Minnesota cannabis bill could create problems for “hemp-derived” industry

While the bill creates regulations and provisions for new businesses and dispensaries, the existing “hemp-derived THC” industry could suffer.
Published: Mar. 15, 2023 at 7:02 PM CDT
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ST. PAUL, Minn. (GRAY) - The Minnesota DFL is working to pass a bill that would legalize cannabis for recreational adult use.

While the bill creates regulations and provisions for new businesses and dispensaries, the existing “hemp-derived THC” industry could suffer if steps aren’t taken to protect their products. Those products have been legal through a gray area in the federal Farm Bill a few years ago. In 2022, Minnesota legalized low-potency hemp-derived edibles and beverages by regulating them at a state level. That publicity has made the industry explode over the last year.

“Since that, and because of the media exposure, it has boosted our sales significantly, especially in our Duluth location,” said Craig Sutherland, founder and owner of Sutherland CBD, a Twin Ports-based business that has capitalized on the hemp-derived market.

Sutherland says that success has allowed them to expand to new products.

“We have created products that we’re selling a lot of them every month. The shift has gone from oils to edibles to now beverages. It’s helped our industry out. And it’s given another option to the consumer for a nonalcoholic beverage,” said Sutherland.

Sutherland worries that full legalization could destroy his industry if it isn’t done properly.

“It says cannabis it doesn’t separate marijuana from hemp. Hemp is considered cannabis. What that means is the thousands of stores throughout Minnesota that are selling hemp-derived products will now have to become dispensaries,” he said.

Dispensaries are subject to entirely different tax and banking regulations, which would disrupt the hemp-derived THC industry the state has cultivated in recent years.

Tuesday, the Minnesota State Senate passed an amendment in one of its committee hearings that would, in theory, allow for the continuation of those businesses without any additional burdens.

Rep. Jess Hanson (D - Burnsville) says the House is hoping to work with the Senate on the matter in the coming weeks.

Hanson recognizes the needs of those already-established businesses.

“It is important that we acknowledge the passage of last year’s bill prompted a lot of business ventures. Obviously people have invested money in this now. And so we want to make sure that that wasn’t in vain,” she said, “Continuing to do that is how we help our workforce. It’s how we create more jobs here and draw more people to want to move to Minnesota to live, work, raise a family, and pay taxes here.”