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Curaleaf Holdings was done with hemp.
The New York-based marijuana multistate operator had a hemp operation in Lexington, Kentucky, as part of a CBD product line the company had operated since 2018.
But as of Sept. 30, 2023, Curaleaf had “ceased all of its operations in Kentucky related to the manufacturing and wholesale distribution of hemp-derived products wholesale,” moving to terminate a lease and putting its assets up for sale, the company reported in annual filings earlier this year.
Then, it seems, the company had second thoughts.
Instead of exiting hemp – for years viewed by many in the industry as an unwelcome competitor to strictly regulated marijuana – Curaleaf would go all in, joining a growing trend among licensed cannabis companies.
Embracing hemp
In the first quarter of 2024, with federal marijuana-reform efforts not yielding any practical changes, Curaleaf “made a strategic decision to enter the hemp market,” the company reported in later public filings.
Instead of canceling and divesting, Curaleaf held on to the lease as well as its equipment in Kentucky.
On June 24, the company launched an entire product line of hemp-derived THC products under a new brand: The Hemp Co.
Curaleaf-branded gummies, drinks and other shelf-stable intoxicating products – all derived from hemp and, thus, legal to ship across state lines – are available via e-commerce and mainstream retail channels such as DoorDash in 25 states.
Since the products are derived from hemp, the company can serve consumers in deep-red markets that are traditionally unfriendly to marijuana, such as Texas.
Why the change?
“I can’t point to one ‘eureka moment’” that changed Curaleaf’s mind, CEO Matt Darin told MJBizDaily in an interview.
But after Darin spent time with federal lawmakers in Washington, D.C. – where the 2018 Farm Bill, partly by accident, legalized a nationwide trade in hemp-derived THC that is legally distinct from marijuana – the basic facts became undeniable.
Hemp “is legal, and (marijuana) is not, in the eyes of the federal government,” Darin said.
“As much as we continue to be industry leaders in advocating for cannabis reform, that was a really revealing viewpoint.”
Hemp trending
Curaleaf’s reversal is part of a growing industrywide trend – one that represents a significant departure from past practices.
Like most other large MSOs, Curaleaf is a member of the U.S. Cannabis Council, a D.C.-based lobbying group for licensed marijuana companies.
In April, the organization sent a letter to federal lawmakers requesting they close the 2018 Farm Bill hemp “loophole,” which is credited with unwittingly legalizing a nationwide market in hemp-derived cannabinoids.
But that hasn’t happened.
So, instead of lobbying for regulations to squash intoxicating hemp-derived products that aren’t subject to the same taxation and regulatory burdens imposed on state-regulated marijuana, large MSOs are jumping into hemp.
Hemp migration
In addition to Curaleaf, Chicago-based Green Thumb Industries licensed its Incredibles edibles brand to hemp-derived manufacturer Urb, according to Forbes reporter Will Yakowicz.
A spokesperson for Green Thumb did not respond to MJBizDaily requests for comment.
Other marijuana brands sold in multiple states – Cookies, Jeeter and 1906 – also have jumped into the hemp arena.
For hemp advocates such as Jonathan Miller, a former Kentucky state treasurer and general counsel of the U.S. Hemp Roundtable, a Washington, D.C.-based advocacy group, big marijuana companies ditching their crusades against hemp is vindicating.
“Our philosophy is, come on in. The water is warm,” Miller told MJBizDaily. “We welcome more and more to this coalition.”
“I not only view it as a healthy thing for the industry, but it’s helpful politically. Right now, there are a handful of marijuana companies that are trying to destroy the hemp industry. The more marijuana folks that come over to the hemp side, I think the less hostility there will be for both sides of the plant.”
Whether other big companies will follow suit – or focus resources instead on opening new adult-use markets, as Tallahassee-based Trulieve Cannabis Corp. is doing by pouring more than $40 million and counting into a recreational marijuana legalization ballot initiative in Florida – the message seems clear: As long as there’s no marijuana rescheduling or interstate commerce, the trade in hemp-derived THC products is the next best thing.
“As companies evaluate what is commonly known as the Farm Bill loophole, the question has been, ‘If these loopholes continue to persist, do we have to explore it?” said Michael Bronstein, the president of the American Trade Association for Cannabis & Hemp (ATACH), a D.C. lobbying group.
2024 Farm Bill
Yet the “let-it-ride” attitude toward hemp on Capitol Hill might be waning: In late May, U.S. Rep. Mary Miller, an Indiana Republican, introduced an amendment to the House version of the long-overdue Farm Bill that would ban ingestible hemp products containing THC.
While the Republican-controlled House Committee on Agriculture voted to advance a draft Farm Bill with Miller’s ban included, the full U.S. House of Representatives has yet to take up the measure.
Nor has the Democrat-controlled Senate, where serious Farm Bill discussions have yet to begin.
Plus, there are legitimate doubts whether Congress will pass a Farm Bill in 2024 at all.
In the meantime, the status quo allows hemp-derived THC products to be sold across state lines and online, though with certain state-by-state carve-outs and restrictions.
That means an opportunity remains for brand expansion that’s difficult to resist.
“We’re building a global brand. We want our brands and our products to be as widely distributed as possible, as long as it’s done the right way,” Curaleaf’s Darin said.
“We looked at this opportunity, and we said, this is really compelling. We’re in the THC industry, and so we’ve kind of taken the leap into it.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
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