Maryland CBD Market Under Threat as Hemp Producers Challenge State Law

Maryland CBD Market Under Threat as Hemp Producers Challenge State Law

A group of hemp stakeholders in Maryland have initiated legal action against state officials over the restricted market access for their CBD products. A new law that came into effect this month has made CBD-based products like extracts, gummies, and topicals illegal in Maryland if they contain more than 2.5 milligrams of THC per package. This has led CBD operators to claim that the majority of products on the market are now eliminated.

The new regulations also explicitly prohibit delta-8 THC, which is a popular synthetic form of THC derived from hemp-derived CBD.

‘New standard’

The lawsuit filed by a group of hemp producers based in Boonsboro states, “Almost all of the products sold by the plaintiff retailers, while being derived from hemp and not considered unlawful marijuana under the previously existing law and therefore previously lawful to distribute without a license, cannot meet the new standard.”

State officials argue that the new law aims to protect consumers from unregulated and potentially dangerous products. The U.S. Food & Drug Administration prohibits the marketing of cannabis derivatives in food products, with both CBD and delta-8 THC not approved for human and animal consumption. Additionally, the U.S. Drug Enforcement Administration has classified delta-8 THC as a Schedule I drug under the Controlled Substances Act (CSA).

The lawsuit was filed on July 24 in a Circuit Court in Washington County against Gov. Wes Moore, the Maryland Cannabis Administration, and the Maryland Alcohol, Tobacco, and Cannabis Commission. It pertains to House and Senate Bill 516, which established a cannabis law encompassing both hemp and marijuana.

‘Monopoly’ for MJ players

The plaintiffs argue that the state has created a virtual monopoly for licensed marijuana operators by capping the limits on THC concentrates in CBD products and imposing restrictions on cannabis licensing.

Nevin Young, an attorney representing hemp stakeholders, stated, “My clients, who have been lawfully selling these products for years, are suddenly in a position where they are being told they can’t sell their products without a license, and yet the obstacles to get a license are nearly insurmountable,” following the filing of the lawsuit.

Critics claim that the current licensing process prevents many hemp operators from obtaining marijuana licenses required to sell their CBD products under the strict THC limits. Applicants must meet stringent requirements, including having at least 65% ownership and control held by at least one person.

The plaintiffs allege that the licensing process violates both Maryland’s anti-monopoly laws and the state’s Equal Protection Act by creating specific categories of eligible applicants for the first round of licenses, according to Young.

Under the new law, the Maryland Cannabis Commission is responsible for regulating the cannabis industry in the state and has the authority to establish standards for the production, testing, and labeling of marijuana and hemp products.

Hit to economy

The hemp industry predicts that the new law will result in the loss of over $560 million in CBD sales and could threaten up to 4,200 jobs. It is estimated that 370 businesses may close, and another 60 may relocate out of state.

Efforts to oppose the new law were unsuccessful during the previous legislative session.

Maryland now joins neighboring state Virginia in implementing laws that severely restrict the hemp industry. New York and Tennessee have also established laws that limit the amount of THC in hemp-derived products or require specific business licenses for their sale.

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