DENVER— Colorado's Marijuana Enforcement Division (MED) has launched an investigation after receiving reports of licensees bringing hemp with higher levels of THC into the regulated market.
At the federal level, hemp coming out of the ground can only contain less than 0.3% THC. At the same time, marijuana is only legal in states that have passed medical or recreational marijuana laws.
According to the notice to licensees issued in April, the MED has received reports of CBD being converted into THC, which is then used in the manufacture of regulated marijuana products.
"The inversion of chemically derived THC products from outside of the Regulated Marijuana industry is a license violation affecting public safety," the MED said in its notice.
"There's hemp and there's marijuana. And hemp doesn't have a lot of THC, but if you distill it down and take it through some harsh chemical processes, you can convert it into THC. So what's happening is that it’s being illegally brought into the regulated market,” said Truman Bradley with the Marijuana Industry Group, a trade association that represents regulated businesses in the industry.
Bradley said this ultimately hurts licensed businesses, the consumer and the state.
"You have people circumventing their taxes. They're not paying compliance or licensing. It costs a lot of money to do things the right way,” said Bradley.
Brian Higgins, founder of Happy Plant Farms and co-founder of Happy Plant Extracts, partners with Mountain High Suckers to create various products.
"We cultivate and we make marijuana products, so anything from extracting the plant's essential oils all the way down to finished products,” said Higgins.
Higgins believes hemp-derived THC could impact businesses that operate properly and, ultimately, the customer.
"We've grown less because it's less valuable,” said Higgins. “That translates into cutting back on employment.”
He said this ultimately impacts taxpayers.
"They're not paying tax on this product and that affects all Coloradans, you know, at a time when property taxes are increasing and schools are closing,” said Higgins. "This could really sink the whole industry if it's not addressed quickly.”
The MED declined Denver7's request for a comment, saying it does not comment on active investigations.
The Colorado Department of Revenue said marijuana sales peaked a few years ago and have now come back down. Retail and medical sales peaked in 2020 and 2021 at roughly $2.2 billion. It came down to $1.5 billion in 2023.
Experts attribute the peak partially to the COVID-19 pandemic but also believe the decline in sales could be because of those bad actors.
