#009 - Unraveling the Complex World of Hemp Laws w/ Rod Kight & Gary Kaminsky

Speaker 2: 0:18

Welcome to High Spirits Live, where we're serving the people of the United States. Welcome to High Spirits Live, where we're serving up unfiltered insights, revealing our investors' perspectives and illuminating transformative strategies for people. You who are trying to make sense of the cannabis industry, let's go. Anna Rae, how are you doing on this beautiful Thursday morning?

Speaker 1: 0:49

Oh, I'm so good. It's been such a wild week. We've gotten so much great feedback about the podcast last week. This week I've just been testing out all these different technology platforms and up-leveling my skills so that we can take this to the next level. So, really, really pop. How about you?

Speaker 2: 1:07

I'm stoked. I've seen what you've been doing. There's some AI tools that we're really excited to start leveraging that are going to really kind of help us get the word about these conversations that we're having. But yeah, I was buzzing all week after our conversation with Pam Lebsdine last week. It was just a super engaging conversation, not only with her but with the audience. We'll get a little bit into that. But yeah, also just had a nice Labor Day weekend, a three-day weekend, and a lot of people have a tendency to ask me oh, did you actually take some time off? And the answer is yes, I did, which has resulted in a five-day, four-day work week where everything just kind of gets compressed. So, yeah, I don't know it's been, everything's been rocking and rolling.

Speaker 1: 2:00

Yeah, the Tuesday after Labor Day was tough. It felt like Monday. I'm sure everybody felt that, but all the time I spent in the pool over the weekend was worth it Lots of catch-up. So I hope everybody out there spent some time in the pool or outside and maybe over a grill. It's good to take that time for all of us, especially when we're working hard.

Speaker 2: 2:23

Absolutely yeah, all right. Well, everyone's already starting to leave some comments. I'm excited, so let's talk about it. Going back to what I was saying, I was receiving text messages from who we had intended to be our guest this week, and so it was just one of the exciting things about doing a live show, which we are live officially right now recording.

Speaker 2: 2:48

Yeah, it's like Gary Kaminski, who's been a longtime friend in the industry. He's a total mensch when it comes to understanding the legal ins and outs of both cannabis and hemp maybe a little bit of opposing views on some of the things that Pamela was talking about, but he was texting me in the middle of the show at a certain point, when Pamela brought up the topic of THCA flower and the opinion that cookies has taken and started leveraging, and what was I mean? I'll just show it like what's on their website right here is like here it is Okay. So THCA flower is this legal? And they have this big long description and like, all right, well, they have an opinion and it says legal opinion letter and I go here and says kite law and I'm like whoa, okay, I know that name. And it turns out Gary really knows that name and so I'm just going to bring Gary on because he knows Rod. He's like I'm going to get Rod on the show for you guys. This is going to be awesome, gary, welcome to the show.

Speaker 3: 4:03

Thank you, I'm just very happy to be here.

Speaker 2: 4:07

And like for kind of seeding some of your time to share with another legal expert, like that's. You know, just very kind of you to help out the show like that.

Speaker 3: 4:18

Well, I mean, rod is amazing. I call him the Oracle of hemp and he has earned that. He's been a lawyer for over 25 years but he spent the most of it, particularly the last 10 to 15, in hemp. Being a North Carolinian as Amitarr healed by birth and by college as well. He has really been a pioneer for the industry. He's been the person that has taken up the cause. He's the one who kind of invented, if not alerted us all to, the source rule, which is a way of determining whether or not you have hemp, and he is also the person that went to Washington and filed the case against the DEA for declaratory relief on some of the statements they've made. So I thought it would be really helpful and fun to have Rod join us, because he and I geek out about this stuff all the time.

Speaker 1: 5:19

Hey Rod? No, he is.

Speaker 2: 5:20

Insane his name and it appears. Look at that.

Speaker 4: 5:24

Well, I feel so humble. Thanks, gary, for the kind comments I mean coming from Gary. So Gary is the guru of securities law, as you all know, and Gary and I do talk about this stuff. Sometimes we're in full agreement, sometimes we disagree, but we always have a lively and fun discussion and when I have securities issue he's my guy. I go to you. So it's quite an honor to be on here. Thanks, gary, for inviting me and thanks Ben and Anna Ray for having me. I'm excited about the discussion.

Speaker 2: 5:48

Yeah, and in case anyone doesn't know, gary does have an acclaimed background. I met Gary as part of the cannabis beverage council of Attach. Gary is the chief legal expert advisor for Attach and also works with some of our partners in the cannabis beverage space Operators on both the hemp and cannabis side, so just incredibly well versed. This is going to be an incredible discussion, anna Ray. Where do you want to start it?

Speaker 1: 6:20

Yeah, let's get into it. Also. The topic that we put out was myths, misperceptions and the reality of hemp-derived product law. But I figure like, let's be real here.

Speaker 1: 6:31

A lot of us that are working in cannabis or might be listening and are thinking about cannabis or investing in cannabis are interested because we started paying attention to cannabis because we like to get high or we thought there was a really great opportunity to make it easier and more accessible and safe and legal for people to get high.

Speaker 1: 6:48

And for a long time people talked about hemp. As you know, it's rope, not dope, and hemp really didn't seem that interesting to people that wanted to operate in the THC supply chain. But over the last couple of years something has changed and in the hemp side of the broader cannabis industry there are intoxicating cannabinoid products that are coming from hemp and a lot of us are really confused about what is legal, what isn't legal, what are the laws that are overseeing this, who can we turn to to help us understand? So that's what we're here to talk about today what is going on on the hemp side of the market, what is legal, what are the myths and misperceptions? And I think today it would be really good to start with talking about what happened in 2018 with the Farm Bill.

