate their products by stripping them of THC completely. Bergad blamed the new mandate on some hemp producers who have exploited the loophole to sell products with high levels of THC, skirting state restrictions on cannabis and prompting Congress to tighten the law. “The greed that helped birth an emerging market has also helped take it down,” he said. To understand what the buzz is all about requires wading into the weeds of plant chemistry. Hemp and cannabis are the same plant species — Cannabis sativa — and differ only in their respective concentrations of delta-9 THC. Nonintoxicating hemp contains 0.3 percent or less THC, whereas cannabis typically contains levels ranging from 5 to 30 percent. The greed that helped birth an emerging market has also helped take it down.Alejandro Bergad The federal distinction between hemp and cannabis created a legal gray zone. The 2018 U.S. Farm Bill legalized the production and sale of hemp-derived goods such as paper, rope and textiles, as well as CBD supplements, oils, tinctures and salves. CBD, a nonintoxicating chemical in hemp, is widely used for health and therapeutic purposes such as relief from chronic pain, anxiety, inflammation and sleep problems. Many CBD products typically contain trace amounts of THC but are not intoxicating. The 2018 law defined hemp as “the plant Cannabis sativa L. and any part of that plant … with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” But hemp also contains other forms of psychoactive THC — delta-8 and delta-10 — not mentioned in the law. That oversight inadvertently allowed companies to sell hemp-derived products containing those other compounds. The U.S. hemp market has subsequently grown into a $28 billion industry. “What we’ve seen play out since the passage of the 2018 Farm Bill is just an explosion of highly intoxicating, unregulated THC products that are masquerading as hemp products,” said James Pepper, chair of the Vermont Cannabis Control Board. Many of these goods, which are sold through the mail or in gas stations and convenience stores, aren’t tested for safety or potency and would be illegal to sell in Vermont’s cannabis dispensaries. One such product sits on Pepper’s desk: a 12-ounce can of seltzer, manufactured in Florida, containing 50 milligrams of hemp-derived THC per serving — five times Vermont’s legal limit for a THC beverage. Such products are illegal to sell in Vermont, and the state Attorney General’s Office has the authority to level hefty fines against retailers who do. But for those sold through the mail, “There’s no cop on the beat as far as selling it to kids or anyone else,” Pepper said. Since 2022, Pepper’s board has had the authority to regulate the sale of all products, including hemp, that contain cannabinoids. According to its website, a “THC concentrate that contains more than 0.3% THC by weight … is cannabis for purposes of state law, and buying and selling it without a CCB cannabis establishment license violates state drug laws.” Nevertheless, such sales abound. From left: Jacob Goldstein, Alejandro Bergad and Dylan McCarthy Credit: Jeb Wallace-Brodeur To address the legal loophole, Congress last year rewrote the federal definition of hemp to cap “total THC” in products at 0.4 milligrams per container. The problem for Vermont hemp growers is that the new definition also swept up nonintoxicating CBD supplements whose THC content is less than 0.3 percent per serving, but would exceed the legal limit per bottle or package. In fact, hemp industry estimates suggest that about 95 percent of the hemp-derived products currently on the market would be illegal under the new definition. Manufacturers who violate the new standard risk prosecution under the federal Controlled Substances Act. The State of Vermont no longer oversees hemp processors; those licenses are issued by the U.S. Department of Agriculture. According to Vermont hemp businesses interviewed for this story, the vast majority sell to out-of-state customers. Congress has already delayed the implementation of the new law, and some speculate that it will be reconsidered before the December effective date. Given the uncertainty, Vermont’s CBD producers have adopted varying approaches. Sunset Lake Farms in South Hero has sold CBD supplements since 2019. Its sister company, Sunset Lake Cannabis, grows and sells regulated cannabis. Though the two companies are separate legal entities, CBD accounts for about 30 percent of their combined revenues, according to marketing director Rev Baker. Unlike its cannabis, which cannot be sold across state lines, Sunset