America Has A Billion Dollar THCA Dilemma - Is THCA De Facto Weed Legalization Or A Farm Bill Loophole Waiting To Be Closed?

THCA meets legal definition of hemp, operators say – but not everyone agrees

America is getting high on hemp and people are starting to take notice!

Congress members may have unwittingly legalized marijuana, unbeknownst to themselves or customers. This does not include derivatives such as delta-8 THC or hexahydrocannabinol (HHC), which are made from CBD oil taken from federally authorized hemp plants and subsequently converted into psychotropic substances. Despite many states prohibiting hemp-derived THC, these cannabinoids remain federally legal due to a 2018 U.S. Farm Bill loophole.

However, the focus here is on licensed, state-compliant intoxicating cannabis transformed into consumer goods and marketed under the guise of THCA. THCA, a naturally occurring cannabinoid, is nonintoxicating but converts to psychoactive THC when heated, serving as a precursor. Marketed as THCA flower, these products supposedly adhere to the Farm Bill’s 0.3% delta-9 THC limit, thus meeting federal hemp standards.

Estimation of THCA Hemp Revenue

In 2023, THCA sales constituted 7.3% of the approximately $2.8 billion market for hemp-derived cannabinoid products, as reported by the Brightfield Group, a cannabis market data company based in Chicago. This amounted to roughly $200 million in revenue. THCA sales ranked third, trailing behind delta-8 sales (44.2% market share) and hemp-derived delta-9 sales (20.3% market share).

Ecommerce giant Amazon is selling hemp that gets you high and does not even know it as secondary sellers are using the platform to sell intoxicating “hemp gummies and vape pens”

Unlike delta-8 THC and other intoxicating hemp-derived cannabinoids produced through chemical processes and exploiting legal loopholes, THCA sellers rely on strategic testing timing and possibly selective, even ambiguous, labeling and marketing.

Madeline Scanlon, cannabis insights manager at Brightfield Group, noted, “There is a prevailing sense of inevitability around THCA. Some perceive it as a de facto legalization of cannabis in America. Others see it as a loophole to be closed and are actively advocating against it. Regardless, it’s already in circulation, available for purchase much like traditional cannabis.”

One notable business, The Dispensary, operates 13 stores across North Carolina, Pennsylvania, and Wisconsin, selling THCA flowers alongside products containing hemp-derived cannabinoids like delta-8 THC.

CEO William Nething, a U.S. Army veteran, expressed concerns about legal risks but emphasized the availability of federally compliant genetics within the THCA market.

While The Dispensary’s four Virginia stores ceased sales of hemp-derived cannabinoids following a state ban in July, they continue to receive THCA flower and cannabinoid products from their Wisconsin base. In Virginia, customers interested in these products must visit the online store based in Wisconsin to check inventory and make purchases. Orders can be picked up shortly afterward at the Virginia location.

Nething clarified, “We cannot operate in every state due to regulations. However, since our products comply with federal standards, we are permitted to ship them.”

Legal Uncertainty Surrounding THCA

A number of factors, including plant degradation, testing time and procedure, and regulatory interpretation determines the THCA flower’s legality. The U.S. Department of Agriculture (USDA) demands testing for “total THC,” which comprises both THC and THCA, within 30 days before harvest.

However, post-packaging or retail-level testing is not required by the USDA, according to Heidi Urness, co-chair of the cannabis practice group at the McGlinchey Stafford law firm in Seattle. As long as the pre-combustion delta-9 THC levels remain below the federal threshold of 0.3%, the product is considered federally legal hemp.

Under these USDA guidelines, retailers in states without established marijuana markets, such as North Carolina, Tennessee, Texas, and Wisconsin, can legally sell flower as compliant hemp, despite the fact that high levels of THCA may convert to THC upon combustion.

Urness clarified the legal standpoint, stating, “When it comes to retail sales, the question of legality sparks academic debates. Some, like myself, argue that it is permissible under federal law because we are confined to the definition of delta-9 THC. THCA does not fall under this category.”

However, these same USDA regulations largely prohibit the cultivation of cannabis if its total THC level exceeds the 0.3% hemp threshold. Total THC is calculated as follows:

% delta-9 THC + (% THCA x 0.877)

For instance, if a plant contains 0.1% THC and 10% THCA, its total THC would be 8.8%, consisting of 8.7% THCA and 0.1% THC.

THCA Testing Strategies?

Numerous cultivators claim to successfully cultivate high-THCA flower by selecting strains that delay THCA expression until late in the USDA’s 30-day testing window, and then conducting tests early within that timeframe.

According to Urness, “You can manipulate a plant to suppress THCA during production but trigger its expression once it reaches retailers. At the retail stage, THCA is acceptable.”

Plant scientist Av Singh supported this assertion, citing studies indicating that THC concentration tends to rise later in the flowering phase. Consequently, businesses aiming to sell federally compliant THCA flower prefer to test their crops as early as possible before harvest.

However, some companies, like Power Biopharms based in Euless, Texas, opt out of growing their own THCA flower due to the difficulty of finding strains that meet regulatory requirements. CEO Colt Power explained, “Although it’s theoretically possible, we haven’t identified suitable strains from the approved list or refined our practices for compliance.”

He elaborated, “In Texas, hemp flower must contain total THC (including estimated additional delta-9 THC upon decarboxylation) below 0.3% at the cultivation stage. However, at the retail level, only delta-9 THC below 0.3% matters, with THCA disregarded.”

Despite not growing compliant THCA flower, Power Biopharms sources it from out-of-state cultivators and sells it both locally and online, shipping nationwide. Power emphasized the importance of thorough third-party lab testing to ensure compliance.

THCA flower is delivered to Power Biopharms’ Texas warehouse by cultivators, where it’s branded, packaged, and distributed. Kim Flores, the company’s business development manager, highlighted the nationwide demand for their products.

Bottom Line

The legal status of THCA in the cannabis market remains contentious, with regulatory interpretation and testing complexities posing significant challenges. While THCA offers promising opportunities, stakeholders must navigate uncertain terrain to ensure compliance and market viability. Clarity and consistency in regulations are essential to foster a thriving industry. Despite these uncertainties, the increasing demand for THCA products underscores the need for ongoing dialogue and regulatory refinement. By addressing legal ambiguities and implementing clear guidelines, policymakers can support responsible innovation while ensuring consumer safety and market integrity. Moving forward, collaborative efforts are crucial to establish a transparent framework that balances industry growth with regulatory compliance in the evolving landscape of the cannabis sector.