Why The Government Is Waging War Against Hemp, Marijuana’s Legal Cousin

Forbes

California has banned intoxicating hemp products. The DEA is conducting raids in North Carolina. And the $28 billion hemp industry is at stake.  Read the full story on Forbes: https://www.forbes.com/sites/willyakowicz/2024/10/05/hemp-madness-why-the-government-is-waging-war-against-marijuanas-legal-cousin/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, why the government is waging war against hemp, marijuana's legal cousin.

00:08In the early morning hours of late September, some 30 Drug Enforcement Administration agents

00:13in tactical gear, with high-powered rifles drawn, raided a warehouse near Raleigh, North

00:18Carolina.

00:20The officers seized intoxicating hemp-derived THC vapes and joints, along with cash, computers

00:26and cars.

00:28The agents, who were armed with a federal search warrant, froze the company's $1.5

00:33million bank account and seized half a million dollars' worth of product.

00:37Jay, the founder of the Wake County-based hemp product manufacturer and distributor,

00:42says, quote,

00:43"...they came in full force."

00:47Jay did not want us to use his full name due to fear of legal repercussions.

00:51Jay has not been arrested nor charged with a crime.

00:55Jay's company, which he founded in 2019, generates about $60 million in annual revenue

01:01by selling hemp-derived products with enough delta-9-tetrahydrocannabinol, or THC, the

01:07main psychoactive compound in cannabis, to get people stoned.

01:11But he says his products are federally legal under the 2018 Farm Bill, which allows the

01:16production of hemp and all its derivatives so long as it contains 0.3% of THC or less.

01:24Jay says his products are within the legal limit.

01:26He says, quote,

01:27"...I feel like we are currently at war with law enforcement on what we believe is legal."

01:34Over the last several months, joint state and federal task forces have raided more than

01:38100 vape and smoke shops, hemp product manufacturers and distributors in North Carolina, alleging

01:44that they are selling marijuana disguised as hemp.

01:48Both hemp and marijuana are varietals of the same plant, cannabis sativa L.

01:53But marijuana is illegal in North Carolina.

01:57Jay says he only makes Farm Bill-compliant products, but some retailers, law enforcement

02:01alleges, have sold illegal cannabis products to children, and others have sold marijuana

02:06in counterfeit packaging made to look like Oreos, Chips Ahoy, and Doritos.

02:12Law enforcement, according to three sources with knowledge, apparently have a list of

02:16companies and products that have tested so-called, quote,

02:20meaning the THC levels are over the legal hemp limit, crossing over into marijuana.

02:26Kimberly Braden, chief of police in Fayetteville, said in a statement regarding the string of

02:31raids, quote,

02:32"...not only do these products contain unlawful levels of THC, but also other harmful chemicals

02:38resulting in some individuals experiencing long-term health issues."

02:43Raleigh-based attorney Morgan Davis, who represents more than 10 hemp business owners who have

02:48been raided, says some of her clients have been charged with felonies related to trafficking,

02:52possession with intent to sell, and the manufacture of marijuana.

02:56If convicted, her clients could face considerable prison time.

03:00Davis says, quote,

03:02"...the line between criminal and civil liability in this industry is razor thin.

03:07It's just a ridiculous overreaction to a regulatory compliance issue.

03:11It's not a crime.

03:12It's like using napalm to get rid of the weeds in your backyard."

03:17The stakes are high.

03:18Overall, hemp-derived cannabinoid product sales hit $28 billion in 2022, while illegal

03:25marijuana products generated $26 billion in sales during that same period, according to

03:30cannabis data firm Whitney Economics.

03:33Only 10% of the market is cannabidiol or CBD products, which do not get people high and

03:38are associated with therapeutic effects.

03:42Hemp is also used to make clothing, construction materials, plastics, and other products, which

03:47is a much smaller segment in the U.S., with about $5.5 billion in sales this year, according

03:53to Grandview Research.

03:55That number could reach $17 billion by 2030.

03:59Despite what the Farm Bill states, there is plenty of debate about whether hemp-derived

04:03THC products are legal under federal law.

04:07That's because several things are true at once.

04:10Hemp-derived cannabinoids, including delta-9-THC, delta-8-THC, which is a less potent compound

04:16that is affectionately called weed light or decaf kush, are legal under the Farm Bill

04:22if those compounds are found naturally in the plant.

04:25In an opinion from the Ninth Circuit Court of Appeals in 2022, judges ruled that cannabinoids

04:31derived from hemp are legal, even if the substances have psychoactive properties.

04:38For full coverage, check out Will Yakowitz's piece on Forbes.com.

04:43This is Kieran Meadows from Forbes.

04:46Thanks for tuning in.

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