Speaker 3: 7:41

Yeah, well, kerry you want to take that I would love to. I mean, I think that you phrased it completely correct in that the concept at least what we thought, was that the Farm Bill was a rope, not dope, whatever that may mean philosophy. But the problem, obviously, is that we have one plant, it's called Cannabis Cetiva L, and we only have one set of cannabinoids that are in that plant, and there's anywhere from 150 that we actually know about, cbd being a main one, as well as Delta 9 THC. And when they wrote the Farm Bill, I believe that they may have thought at least some of the folks may have thought that they were creating a bill to help hemp farmers create, you know, facilitate biomass cultivation, and what they didn't really understand was that, again, the plant is identical and the cannabinoids are identical and at hemp in marijuana, are artificially created, artificially derived legal terms. So when the Farm Bill came out, I think that we had a bunch of people excited that it was a step in the right direction, at least for a plant that didn't seem to be need to be under prohibition under the controlled substance, and what we ended up having was a glut of CBD oil and, needless to say, as everybody may remember, there was CBD, everything everywhere, and what ended up happening is that it became, as it always does, when the supply is well in excess of demand. The prices plummeted and the hemp farmers started to really suffer, and that was not the intent. And then it became clear that, under that Farm Bill, derivatives of hemp, which is cannabis ativa L that is tested within 30 days of harvest and has less than 0.3 percent delta 9 THC by dry weight that is the definition. Once you get past that, the Farm Bill does not address post harvest, it doesn't address production and it certainly doesn't address end product.

Speaker 3: 10:00

So I think that what happened was the industry started to develop products around this reasonable interpretation of this law and, needless to say, rod was a pioneer in helping some of these hemp farmers and hemp producers come up with different ways for them to take advantage of this new bill but also actually generate revenues, and one of those ways was to create intoxicating hemp derived cannabinoids, of which there are a number Delta 9 THC is just one of them. Delta 8 THC, which we've heard about, is another THCP, hhc, and the list goes on of an alphabet soup, and what has been created is a very large industry in smoke shops, gas stations, farmers markets and generally unregulated at least when compared to the marijuana industry retail outlets. And I think there's a lot of myths and misperceptions about this, including up on the hill, to be honest, because I don't think Congress really got themselves educated enough about the cannabis sativa L plant and the supply chain and demand for products when they wrote the Farm Bill, a recent, obviously as a 10,000-some-odd page document I think it's only like a couple pages on cannabis. So it's a very crucial and important piece of legislation, cannabis being a very small part of it. But what has happened is that a can of worms has been opened and an industry has proliferated. Unfortunately, the confusion around that industry that we had hoped would be addressed in part by a farm bill has only gotten increasingly, increasingly more difficult to navigate, mainly because of the overlap of products, mainly because of people's possible preconception of, like you said, an array rope, not dough.

Speaker 3: 12:14

But what we have is a hodgepodge of regulatory arbitrage that is going on in this country and in this industry, and then we also have kind of a regulatory ping-pong game where you've got all of these different agencies, starting with the USDA, the FDA, the DOJ, the FTC, the DEA, of course, and then you go to the states and you've got the AGs, and all of those parties are really confused as to what their mandate is. There's a lot of finger pointing well, the FDA needs to do this, the DOJ should do that, it's really the USDA? Well, we only deal with flour, et cetera, et cetera. And then you're left with the state regulators in the marijuana and hemp industry, who then are left to try to fill the void, and what they're doing is filling the void with regulatory pronouncements, guidance and just regulations that, in a lot of ways, are very much unnormalized on a state-by-state basis, and one of the key points of the farm bill was to facilitate interstate commerce. So that is why we are left with myths and misperceptions.

Speaker 1: 13:28

Well, let's talk about interstate commerce for a second. I think that's interesting because what we're seeing with a lot of the THCA, delta 9, delta 8, hemp-derived products is an active direct-to-consumer E-com pathway to market lots of different channels and Ben at the beginning of the show talked about the cookies E-com site, but that's just one of many and I wanted to ask Rod about what you're seeing from folks that are looking to enter this space. And we've even heard on some earnings reports from some public cannabis companies MSOs that are starting to look at alternative ways to bring cannabinoids to market outside of the regulated cannabis THC supply chain in the state-by-state market. And, rod, are companies coming to you trying to understand what the options are Like. How does someone navigate this?

Speaker 4: 14:24

Yeah, sure. Thanks, annara. That's a great question. So the short answer is yes, we're seeing lots of calls from companies that are wanting to get involved. And you talk about interstate commerce.

