Navigating the Changing Landscape of Hemp-Derived Products in Virginia – Cannabis Business Executive

The 2023 Session of the General Assembly brought significant changes to Virginia’s hemp industry with new legislation that amended the Code of Virginia, setting forth fresh requirements for certain hemp-derived products. As of July 1, 2023, these requirements took effect, impacting hemp businesses across the state. Some of the changes are head scratchers while others seem to make some reasonable sense.

Among the updates, definitions have been introduced for important terms like “edible hemp product,” “hemp product,” “hemp product intended for smoking,” and “industrial hemp extract.”

Here are my top defined terms from the updated code sections. These will be important for all stakeholders to learn.

1. Edible Hemp Product: Any hemp product that contains an industrial hemp extract and is intended to be consumed orally.
2. Hemp Product: A product that contains industrial hemp and has completed all processing stages needed for the product. When offered for retail sale, it must have a total tetrahydrocannabinol (THC) concentration of no greater than 0.3 percent and either no more than two milligrams of total THC per package or an amount of cannabidiol (CBD) that is at least 25 times greater than the amount of total THC per package.
3. Hemp Product Intended for Smoking: A hemp product intended to be consumed by inhalation.
4. Industrial Hemp Extract: An extract of industrial hemp that is intended for human consumption and contains a total THC concentration of no greater than 0.3 percent. When offered for retail sale, it must have either no more than two milligrams of total THC per package or an amount of CBD that is at least 25 times greater than the amount of total THC per package.
5. Regulated Hemp Product: A hemp product intended for smoking or an edible hemp product.
6. Food and Drink Law: The set of regulations governing the manufacturing and sale of products that contain industrial hemp extracts intended for human consumption. This includes requirements such as contaminant testing, batch identification, and labeling.
7. Total THC: Refers to all forms of tetrahydrocannabinol (THC) present in a product, including delta-8, delta-9 THC, and any other forms of THC.
8. Child-Resistant Packaging: Packaging or containers designed to be significantly difficult for a typical child under five years of age to open but not significantly difficult for a typical adult to open and reseal.
9. Certificate of Analysis: A document produced by an independent laboratory accredited to ISO/IEC 17025, stating the THC concentration of the hemp product or the batch from which it originates.
10. Virginia Consumer Protection Act (VCPA): A set of regulations governing the sale of substances intended for human consumption that contain THC, protecting consumers from deceptive practices.
11. Regulated Hemp Product Retail Facility Registration: A registration required for retailers selling hemp products intended for smoking or edibles. Each location offering these products must have this registration.

Existing rules for hemp processing remain in effect, mandating that all industrial hemp processors, regardless of the type of product they process or its intended consumption, must hold an Industrial Hemp Processor Registration. For those involved in manufacturing industrial hemp extracts for human consumption, compliance with the Food and Drink Law is a must. This entails strict adherence to regulations governing manufacturing practices, labeling, contaminant testing, and batch identification.

Virginia’s Consumer Protection Act has been updated to impose regulations on substances containing THC, regardless of whether they are marijuana derivatives or synthetic. The sale of such products to individuals under 21 is prohibited, and they must be packaged in child-resistant containers with appropriate labels, providing critical information on THC content, ingredients, and serving size. Additionally, a certificate of analysis from an accredited laboratory must accompany these products.

Let’s take a closer look at some of the updates:

1. Industrial Hemp Processor Registration: The requirement for hemp producers involved in processing industrial hemp to obtain an Industrial Hemp Processor Registration is described in the section § 3.2-4115.
   1. Hemp producers involved in processing industrial hemp into various products, including hemp-infused beverages, are required to obtain an Industrial Hemp Processor Registration. Regardless of the final product’s intended use or consumption, this registration is mandatory for any processor operating in the state.
2. Compliance with Food and Drink Law: The regulations governing hemp-infused beverages and compliance with the Food and Drink Law are described in the section referenced as § 3.2-4122.
   1. To ensure legal operations, hemp producers in the beverage sector must adhere to Virginia’s Food and Drink Law. This involves meeting specific criteria for hemp-infused beverages, which includes qualifying as an “industrial hemp extract,” manufacturing products in a facility that undergoes inspection, and complying with the Regulations Governing the Manufacturing and Sale of Products that Contain Industrial Hemp Extracts Intended for Human Consumption.
3. THC and CBD Concentration Limits: The limits for THC and CBD concentrations in hemp-infused beverages when offered for retail sale are defined in the section referenced as § 3.2-4115.
   1. A critical aspect of producing hemp-infused beverages is adhering to the THC and CBD concentration limits set by the state. When offering their products for retail sale, hemp-infused beverages must not contain more than 0.3 percent total THC concentration. Additionally, the total THC content per package should not exceed two milligrams unless the product’s CBD to THC ratio is at least 25 to 1.
4. Labeling and Packaging Requirements: The labeling and packaging requirements for hemp-infused beverages are detailed in the section referenced as § 3.2-4123.
   1. Proper labeling and packaging are essential for hemp-infused beverages. If the product contains THC, it must be packaged in child-resistant packaging. All hemp-infused beverages, regardless of THC content, must have labels in English, using a minimum font size of 1/16 of an inch. These labels should include comprehensive information about the ingredients, serving size, THC content per serving, THC content per package, and, if applicable, an age restriction notice
5. Certificate of Analysis: The need to provide a certificate of analysis for hemp-infused beverages is mentioned in the section referenced as § 3.2-4123.
   1. Before offering hemp-infused beverages for sale, hemp producers must provide a certificate of analysis. This document should be generated by an independent laboratory accredited to ISO/IEC 17025. The certificate must accurately state the total THC concentration of the product or the specific batch from which it originated.
6. Potential Penalties: The potential penalties for non-compliance with the Food and Drink Law are described in the section referenced as § 3.2-4126.
   1. Failure to comply with the Food and Drink Law can result in severe penalties for hemp producers. Consequences may include the denial, revocation, or suspension of the Food Permit, class 1 misdemeanor charges, or civil penalties of up to $10,000 per day of violation. To avoid these penalties, hemp producers must diligently follow all regulatory requirements.