Lake’s CBD products are primarily sold outside Vermont, in 49 states and several U.S. territories. After the new law passed, Sunset Lake Farms determined that about 60 percent of its CBD supplements would not comply, Baker said. In response, the company began reformulating and rebranding its products to remove any trace of THC, at a cost of about $100,000. “This is a bummer for us as a company,” Baker said. “There are millions of Americans who rely on full-spectrum CBD products for their well-being.” “Full-spectrum” CBD refers to products that contain as much of the whole plant as possible, allowing all of its constituent chemicals to work together in what’s called the entourage effect. Many customers prefer full-spectrum CBD products to “broad-spectrum” ones, which have had the THC removed. Some products are refined even further into “isolates,” which contain only CBD. Sunset Lake Farms produces both full-spectrum CBD and isolates. One of its soon-to-be-illegal products, Vibe Gummies, each contain one milligram of THC per gummy and 30 milligrams of CBD. Though the product doesn’t get the consumer high, it will soon be illegal. The feds “have thrown the baby out with the bathwater,” Baker said. To protect its bottom line, Sunset Lake has expanded into non-CBD offerings. It recently teamed up with an herbalist in Randolph to develop new tinctures that contain no hemp. It is also working with another Vermont firm to develop a line of supplements containing non-psychedelic mushrooms such as reishi, lion’s mane and Cordyceps. These products are taken for promised health benefits such as increased focus, energy, relaxation and immune support. “We made the decision early on that it’s in our best interest to act as though the ban is going to take effect and plan accordingly,” Baker said. Sunsoil, the Hardwick company, has adopted a somewhat riskier approach. While it, too, has expanded into mushroom wellness products in addition to non-CBD vitamins, the company has no plans to reformulate its full-spectrum offerings. It will continue selling these products outside Vermont but in smaller containers so as not to exceed the federal THC cap. “We are absolutely committed to selling the exact same products the exact same way,” said Bergad, who added that all Sunsoil products comply with Vermont’s THC laws. “I don’t know if this will be the end of us or if we’ll be the last pizza shop in New York … But we will not compromise our standards.” Upstate Elevator in Burlington was among the first companies in Vermont to sell CBD products after hemp was legalized. According to company founder and CEO Dylan Raap, Upstate stands to lose about 90 percent of the products it currently sells if the law isn’t changed. But so far, Upstate has not reformulated any of its offerings. Instead, it has added others that contain “mood-lifting” botanicals such as kava, which contains mild psychoactive compounds, and kanna, which acts as a naturally uplifting serotonin re-uptake inhibitor. The U.S. Food Drug Administration considers both to be dietary supplements. Raap is banking on Congress and the national hemp lobby to find a legislative fix before the December 11 deadline. Upstate’s best-selling hemp product is Yuzu Lemonade Spritz, a beverage that contains 10 milligrams of THC per can. Raap sees this issue as the latest fight between the industry and “prohibitionists.” “If you choose to eliminate a market rather than regulate a market, you just divert all that revenue to the black market. Not a very sensible strategy,” Raap said. But the sale and shipment of hemp-derived products could soon get more difficult. In August, the payment app Square announced that it will no longer process those transactions on its platform. “What is UPS gonna do? What is FedEx gonna do? What are the U.S. Postal Service and credit card companies gonna do?” asked Pepper, the Cannabis Control Board chair. Even if there is little federal enforcement, Pepper questioned whether any national company would risk the reputational damage of transporting products that violate the Controlled Substances Act. Pepper said he had assumed the feds would provide more clarity by now about the new standard. Instead, he said, the industry and regulators continue to operate in a haze of uncertainty. ➆ The original print version of this article was headlined “Hard Times for Hemp | Vermont’s CBD producers take different approaches to a new federal law that threatens their livelihoods” The post New Hemp Rule Upends Industry for Vermont CBD Producers appeared first on Seven Days. ...read more read less