Speaker 4: 14:36

Interstate commerce is A one of the foundational principles of the Constitution not to go all the way back into constitutional law but interstate commerce is and has always been part of US regulations, and it is in the Farm Bill specifically states that a state may not, or a tribe or a province may not, interfere with interstate commerce and hemp or passage of hemp through its borders. And so the way the laws have grown up, we've got the hemp laws over here you might hand them in the camera here and then we've got the marijuana laws on a state-by-state basis over here, and for a long time they were sort of running in parallel. But hemp, because it's federally legal and legal in some way, shape or form in all 50 states, has been a national and in fact even an international at times commodity, and it produces products that go across state lines. Meanwhile, on the marijuana side, it's very state-specific, because we have the fact that marijuana is illegal under federal law, it's only legal in various states, and so the companies operating in the marijuana space have been confined by their state boundaries, not to mention regulatory hurdles and taxes and that type of thing, and so a lot of those companies and we can see that the marijuana industry has been suffering and struggling, and a lot of that has to do with a limited population in which it can sell to. You're constricted to this state. Even if you're an MSO, you can only operate in these various states and you can't really very well operate a top-down operation. You've still got to have a state-by-state mechanism for distribution. Meanwhile, hemp you can distribute it throughout the country and again, even internationally, and so that is, as you might imagine, very appealing.

Speaker 4: 16:26

And I think that, even though we've had the farm bill in place since 2018, the end of 2018, and in fact, just as a quick aside, this wrote not dope thing. I agree with everything you and Gary said, but this goes actually back to 2014. So by the time the 2018 farm bill came, I think some people still thought this is rope, not dope. But for a lot of us who had been in the industry for a while, we were already the CBD industry in particular, but even the hemp flower industry was already booming years before the 2018 farm bill, based on the 2014 farm bill and the 2018 farm bill just expanded and refined that. So it's been around for a while, but the point being that I think, even though we've had hemp legal for a long time, I think because of the way the laws grew up and even the cultures around them grew up, I think it's only recently dawned on a certain segment of the industry that, wait a second, we can operate, we can sell cannabis across state lines. Now, at least, it's just called hemp.

Speaker 2: 17:26

So, rod and I'm going to reference one of the comments that did pop up with, talking about science and reason, and you're talking about the war of the law, going all the way back to the Constitution. So I kind of want to dig down into some maybe more a little bit of the gray area here, because, being an observer and operator kind of in the space, it does feel like it's just this kind of perpetual. How far can we push the envelope to the letter of the law? And so it's been this really kind of stepwise evolution progression and I'm curious how do we get past this science reason? Like in Pamela's conversation we talked a lot about empathy and the intent of some of these regulations and just kind of, what is your perspective as far as how we think about what is legal versus not, especially when, as Gary pointed out, there is this kind of just ping-pong between all these federal agencies that really don't seem to know what's going on.

Speaker 4: 18:34

Yeah, sure, I think that's a great question. I think that Congress in some respects is just a sort of a pure sort of cannabis advocate Advocate did us a lot of favors. It just legalized, you know, you know hemp, which is, you know, there's one metric that distinguishes between lawful hemp at the federal level and illegal marijuana, and that's the built-in iron Concentrations and everything else is just, you know. So that's, that's wonderful. But they also didn't give us a whole lot of guidance. And so Gary hit on this. Earlier we talked about, you know, going about his comments about rope, not dope, but the ping-ponging and what do we do? The the farm bill doesn't really address in market or even even mid-stage market, and so the to sort of answer your question in a different way, it's just or to approach it from a different way. You know we've got this very short law. The Gary said it's a, it's a couple pages. It really is. We talked about a thousand page farm bill and a page and a half, I think, it is about hemp. We don't have much guidance, and the only guidance we really have is A here's, you know, for producing it, here's, here the regulations about how to grow it, and and then here's a definition of what constitutes hemp and that's it. And so what that does is is you can't. You know this is an industry right, the cannabis industry and you can't just Say, well, we're gonna, we're gonna allow farmers to grow hemp, thanks, we're done. You know, that's like saying I don't know, we, we're gonna allow tire makers to make tires, go ahead and start a car industry. What's legal and what's not? You know, we really need a focus on the full Ecosystem of hemp, because you do have farmers, that the primary, that's how we get cannabis right. But then you've got processors and you've got manufacturers and you've got distributors and you've got retailers and consumers and it's a whole ecosystem. And so to not, since the farm bill didn't address any of that, all we've got is this bare statute, and that's where it all comes from. And so that leads to what is a lot of this quote-unquote gray area about what's legal and what's not legal, and and to sort of wrap up, you know this, this response In terms of the intent, we deal with this a lot. You know what is the intent of the farm bill.

Speaker 4: 20:41

There are two quick pieces I like to tell people about the intent. First of all, it's basic statutory interpretation that you learn in like first-year law school. If the statute is clear, the intent of the legislative body, in this case Congress, is irrelevant. The statute says what it says, that the speed limit is 55. You don't say, well, did they really intend it to be 45? No, it's 55. It's clear. The only time intent comes into play is when the statute's unclear. And it's very clear. But even then people say, well, it wasn't really the intent to do X or Y. How do we know that?

Speaker 4: 21:12

I mean, I'll concede that probably Mitch McConnell didn't think he was legalizing intoxicating cannabinoids, but this, this you know there are a lot of cannabis advocates in Congress, believe it or not, and Seeing that we can't sort of get this full-blown marijuana reform, at least you know, years ago hemp was the way maybe to get this done. So the intent I think a lot of Congress people's, people in Congress's idea was, hey, this is fantastic, this is a way to get some legalization that we desperately need. So anyway, that's that's my thoughts about intent. I think intent ultimately is completely irrelevant. We just have to look to what the statute says.

Speaker 2: 21:49

Yeah, so just Kind of pulling on a little bit of a thread here like intent, ambiguity and and just interpretations in the legal world and I'm not a lawyer, that's probably clear but what we often like lean on when there are ambiguities is case law and and you have been involved with it with a number of different cases and and I'm just curious as to you know, wherever there is doubt, what kind of case law has kind of occurred over the last, you know, several years that can help us understand a little bit more what has been deemed legal and and to what extent.