One of the most intriguing updates includes establishing a new hemp retail licensing program

The state’s regulatory landscape now requires all individuals and businesses involved in the sale of hemp products at retail to obtain a regulated hemp product retail facility registration. This step aims to ensure consumer safety, product quality, and adherence to strict guidelines governing the sale of hemp-derived products. The retail licensing process necessitates applicants to submit comprehensive information, including the physical address of the retail facility, consent for inspections to ensure compliance, and details on the intended hemp products to be offered for sale.

The question is, how many current retailers will be standing once the new licensing requirements are live? Probably a good time to start planning ahead for that eventuality.

Get to know your Virginia Hemp manufacturers and producers.

Effective at Future Date

The “effective at future date” provision in the Virginia hemp regulations introduces a runway approach to the implementation of new requirements. The new licensing for retailers and certain other provisions will not immediately take effect but will become enforceable once the Virginia Department of Agriculture and Consumer Services (VDACS) has established the necessary infrastructure and processes. This deliberate delay allows VDACS to effectively prepare for the introduction of the regulated hemp product retail facility registration system. During this interim period, hemp producers and other market participants have the opportunity to proactively align their businesses with the upcoming regulations, address any compliance concerns, and seek guidance from VDACS on the new licensing requirements. It will be critical for hemp producers and other market participants to take advantage of this time and prepare for the eventual licensing and new regulatory requirements. Utilizing this opportunity effectively will enable stakeholders to align their businesses with the upcoming hemp retail licensing framework and avoid the panic of procrastination.

What does it all mean?

Virginia has taken to bandaid approaches to its cannabis marketplace. Governor Youngkin has signalled that he has zero interest in regulating cannabis in any coherent way, but instead is opting to target what the administration views as less safe products in the market. However, this approach over the last two years has only seen Virginia’s unregulated market place boom, while entrepreneurs looking to provide regulated products have withered on the vine and looked to other markets. The new hemp regulations seem to make some sense in that consumers will have a little more assurance that what is in the product is on the label, so they can be more informed in their choices. On the other hand, the updates do nothing to address the growing concern of a marketplace looking for adult use products and unable to get those products through the medicinal side or the hemp derived side. So naturally we should expect the unregulated market place to continue outpacing the pack.

Observations from the field

On Sunday I took a walk through a local Northern Virginia mall where I came across a vendor stand selling “legal” hemp products. On display were a number of clearly not legal products including Delta-8 spray on hemp flower, and a number of synthetic cannabinoid based products. What was clear was that the vendor had a very uninformed approach to the sales. He simply told me that his products were 2018 Farm Bill compliant, which in fact they were not, but I digress. The experience raised a whole slew of questions and concerns. In my experience working with some terrific cannabis and hemp producers, there are legitimate hemp products that can be produced under the Farm Bill, but what I was seeing was something else entirely. This was a clear attempt to sell drugs in the mall rather than smart hemp derived products that are safe for consumers. Much of the packaging looked like it could be targeted to underage consumers and the labeling was a far cry from transparent and honest consumer focussed labeling. This is the reason we have seen such a strong response to hemp derived products from the Governor’s office. Unfortunately, this is what legislators think of when they think of loophole hemp products. What we need are common sense rules and regulations that allows for the right types of hemp derived products to find their place in the broad umbrella cannabis marketplace.

Looking Forward

Until we have a one-plant policy in this country there will be a need to draw lines between hemp and THC-cannabis markets. There seems to me to be a clear opportunity for a lower dose (naturally derived Delta-9 products) marketplace where hemp products can find a home and higher dose marketplace where regulated cannabis should sit. Finding this line and maintaining balance will be the responsibility of all market participants including the hemp industry and the legislators.