Minnesota Regulators Launch Effort To Catch Retailers Selling Illegal Marijuana As ‘Hemp’ Flower

“We are starting to contact retailers as we speak to talk about inspections.”

By Peter Callaghan, MinnPost

It has been an open question—until now—whether registered hemp retailers in Minnesota are selling raw cannabis flower that crosses the line between legal hemp and illegal marijuana.

Marijuana use is legal in Minnesota, but legal sales haven’t started yet outside of tribal reservations. That means a raw cannabis flower purchased in the Twin Cities that recently tested above the legal limit isn’t supposed to be sold in the state.

Because of a gap in the state’s new recreational cannabis law, no state regulators had either the legal authority or the inspectors to sample the flower being sold to check whether it exceeded the federal and state definitions for hemp. That is, is the flower being sold in some stores legal or illegal? Does it contain more than 0.3 percent delta-9 THC, the intoxicating compound in marijuana?

Turns out, it does. The sample purchased from a registered hemp store by a private person tested at levels that are illegal under the law, according to the results from a California-based cannabis testing lab. MinnPost agreed not to name either the raw flower purchaser or the lab but has verified the identities of both.

The lab reported the flower showed a potency of 1.1 percent delta-9 THC, three times the limit under state law. The same sample showed that the bud had total THC content of 29.99 percent. Total THC is a measure of all different types of THC in the flower and 29.99 percent is similar to the types of flower sold in legal recreational marijuana states.

The retail sample tested is actually more potent than a cannabis sample purchased on the illicit market in Minnesota and tested by the same lab. That sample showed 1.38 percent delta-9 THC and 25.36 percent total THC.

Jeff Taylor is co-owner of Kooka, the Fridley company that produces the retail flower sample that was tested. He said if the state determines that it is illegal, he will stop selling it.

“If they’d rather it be sold on the street where people are putting fentanyl in it, does that make sense?” he asked. “I’ve talked to a lot of police and they say they’d rather you sell it in stores than it being sold out of the street.”

“But I’m here to work with the state,” Taylor said. “I told them the day they want us to stop selling what we’re selling, all they have to do is pick up the phone and say we don’t want you to sell it. That would be the last day it would be sold.”

Kooka makes other products that are hemp-derived—gummies, beverages and chocolate bars. All of those products became legal in July 2022 through Minnesota’s hemp law, but their regulation was folded into the state’s recreational marijuana law that passed last year.

New enforcement started Thursday

On Thursday, the state Office of Cannabis Management (OCM) confirmed that it has begun regulating the sale of raw cannabis flower—seven months after passage of the recreational marijuana bill.

“That interagency agreement is in place. I have signed it. We are starting to contact retailers as we speak to talk about inspections,” said Office of Cannabis Management interim director Charlene Briner Thursday. The state has also contracted with a testing lab to assess the legality of raw flower being sold.

Briner sent a memo to hemp retailers Thursday informing them of the new regulatory system.

“The Office of Cannabis Management has received complaints of retailers selling cannabis flower under the label of hemp flower,” the memo stated. “Under an agreement between The Minnesota Department of Health (MDH) and OCM, inspectors from MDH will begin to examine any flower products being sold during their regular inspections to determine whether they are indeed hemp flower or cannabis flower.”

The memo also noted:

• Under state law, OCM may assess fines in excess of $1 million for violations.
• OCM has the authority to embargo any product it has probable cause to believe “is being distributed in violation” of the law.
• Violations may be considered in OCM’s future licensing decisions.

The memo encouraged retailers to review their products “to ensure they fall within the thresholds outlined above.”

A gap in that law left open which state agency would regulate raw flower, letting some registered hemp stores and smoke shops sell flower that might—or might not—be illegal.

The Office of Medical Cannabis is temporarily charged with regulating the hemp-derived edibles market until next spring when the Office of Cannabis Management is fully operational and the first marijuana retailers are open. But it decided it lacked jurisdiction over raw flower. And while the OCM had jurisdiction to stop illegal sales, it didn’t yet have inspectors.

The workaround is an agreement between the cannabis management office and the medical cannabis office to empower the existing inspectors to enforce the prohibitions against illegal sales of raw cannabis flower that carries potency levels in excess of what is allowed for hemp.

Until marijuana sales become fully legal sometime next spring, hemp-derived edibles and beverages must be made from plants that meet the legal definition of hemp, that is, to have THC content of 0.3 percent or less.

The gap in regulation became apparent last fall. Inspectors working for the state Office of Medical Cannabis, the Department of Health division given the temporary duty of regulating the hemp-derived market, had seen raw cannabis flower being sold in some registered hemp stores and smoke shops. But the agency determined because it wasn’t “hemp-derived” but simply unprocessed hemp plants, they had no jurisdiction.

“Our regulatory authority is over hemp-derived cannabinoid products, and that is defined as extracted products,” former Office of Medical Cannabis director Chris Tholkes said last year on the podcast Weed Wonks. “It’s the edibles, the beverages, the topicals. It’s not flower.

“We’re seeing lots of hemp flower—doing air quotes—out in the marketplace, and we don’t have the regulatory authority over that flower,” she said.

It has taken several months for the gap to be filled.

In addition to the interagency agreement allowing for immediate regulation of raw flower, a bill introduced this week to make adjustments to the 2023 legalization law would bring the employees regulating the hemp-derived edibles and beverages market under the wing of the Office of Cannabis Management in July rather than wait until next spring.

Briner termed it a “both/and” approach.

One of the retailers who has complained to the OCM about THCa sales that could be illegal is David Mendolia, who owns a hemp store in St. Paul.

“So many of us are running our stores having to disappoint customers all day, every day, when we say we can’t sell weed, we can’t sell concentrates, we can’t sell hash. It’s not compliant,” Mendolia said. “But then you have people doing it. It’s a total bummer.”

What is THC-A?

The cannabis flower tested by the California lab, called the Kooka Torched Gelato variation, was sold as THC-A hemp, a variation of hemp with a higher content of a related THC compound. THC-A flower is commonly sold online as a legal product for states that do not have recreational marijuana legalization. While it can test as legal in raw form, smoking, vaping or cooking the bud—a chemical process known as decarboxylation—converts the THC-A to THC and is intoxicating.

One site, Mr. Hemp Flower, notes that laws vary around the country, based mostly on how it measures THC content in hemp plants. States that measure only the delta-9 THC, the most common intoxicating compound, would tend to find THC-A legal. States that use “Total THC,” which measures all of the THC compounds in the plant, would not.

Mr. Hemp Flower describes Minnesota law as a “gray area.” But OCM has decided that the 2023 law requires it to measure “any THC” in the plant. That coincides with an analysis of the new law by Minneapolis attorney Carol Moss, who said the new law clearly moved the state from a delta-9 only state to a total THC state.

“While misinformation and misunderstandings are not uncommon when it comes to cannabinoids and Minnesota’s hemp law, some incorrectly believe THCa flower is legal,” Moss wrote. “Contrary, selling flower containing THCa is illegal under Minnesota law and puts the retailer and consumer at risk of selling or possessing a controlled substance.”

The THC-A bud produced by Kooka measured illegal under either metric.

This regulation of hemp and hemp-derived products is a temporary set-up that becomes mostly a non-issue in a year when newly licensed stores will be selling marijuana with total THC content between 20 percent and 30 percent.

This story was first published by MinnPost.

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