Speaker 2: 22:28

Because, like we've heard and seen, you know Delta 8, you know hitting the headlines as being defined as legal and and you know, by the, the Ninth Circuit courts and and you know, and I'm sure there's probably something that that you've kind of taken to the court regarding, you know, some of these other derivatives, and so just like, can you help the audience understand what has been, you know, taking taken to the courts and help kind of structure up the the legality of the, the hemp side of the industry?

Speaker 4: 23:01

Yeah, sure, I'll respond pretty quickly. I think that it's. It's unfortunately fairly complicated because in the United States we have a federal system and we've got the federal laws, we've also got the state laws, and so I think much of the litigation has happened on a state by state basis. There's there's litigation and it's happened in Texas the several bits about some litigation, most of which have been successful for the hemp industry and teasing out what's what's legal or not, but typically that's about state law. So it's really applicable to Texas, but not so much, say, in Arkansas, where there's a case going on right now. It's a brand new case. So we're seeing a lot of state by state cases that are very helpful in a lot of ways, but only helpful within the context of mostly for the state therein. On the other hand, we've got federal litigation.

Speaker 4: 23:48

We haven't had much of that, and you mentioned the AK Futures case, the Night Circuit case, which I think is it's kind of strange to say this is a lawyer because it was a case about intellectual property.

Speaker 4: 23:58

It was not a grand case.

Speaker 4: 24:00

I don't think it ever set out to create a huge precedent, but it's probably one of the most of the most presidential case we have for hemp right now, because in determining its final ruling regarding the intellectual property, which is kind of unrelated to what we're talking about it did go into some level of detail and stating very explicitly that Delta THC from hemp is not a controlled substance and, importantly, that it's manufacturer.

Speaker 4: 24:25

The method of manufacture is irrelevant, that it is not a controlled substance and the reason that method of manufacturer language is important, because you see a lot, even in a recent Arkansas state case litigation affidavit, but you see a lot about the fact that oh well, no, but synthetic Delta is not a controlled substance, but synthetic Delta 8 is not legal. That's untrue and the formula specifically says that a derivative of hemp is also hemp. A derivative is by definition, a synthetic and in the AK Futures case, the court agreed with that by saying that the method of manufacture is irrelevant. So, anyway, to answer your question, there are a lot of cases where there are very few cases, but that precedent is beginning to increase and that's very helpful in teasing out and determining what's gray and what's black and white.

Speaker 1: 25:18

Well, so, rod, then let's talk about the long tail on this opportunity. You know, the farm bill is a bill that gets revisited every so often, and we're about to revisit it again, and there is speculation about if the language surrounding hemp will change and if that will create restrictions that aren't in place now on some of these psychoactive cannabinoid products that are in the hemp side of the market. Whether it's a question of intent or a loophole, a lot of the things that the folks that are trying to protect their regulated cannabis businesses are saying is well, this, this isn't going to last forever, and and I've also heard people on the hemp side say, well, we're too big to fail. What, what are you tracking? This is obviously a huge part of your business, and so I think you have. What is your prediction, if you have one, about what is coming with the farm bill and the likelihood that the psychoactive products that are in market will be able to stay in market, based on your own interpretation of the law?

Speaker 4: 26:26

I believe. Well, first anything could happen, but I believe that we're going to see something that's very akin to the same thing. I don't think it's a too big to fail issue. I think that this is. You know, cannabis is now legal and we have supply chains that are established. Now we have consumers throughout the country that want these products and I I understand the limits of sort of the regulated marijuana companies because they are struggling in their state markets, but the good news is they can participate in the same market. You know, they, they and, and as we've seen, some marijuana companies are legacy ones even are beginning to participate.

Speaker 4: 27:10

You know, and you and I spoke briefly about this and I read the the other day. You know, the regulated cannabis markets are now, by and large, are not working, and it's unfortunate, but but they're overburdened with with regulations, they're they're overtaxed, they differ from state to state, so a company trying to do it in the MSO in different states has to adhere to all these different complexities and it's almost sort of, you know, the regulated market is almost painted itself into a corner Like what are we going to do here? And? And hemp has emerged, I think, quite unexpectedly for a lot of people as sort of the path forward to kind of get out from, out from this painted corner, out from and and to continue the the progress of cannabis legalization and bringing cannabis, you know, to the forefront in American and, ultimately, the world culture.

Speaker 4: 28:03

So not to get too grandiose, but I think that the primary focus is there are unfortunately some competing factions coming into this farm bill. You've got the prohibitions. There will always be at least a small number of outright prohibitions, but within the cannabis community we unfortunately have a bit of a sort of civil war, that it is a lot kind of a turf war as to who can do what, and I think that's just a wrong headed approach. I think the approach should be hey, let's continue to push this hemp thing forward, because it really lifts all the ships in the sea of cannabis here, because everyone can participate and we bring that, we normalize it more, we continue to create standards and supply chains and broader consumer base for these products and then hopefully we you know we can bring it all together down the road.

Speaker 1: 28:52

Yeah, I mean, I think the Civil War is a great analogy. It's tough because when you've found a business, you're operating a business. You want to protect it at all costs and I think that, inherently, the Delta 9, thca and Delta 8 products are competing against the regulated cannabis products in the states where those products are available and they're harder to get. To go into a dispensary is not often as easy as going into a gas station and when you're getting gas or snacks or whatever else. And so I think cannabis companies inherently are trying to protect what they've built, because they've tried to follow a path to complying with these programs to bring THC products to market, and now there's THC products coming from the other side and it feels like they're coming.

