Theo Wells-Spackman is a Report for America corps member who reports for VTDigger.
A recent change in the federal definition of hemp is sending shockwaves through an entire Vermont industry, state regulators say.
Last fall, federal lawmakers passed a budget law that included a definition of hemp and its associated products with a new maximum allowable amount of intoxicating compounds, such as tetrahydrocannabinol, or THC. But while congressional leaders were targeting what they saw as a regulatory loophole for intoxicating products, hemp vendors in Vermont said in a new state working group this week that their distinct business models could be on the chopping block too if and when the provision takes effect.
“The impact is big,” said James Pepper, who chairs Vermont’s Cannabis Control Board. “There are a number of small, medium and — for Vermont’s scale — large businesses that have jumped into the hemp manufacturing space.”
In Vermont, hemp product vendors range from small shops selling body lotions to high-volume seltzer operations. Many such goods contain some THC but often primarily feature cannabidiol, or CBD, a non-intoxicating compound studies suggest may help with physical and psychological symptoms from anxiety to chronic pain.
State lawmakers passed Act 178 earlier this year, which helped clarify a path for hemp sales to continue within Vermont, Pepper said. But absent federal intervention in the next three months, he said, hemp vendors across the state will lose the ability to legally sell across state lines in November.
For Annika McCann, a St. Johnsbury-based CBD shop owner, that means more than 60% of her business would likely vanish. Between online sales, shipping to out-of-state vendors and her stall every week at the farmers’ market in Littleton, New Hampshire, she relies heavily on a customer base beyond Vermont.
“My income would be slashed,” she said in an interview Friday. “My business would sort of revert to, like, a half-time business.”
Because the new federal law caps THC at 0.4mg per container of hemp products, the locally sourced CBD oils and body butters at McCann’s Primal Botanical would become cannabis in the eyes of the federal government, she said. Like many similar vendors in Vermont, McCann uses “full spectrum” CBD products, which incorporate unaltered extracts from hemp. The resulting level of THC is well within Vermont’s general threshold of 1.5mg per serving or 10mg per package but comes in above the new federal maximum.
“They’ll be Schedule I drugs,” she said of her products. “They’ll be more illegal than methamphetamine, cocaine and fentanyl.”
McCann, a registered nurse, plans to apply for a new job at the local hospital in order to make ends meet. When the federal change to the definition of hemp first passed in the fall she was optimistic that the shift would be delayed or abandoned altogether. But legislative attempts to do either have so far been unsuccessful, and Pepper said the new definition is likely to take effect this fall.
“The clock is running out,” McCann said. “It’s so hard to plan and make any kind of business decisions with all this uncertainty.”
Pepper agreed, calling the current period a “limbo” for vendors and state regulators alike. But he, like McCann, is on board with federal lawmakers’ intent in protecting consumers from potentially harmful products. Numerous national reports have indicated that certain hemp-derived products in the U.S. are poorly controlled and could be dangerous to consumers.
“There’s a lot of garbage hemp products that contain huge amounts of THC, that are untested,” Pepper said.
But ideally, he said, Congress would have outlined provisions for products like McCann’s to continue and immediately handed off regulatory authority to a federal agency with the capacity to ensure safe commerce. In the meantime, he said, the Cannabis Control Board is weighing its options for creating a new Vermont regulatory system for hemp that would allow vendors to prove their legal standing to insurers and banks, and frame the industry’s boundaries for the future.
Vermont Attorney General Charity Clark also weighed in on Tuesday, joining 34 of her counterparts in calling on Congress not to “delay, repeal, suspend, or weaken” November’s law.
“Vermont’s agricultural industry is integral to the state’s economy, and hemp is an innovative and worthwhile part of that sector,” said Clark in an emailed statement to VTDigger. “Protecting the integrity of the hemp marketplace by ensuring products are safe, legitimate, and responsibly regulated is essential to supporting Vermont farmers, businesses, and consumers alike.”
Rev Baker, who leads marketing at Sunset Lake CBD in South Hero, said his company’s full-spectrum hemp products are sourced entirely from its own hemp farm. Close to 90% of the company’s 30,000 product orders last year came from out-of-state customers, he said.
The company has spent the last nine months overhauling its business model, including redeveloping recipes based on isolated CBD extracts and creating a new line of (non-psychedelic) mushroom products, Baker said. But even with all the money and time spent on those changes, it feels like a roll of the dice, he said.
“It’s going to be rocky,” Baker said. He knows at least one CBD owner who shut up shop already after last November’s law passed.
A long-term solution will likely take time to become clear, according to Pepper, both at the state and federal level. His board will likely wait until federal policy crystallizes to finalize a state regulatory framework. President Donald Trump, meanwhile, has expressed a desire to protect consumer access to full-spectrum hemp products and to reschedule cannabis itself as a less dangerous drug.
“We’ve gotta find kind of a happy medium,” Pepper said of such regulatory decisions.
