Pubdate: Mon, 01 Mar 2021
Source: New York Times (NY)
Copyright: 2021 The New York Times Company
Author: Matt Richtel


Texas has one of the most restrictive medical marijuana laws in the
country, with sales allowed only by prescription for a handful of conditions.

That hasn't stopped Lukas Gilkey, chief executive of Hometown Hero
CBD, based in Austin, Texas. His company sells joints, blunts, gummy
bears, vaping devices and tinctures that offer a recreational high. In
fact, business is booming online as well, where he sells to many
people in other states with strict marijuana laws.

But Mr. Gilkey says that he is no outlaw, and that he's not selling
marijuana, just a close relation. He's offering products with a
chemical compound - Delta-8-THC - extracted from hemp. It is only
slightly chemically different from Delta 9, which is the main
psychoactive ingredient in marijuana.

And that small distinction, it turns out, may make a big difference in
the eyes of the law. Under federal law, psychoactive Delta 9 is
explicitly outlawed. But Delta-8-THC from hemp is not, a loophole that
some entrepreneurs say allows them to sell it in many states where
hemp possession is legal. The number of customers "coming into Delta 8
is staggering," Mr. Gilkey said.

"You have a drug that essentially gets you high, but is fully legal,"
he added. "The whole thing is comical."

The rise of Delta 8 is a case study in how industrious cannabis
entrepreneurs are pulling apart hemp and marijuana to create myriad
new product lines with different marketing angles. They are building
brands from a variety of potencies, flavors and strains of THC, the
intoxicating substance in cannabis, and of CBD, the nonintoxicating
compound that is often sold as a health product.

With Delta 8, entrepreneurs also believe they have found a way to take
advantage of the country's fractured and convoluted laws on
recreational marijuana use. It's not quite that simple, though.
Federal agencies, including the Drug Enforcement Administration, are
still considering their options for enforcement and regulation.

"Dealing in any way with Delta-8 THC is not without significant legal
risk," said Alex Buscher, a Colorado lawyer who specializes in
cannabis law.

Still, experts in the cannabis industry said Delta 8 sales had indeed
exploded. Delta 8 is "the fastest growing segment" of products derived
from hemp, said Ian Laird, chief financial officer of New Leaf Data
Services, which tracks the hemp and cannabis markets. He estimated
consumer sales of at least $10 million, adding, "Delta 8 has really
come out of nowhere over the past year."

Marijuana and hemp are essentially the same plant, but marijuana has
higher concentrations of Delta-9 THC - and, as a source of
intoxication, it has been a main focus of entrepreneurs, as well as
state and federal lawmakers. Delta 8, if discussed at all, was an
esoteric, less potent byproduct of both plants.

That changed with the 2018 Farm Bill, an enormous piece of federal
legislation that, among other things, legalized widespread hemp
farming and distribution. The law also specifically allowed the sale
of the plant's byproducts - the only exception was Delta 9 with a
high-enough level of THC to define it as marijuana.

Because the legislation made no mention of Delta 8, entrepreneurs
leapt into the void and began extracting and packaging it as a legal
edible and smokable alternative.

Precisely what kind of high Delta 8 produces depends on whom you ask.
Some think of it as "marijuana light," while others "are pitching it
as pain relief with less psychoactivity," said David Downs, senior
content editor for, a popular source of news and
information about cannabis.

Either way, Delta 8 has become "extremely ascendant," Mr. Downs said,
reflecting what he calls "prohibition downfall interregnum," where
consumer demand and entrepreneurial activity are exploiting the holes
in rapidly evolving and fractured law.

"We're getting reports that you can walk into a truck stop in
prohibition states like Georgia where you're looking at what looks
like a cannabis bud in a jar," Mr. Downs said. The bud is hemp sprayed
with high-concentration Delta 8 oil.

Joe Salome owns the Georgia Hemp Company, which in October started
selling Delta 8 locally and shipping nationally - about 25 orders a
day, he said. "It's taken off tremendously."

His website heralds Delta 8 as "very similar to its psychoactive
brother THC," giving users the same relief from stress and
inflammation, "without the same anxiety-producing high that some can
experience with THC."

Mr. Salome said that he didn't need to buy an expensive state license
to sell medical marijuana because he felt protected by the farm bill.

"It's all right there," he said, explaining it's now legal to "sell
all parts of the plant."

The legal landscape is contradictory at best. Many states are more
permissive than the federal government, which under the Controlled
Substances Act considers marijuana an illegal and highly dangerous
drug. In 36 states, marijuana is legal for medicinal use. In 14
states, it's legal for recreational use.

But in a flip, under the farm bill, the federal government opened the
door for the sale of hemp products even in states that haven't
legalized the recreational use of marijuana. Only a few states, like
Idaho, ban hemp altogether, but in others, entrepreneurs of Delta 8
are finding a receptive market.

Lawyers for Mr. Gilkey believe the farm bill is on their side. "Delta
8, if it is derived from hemp, or extracted from hemp, that is
considered hemp," said Andrea Steel, co-chair of the cannabis business
group at Coats Rose, a Houston law firm. She emphasized that the
legality also depends on whether Delta 9 exceeds legal limits.

Ms. Steel noted that when making a Delta 8 product, it can be hard, if
not impossible, to filter out all the Delta 9 from hemp.

"Adding another wrinkle," she said, "a lot of labs do not have the
capability of delineating between Delta 8 and Delta 9."

Lisa Pittman, the other co-chair of the cannabis business group at
Coats Rose, said that in her reading of the issue, the authors of the
farm bill may not have contemplated the consequences of the law.

Ms. Pittman said that the ultimate question of a product's legality
may be dependent on other factors, including how the Delta 8 is
produced and sourced. Specifically, the lawyers said, the D.E.A.'s
rule on the issue seems to suggest that Delta 8 could be illegal if it
is made "synthetically" rather than derived organically.

There are currently lawsuits pending over interpretation of the D.E.A.

Mr. Gilkey said he had paid upward of $50,000 in legal fees to make
sure that he will not run afoul of the law. A veteran of the U.S.
Coast Guard, Mr. Gilkey worked in a counternarcotics unit on boats out
of San Diego. He "saw some really tough stuff," he said, and "wasn't
happy about the war on drugs."

He wound up running a business in Austin that sold e-liquid for vaping
devices. Then in 2019, he started his current business focused on
selling CBD. Late last spring, he said, he started getting calls from
customers about Delta 8.

"I said, please explain to me what that is," he recalled. Mr. Gilkey,
whose company supplies other retail shops around the country with
products, saw a huge opportunity. After checking with the lawyers, he
started full-scale packaging gummies and vape pens and other products
using Delta 8 he said he got from a major hemp supplier.

"It's about to go mainstream," he said. And it's just the beginning.
"There's a Delta 10 in the works."