Speaker 4: 29:43

So I understand. Well, I think you know, rather than defending a broken system, it seems like we embrace the system, that maybe it's beginning to work and we didn't need to refine that. Without a doubt, I'm in favor of reasonable regulations, and every one of my hemp clients are as well. But, you know, rather than sort of digging in and defending a broken system that really supports a handful of monopolies, why don't we, you know, again embrace the system that is allowing mainstream folks, msos can compete and so can Momma Pop down the street. It's bringing cannabis to everybody.

Speaker 2: 30:19

So what like what this all really kind of highlights is just how convoluted this is all become right, and what we've often relied on in the past is kind of the reasonable voices, so to speak, at the kind of organizational higher level. And the common thread that's popped over the last two weeks on the show is that the plant doesn't belong in the controlled substances list and that we need to start talking about cannabinoids. And I was even having a conversation with the NCIA board yesterday about like is there an opportunity to rebrand as the you know, cannabinoid industry? Right? And Gary, I want to get you into this conversation and I know you've been involved with Attach for a long time.

Speaker 2: 31:09

Attach is the American Trade Association of cannabis and hemp, which historically was like oh, that's an interesting position. It's like the intersection of these two kind of as Rod said earlier, like these two parallel industries that are no longer parallel. They're just like very much playing in each other's, in each other's games now. And so, gary, how have the conversations been at the kind of organizational level? And you know, for those of us and actually I don't know, are you, are you going to DC in the coming weeks?

Speaker 2: 31:41

We have a lobby days coming up, so I'm just curious like how is this conversation? Evolving.

Speaker 3: 31:48

Yeah, I don't know if I'll be able to go to Washington, but it's interesting. It's a good point because I would say maybe three and a half years ago, michael Bronstein, who's the executive chair of Attach, and I had a conversation about what I was seeing as the conflation of the hemp and marijuana business because it is generated from one plant and the complexities that were being created because of that and the kind of misunderstandings. And Attach we definitely are working for both marijuana and hemp and I don't see the marijuana and hemp industry as mortal enemies. It's I think that that's something we need to try to address because the, as Rod has said, the way we've approached registration and licensing of marijuana on a state by state basis interest rate has not worked. In fact, it's failed miserably. I've had it up legal compliance for four different MSOs so I come from that world as well and the challenge of creating a nationwide compliance program when you have individual state laws, state regulators and, as I like to say, the law is more important than the law. You're dealing with state regulatory discretion and you have to build infrastructure in, you know, 30 plus states if you're operating in them all and that doesn't work. So why would we say that what we should do is turn the hemp industry into that. What we need to do is take a step back and this is something Canra, I think, very thoughtfully put out in their midst, if they're RFI to Congress is that we need to educate. Let's understand what this business is, let's take a look at how the supply chains are working and what consumers are looking to do, and then let's come up with meaningful and thoughtful regulation.

Speaker 3: 33:50

But in the meantime, there's a large misperception that all of these hemp operators are bathtub gin purveyors and are just putting out high metal and vitamin E acetate smokable products that are going to cause all kinds of public safety issues. The fact is is that the majority of people that I know and that I've helped and that the ones that Robert Rod is representing are self regulating. We are testing our products, we are engaging in good manufacturing practices, we are labeling and packaging and not trying to sell to children. Those are very important and that goes across the entire industry. We need to have regulations like that and we're starting to see some thoughtful regulation come out of states Believe it or not. Florida is one of those. That's where I live. They had thought about outwilling intoxicants earlier this year when they came up with legislation, but after, on further review, they realized that's not the problem. The problem is what are the products that are being sold? Are they safe? Are they being sold to children? Are they being attracted to children? Let's put in labeling requirements. Let's require testing.

Speaker 3: 35:10

Once you take out the public safety issue, you then just get into what it is that this country wants to do with regard to cannabis, and whether it's cannabinoid centric regulatory scheme, a plant scheme or otherwise. I don't think that we know enough right now to even write those regulations, and I do think it would be good for people to take the time up in Congress and try to figure that out. My guess is they don't really care to do that because it's not a priority for them. It's more of a pain in the ass.

Speaker 3: 35:50

The challenge is that this is a multi-billion-dollar industry and I believe that the hemp industry deserves some guidance and some support, and instead what we're getting is a bunch of states either writing regulations that are intrinsic to that state so it's contrary to a federal interstate commerce program, which hemp is supposed to be but also it further proliferates the misunderstandings and we're getting certain laws that don't make sense. They're making cuts, they're calling things synthetic versus artificial cannabinoids. As Rod pointed out earlier, they're making a distinction of a product that's converted from CBD into another cannabinoid, as the one that appears that you get from the mother liquor of the plant. There's no reason for that.

Speaker 1: 36:47

I agree with you that cannabis regulations have been a disaster way too much regulations but where I am going to disagree is about self-regulation, because I started the first cannabis lab in 2009, before there were any regulations, and that's what I was trying to sell, because I was trying to convince Prop 215, california Medical Cannabis Operators to self-regulate and some did and some didn't.

