Hemp producers challenge Maryland law that threatens to wipe out state CBD market

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Maryland hemp stakeholders have filed a lawsuit against state officials over market access for their CBD products, which are now highly restricted under a law that took effect this month.

CBD-based products such as extracts, gummies and topicals are now illegal in Maryland if they contain more than 2.5 milligrams of THC per package, which CBD operators have said eliminates most products on the market.

New rules also specifically prohibit delta-8 THC, a popular synthetic form of THC made from hemp-derived CBD.

‘New standard’

“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,” according to the lawsuit, filed by a group of hemp producers based in Boonsboro.

State officials have said the new law is aimed at protecting consumers from unregulated and potentially dangerous products. The U.S. Food & Drug Administration bars the marketing of cannabis derivatives in food products, with both CBD and delta-8 THC unapproved for human and animal consumption. And 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 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 regards House and Senate Bill 516, which established a cannabis law that covers both hemp and marijuana.

‘Monopoly’ for MJ players

The plaintiffs charge that the state created a virtual monopoly for licensed marijuana operators by capping limits on THC concentrates in CBD products, and restricting cannabis licensing.

“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,” Nevin Young, an attorney representing hemp stakeholders, told Fox News 7 after lodging the lawsuit.

Critics said the current licensing process bars many hemp operators from obtaining marijuana licenses required to sell their CBD products under the strict THC limits. Under state requirements, applicants must have at least 65% ownership and control held by at least one person who must meet other strict requirements.

The plaintiffs allege that the licensing process violates Maryland’s anti-monopoly laws as well as the state’s Equal Protection Act by creating certain categories of persons who will be eligible to submit applications for the first round of licenses, Young said.

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

Hit to economy

Hemp industry estimates have suggested the new law means more than $560 million in CBD sales will be lost while as many as 4,200 jobs are threatened as 370 businesses could close and another 60 could move out of state.

Attempts to sideline the new law failed during the last legislative session.

Maryland joins neighboring state Virginia in enacting a law severely limiting the hemp industry. New York and Tennessee have also established laws limiting the amount of THC in hemp-derived products or requiring certain business licenses to sell such products.

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