Speaker 1: 37:11

But what I also learned through that process is that self-regulation is the first thing that goes out the door when times get tough, if there's a financial stress or if there's an operational inefficiency, whatever it is, self-regulation is added red tape that isn't required. So I think that you're very right that regulations need to be promulgated to protect consumer safety, because self-regulation is not a path to being able to provide any confidence to consumers that what they're getting from hemp or cannabis is safe, and we do need to stand up an industry that we can be proud of that is ensuring safety across the board. I'm wondering if some of the state regulations that you can point to whether it be in Florida or other states that are starting to create regulations for hemp that you think are doing it right, and what regulations are.

Speaker 3: 38:14

I would commend Minnesota, to be honest, and I think that maybe a year and a half ago we all were not necessarily on that page when they possibly mistakenly created an adult use hemp market in which they may not have intended, but they followed it up with very thoughtful adult use regulatory structure and they're working on the regulations, but they've created an environment where the two industries can proliferate and they're not necessarily competitive and we're not vilifying hemp producers because they get to do things that a registered, licensed marijuana producer can't. It's not their fault, as Rod will say, that's what the law says. It's not illegal, so that's not the problem. But I do think Minnesota is a good example of a state that is trying to do that, as opposed to other states like, say, a Washington state which just said we're not doing it, we're cutting it out, we don't care what it is, you can't do it.

Speaker 1: 39:24

I love that you're talking about Minnesota. Will you give our listeners the shorthand on what Minnesota is doing and what their market looks like right now?

Speaker 3: 39:33

Well, minnesota is fascinating because you can walk into a liquor store in Minnesota and buy Paps Blue Ribbon beer next to Paps Blue Ribbon Seltzer if they're selling one, and there's a huge beverage market in Minnesota. It's fascinating. And you can buy them almost anywhere. And I think you'll start to be able to buy intoxicants at the Minnesota Viking Games. And they have put out a statute and they're in the process of writing regulations and they've created a new OCM that's going to oversee hemp and marijuana. They have a low hemp potency product, that is an intoxicant limited to five milligrams per serving that can be sold almost anywhere outside of the marijuana laws, but not outside of law. They have law that governs it. They have testing standards, they have licensing standards and when I talk about self-regulation just to address what you said I think that I'm not saying that we should rely on that because, as we know, when monies to be made, bad actors get involved many times. I'm just saying that to assume that everybody who's selling these products is a bad actor is probably not correct.

Speaker 2: 40:55

So you took it to beverage. So I'm going to like pull on a little bit of a selfish angle really quick because I have a question that probably doesn't have an exact answer. In Minnesota is a great example of like you legalize, so to speak, and the focus goes to beverage, and beverage has been all the buzz in Minnesota and we love it. That's what we focus on. Is there an opportunity, because of how complicated cannabis and hemp in this huge conversation is, is there an opportunity for cannabis beverage, like low doses of THC in a beverage format, to kind of pull away from the pack and have a separate lobbying effort that maybe gets it regulated under the TTB, separate from the whole like cannabis legalization discussion? Like is there a potential strategy for hemp in cannabis beverage industries to unify and become legal, separate from cannabis as a whole?

Speaker 3: 42:02

Well, as you know, at Attach, we certainly believe that that's the way it should go. We believe the TTB has the experience to deal with intoxicants particularly in beverages, obviously and that they would be a logical regulator on that, and I think that that is an example of a thoughtful pathway for a regulatory structure that could be normalized among both marijuana and hemp, and possibly even similar or, if not, identical, but yet not inhibiting what is happening. The challenge for marijuana is there's a big difference, because marijuana is still a controlled substance and hemp is not, so that would have to get resolved on some level, but I would think that moving it to a regulator that has some experience and possible interest in the subject would be much better than an FDA that has shown very little interest in doing anything. The USDA, which has nothing to do with anything other than plants, and the DOJ, which I don't know what they're doing. They're trying not to indict. I don't know why. I didn't guess.

Speaker 4: 43:22

Right. Well, if I could piggyback on that, gary, you made a good point about you might be able to purchase THC seltzers at a Vikings game, and I think that we've gotten so used to. In the marijuana market, on the one hand of like well, you can only get cannabis products at a dispensary, and a lot of times, depending on the state most states it's a super high entrance fee and it's limited access and so on and so forth, because that's how it's been. And on the other side, people say, oh my gosh, you can buy these intoxicating hemp products at convenience stores. Oh, the world's falling out.

Speaker 4: 43:54

Well, I think if we step back and think about the seltzer market, we think about I really to preface this, I really never like comparisons with alcohol and cannabis because I like beer, I like you know, but alcohol is a poison and cannabis is a medicine. But for purposes of this little one example, you know you can go into a convenience store if I want to buy some beer, I'm getting some gas. I run to a convenience store and convenience stores are absolutely set up to deal with that. They deal with lots of different regulators coming in and regulations. They know how to do age gating, they know how to manage it. They sell cratum, they sell beer, they sell tobacco and whatnot.

Speaker 4: 44:35

I don't see what's wrong with a convenience store. By the same token, sometimes I like to go into a very boutique bottle shop to buy some cool beer. Well, that's maybe a really boutique dispensary that has certain cool strains or certain cool beverages. Or sometimes you know, you go to a ballgame or a concert and you can buy alcohol there. Why not buy a THC beverage and so on and so on? Why not the grocery store? You know, sometimes I get ibuprofen from the pharmacy, Sometimes I get it from the convenience store, depending on what's going on.

Speaker 4: 45:02

And I think that we have pigeonholed ourselves into well, it's cannabis, so it can only be distributed, it's very narrow bands of distribution outlets and I think the opposite should be true and can be true. And, gary, I really appreciate all the work you're doing specifically with the beverage side. And you know, on expanding this in Minnesota has done a great job with its law. It's a pretty dense law but it's done a great job in the culture in Minnesota just to again to normalize this. Hey, I'm going to a barbecue, I'm going to have a THC seltzer instead of a beer while I'm cooking out and hanging out with my friends. I think that's wonderful and we just need to continue moving that direction.

Speaker 1: 45:41

I have to admit that, as someone who's been a safe access advocate for the last 20 years, I love what you're saying, rod, and I love the idea of normalizing cannabinoid consumption and making it easy and not feel like something that's weird or out of the norm for anyone, and so this concept of access and the way that hemp is providing that access, I think is really powerful, not just for access, but also to help de-stigmatize and get people to try cannabis that haven't and to see if it's something that appeals to them and that works in their life instead of poisons like alcohol and I'm going to throw a wrench in everything.

Speaker 2: 46:23

Actually, colin Keeler is going to throw a wrench in everything because he brought up this BFG, which I think stands for Big Fing Gummy. I don't know if you've all seen this, but I'm going to try to pull it up really quick and there we go. The BFG Party Pack Blueberry Delight 3,000 milligrams of Delta. 9, 20,000 milligrams total largest legal THC gummy in history. The question was how is this legal? And I'm just wow, look at this thing, holy shit, wow. So yeah, I guess, like opinions, let's like who wants to jump in and pass an opinion on this.

Speaker 4: 47:11

Oh, you know I want to jump in on this. So let's use that alcohol. So this is kind of crazy, right, I don't know. Bfg, it seems like it's more marketing on sort of this, who's got the biggest? But you can go and buy half gallons of Everclear. There's no like a milligram limits of alcohol there. You just sort of use it sparingly or how you need to and, the same token, just sort of step back from the 3,000 milligrams per gummy.

Speaker 4: 47:40

I was asking a client, you know I was like so who buys the? You know 200 milligram? You know D9 hemp gummies, and I was like, as a you know, it's kind of I'm always trying to understand the market of what my clients are seeing and I was assuming that it would be. You know the kids, you know the I mean like 20 something year old, you know, coming in and partying or whatever.

Speaker 4: 47:59

Actually, the primary group that's coming in to buy these large milligram gummies are typically older people who are having it with chronic pain and other issues and they can't get that kind of dosage anywhere else. And these people are terrified of the milligram limits and the caps that are being putting on. And I'm not even necessarily opposed to caps, I'm just saying, you know, I think there's this idea that, oh my gosh, we're just trying to throw a THC at everybody and get bigger. This is bad, bad, bad. I don't. I've never seen a 3000 milligram gummy, but it looked like that would be pretty difficult to eat in one thing Maybe it's a, maybe it's a one that everyone, you know a group of 10 people can share. So I don't, you know whatever, but I think that this idea that that more milligrams means bad and the hemp industry is abusing, is being abusive by adding milligrams, is a little bit out of perspective as to what's really happening in the world on the ground.

Speaker 3: 48:55

Yeah, I would. I would amplify that. I have a client slash friend who has a very cutting edge smoke shop here in coconut grove and I regularly visit him to see which products he has. And he may not have the BFG, but he does have a 6000 milligram package of 20 gummies, 300 each which 300 milligrams in one fell swoop is a lot, and the good news is we haven't.

Speaker 3: 49:22

Nobody's going to quote unquote overdose. If you take that term as taking an opiate and dying, I can say that I have experienced overdosing by taking too much of too many milligrams at once and it's extremely uncomfortable but it passes and you learn not to do it again. I believe that the people that are taking those have worked, have built up their tolerance to take that much and there's not many people who can, but there are people who can and there is a market for that. But when the question is is it legal? Yeah, it is legal because it's it's it, it.

Speaker 3: 50:04

There's less than 0.3% on dry weight. There's a shit ton of sugar and gelatin and every other stuff in that gummy. Whether or not that's appropriate or not, I don't know, but that's not the reason that this decision should be made at the federal level that we're just going to eradicate the hemp intoxicant business. As a former SEC enforcement attorney, I'm very well acquainted with regulators and how they respond to things, and they use an elephant gun to shoot a fleet. They don't necessarily perform surgery and I would hope that when we work out our regulatory structure for cannabis and when I say cannabis I mean hemp and marijuana that we, as best we can perform surgery.

Speaker 1: 50:50

There's. There's two issues and I'll be quick on my response to the 3000 milligram gummy. One is that is why we need regulations. That is too large I'm just going to say that is too large of a serving to put out there. But the second piece is is can we even trust that there are 3000 milligrams of anything in that product? The other reason why we need real regulation instead of self-regulation that would provide some boundaries and constraints around labeling, compliance and testing standards. Because you know, we all know, that that testing is pretty across the board, inflated in some categories and deflated in others. People are getting test results that tell them what they want to see, as opposed to having licensed testing labs that are required to to keep variable limits within certain amounts and to help with dosage control. So I would question the even the reality of 3000 milligrams in that gummy. And then I would also say that's exactly why we, why we need regulation, because it's too.

Speaker 3: 51:58

Yeah, I would agree with that I mean and I think the one thing you've heard loud and clear from both Rod and I today is that we are proponents of regulatory guidance and public safety directed regulations. There's no need for that. On the other hand, if you don't allow people to readily access products, you are creating a problem separate. You're creating one. Creating one, a problem where people are going to gravitate to the illicit market, which continues to dwarf all of the regulatory marketing is a total problem in and of itself. And then you also have the people who are highly sober. I happen to be one of them, who I don't drink, I don't, I don't snort coke, I don't do anything, but I do consume cannabis. But if I were an opiate abuser and I couldn't get cannabis and I had to go to opiate, that's a horrible result, and so, whatever we do, we can't cut off people's avenue to take products that we know are, if not healthier, a hell of a lot less harmful than the ones that they will otherwise take.

Speaker 4: 53:17

Amen.

Speaker 1: 53:24

So I would say that we could keep talking about this forever. I think that there's been a ton of knowledge shared. I can't thank Gary and Rod enough. This has certainly helped me to understand a little bit more about what is allowed and what isn't. So if you're listening, hopefully you learned something too. I encourage both of you guys to get in touch, or everyone who's listening to get in touch with these guys. But we're going to have to start our wrap up. So when we've got guests, we do something called our last call, and this is our ending of the show, where we give our guests an opportunity to make a last impression. So, gary, why don't you give us your last call?

Speaker 3: 54:04

Well, my last call is a call to the legislators and the state regulators to take a step back and really try to understand the business that they're trying to regulate and legislate, because, as a member of the supply chain, I am extremely frustrated to be presented with people who claim they know what the law is and are forcing commercial, non-productive supply chain procedures that are not supported by law, guidance or otherwise, but because there's this void out there that is disrupting our ability to do business and effectively run a cannabis industry. So that is my call is to the people before they rewrite anything the farm bill or anything that they actually commission the appropriate people to learn what's going on Great stuff.

Speaker 1: 55:08

for sure that sounds good. And, rod, what's your last call?

Speaker 4: 55:13

Sure, my last call. Well, I'm a strong supporter for the hemp industry, not because of hemp per se, but because I'm a cannabis advocate, and, as we've discussed, marijuana and hemp are the same plant. And, although medical marijuana in particular made great strides in public awareness in the early days of legalization, hemp is emerged as sort of the great normalizer of cannabis in the US. Now, for almost a decade I mean we're talking CBD to CBD flower, to intoxicating cannabinoids and D9 beverages that we've talked about the day to THCA flower Hemp has not only brought cannabis to people all over the US, in red and blue states alike, but it's also provided a pathway for people and I'm talking about regular people who don't have political connections or access to massive amounts of capital to become involved in the cannabis industry and to turn their passion for cannabis into a livelihood. And so, while the marijuana industry is currently in a state of crisis I just read yesterday that New York is a quagmire. We all know that. We see legacy marijuana companies struggling and even going out of business the hemp industry is growing.

Speaker 4: 56:14

It's clear that the state-regulated marijuana market does not work and, on the other hand, hemp is a way out of this corner that I've talked about earlier that the cannabis industry has painted itself into.

Speaker 4: 56:25

So everyone, from multinational MSOs to convenience change to small mom and pop shops and even individual small talented growers, can participate in the booming market for legal hemp, which is another way of saying legal cannabis and its products. So certainly hemp should be subject to reasonable regulations I agree with you, ann Aray, about that. For safety standardization, access by miners should be limited, but prohibiting it or trying to impose the same types of regulatory barriers and taxation schemes that have harmed the marijuana market is just wrongheaded. So instead of destroying the US cannabis market in general and what amounts to a turf war I advocate, my call, darappa is for continuing to expand cannabis access to people and businesses throughout the US and the world. Currently, it won't always be this way, but currently that pathway is through hemp, and so, for this reason, everyone who's watching this podcast should let your state and federal representatives know that hemp and hemp products should remain lawful, and this is particularly true for the next farm bill, which is going to determine the fate of hemp, which is to say cannabis, for the next five years.

Speaker 2: 57:33

All right.

Speaker 1: 57:35

Make drop.

Speaker 2: 57:35

There you have it. Rod Gary, I can't thank you guys enough being brave Coming on live again. This is live recording. So our guest this week, just being brave to come on and talk about a relatively controversial topic and just kind of put it all out there and actually educate the audience. So thank you guys. I can't thank you enough. This has been great. All right, all righty, I'm going to bring these guys down. Anna Rae, what do you think? That was pretty awesome. To kind of compendium to last week's conversation.

Speaker 1: 58:13

Yeah, I learned a lot. I think that my brain is a little jumbled. I do a lot of work helping companies, mostly on the cannabis supply side, try to think about how to grow strategically, and I think that we have a lot of questions ahead when it comes to these two industries coming together. So I think we're going to keep talking about it on this podcast and keep having more conversations.

Speaker 2: 58:37

Absolutely. Yes, we are All righty, everyone. Well, that's the show. What do you think? The conversation doesn't have to stop here. If you've got questions, want to keep it going, just put them in the comments. We'll get Rod and Gary in there and commenting back to you. Reach out to them directly on social media somewhere. Just look for the post, they're there. Anyone you want to see this show is here for you. We're having these conversations, we're trying to give you access, so make your recommendations. If you want to text me, if you know someone that's good to bring on the show, by all means make it happen. Please, as always, like, subscribe, follow, share, friends, family, coworkers, do it. Until next time, stay curious, stay informed and, of course, keep your skip spirits high. We'll talk to you soon. Bye and thanks again.