THC drinks in beer stores? New hemp regulation effort is brewing in Pennsylvania amid federal crackdown

While Congress debates the impending ban on hemp-derived THC, a smaller push for regulation is brewing in Pennsylvania that hopes to put THC drinks in beer stores and regulate hemp alongside medical marijuana.

State Rep. Steven Malagari (D., Montgomery) plans to introduce a bill that could put THC drinks in beer stores, while State Sen. Dan Laughlin (R., Erie), a major proponent of weed legalization — unlike his party’s leaders — is working on legislation that would open the door to hemp-derived THC being regulated like medical marijuana. Pennsylvania hemp businesses look toward these efforts with optimism, but as the clock races down, stakeholders are asking for urgency.

Representatives from the hemp, medical marijuana, and beer wholesaler industries spoke to state regulators at January’s Pennsylvania Farm Show about shielding the hemp industry from the Nov. 12 deadline that would outlaw all intoxicating hemp products, including Delta-9 THC and CBD, which is what the majority of hemp is grown for in Pennsylvania. Under new rules, many of the state’s hemp farmers would be out of business by fall.

Across all competing interests, industry representatives said one thing was clear: Lawmakers need to regulate the billion-dollar state hemp market.

Testifying before the Center for Rural Pennsylvania, stakeholders, including Montgomery County District Attorney Kevin Steele, agreed, stressing the need for safeguards.

“It’s not about taking away people’s livelihoods in hemp farming and people working in this industry,” Steele said during his testimony. “It’s about community safety and establishing guardrails through legislation to oversee that safety.”

But, as Congress disagrees on when and if it will regulate hemp-derived THC — including if the ban deadline should be extended — those delays cascade to the states, where local lawmakers await federal guidance before regulating it themselves. While any state proposals for regulation are purely speculative until Congress passes hemp legislation, Laughlin’s and Malagari’s efforts in Pennsylvania imagine what is possible.

It is important to note, however, that regulating intoxicating hemp products is an uphill battle in a state where recreational marijuana legalization is opposed by Republican state leadership.

Whether these bills become law or save the state’s hemp industry as it currently stands is up in the air with federal delays, but local hemp businesses choose to be optimistic.

For Tyler Shannon, an Adams County hemp farmer, a full ban on hemp products would be devastating. With the vast majority of Pennsylvania’s hemp grown for cannabinoids, such as Delta-9 THC and CBD, it means that “if hemp is not saved, my family will lose everything, including our farm,” Shannon said.

Shannon is not alone. Beau Whitney, a leading cannabis market analyst who testified at the January hearing, estimated that Pennsylvania’s cannabinoid market generates just under $1 billion in revenue annually. In his latest report, he found that the majority of Pennsylvania’s hemp-derived THC and CBD products were sold “legally” through semi-regulated channels, in stores or online. “As a result, there were 9,500 jobs, generating $382 million in wages in Pennsylvania,” Whitney said.

Those in the local hemp industry are confident that a deadline extension will help protect them, but planting season is fast approaching, while hemp farmers have no reassurance that their crops will be legal come fall, Shannon said. His family farm is holding off on a planned $175,000 facility expansion due to the looming ban.

As of now, no federal or state legislation has been passed to avert the impending doomsday scenario for hemp, and despite the constant regulatory discussions, small hemp farmers and businesses don’t feel on solid ground, Sebastian Stelmach of Manayunk’s Keystone Dispensary said.

“It’s just scary to think that come November, I might be unemployed and close up shop,” Stelmach said. “A lot of lawmakers realize that we can’t let this industry die. I believe that they’re going to do something, but what that is, I don’t know.”

Trade organizations, like the U.S. Hemp Roundtable, are lobbying Congress to extend the federal ban deadline by one year, giving regulators time to flesh out less restrictive standards for hemp products.

“Even [federal agencies] said they don’t have enough time to enforce the rules under the current bill,” said Jonathan Miller, U.S. Hemp Roundtable’s general counsel. “We’ve created a mess here, and we really need this extension to be more deliberate and responsible.”

Laughlin’s bill to establish a Cannabis Control Board would see the state’s medical marijuana program come under new oversight, similar to the liquor and gaming control boards.

While hemp is not the primary focus of that legislation, organizations like the Pennsylvania Cannabis Coalition (PCC), which represents the state’s medical marijuana industry, hope to see hemp included in Laughlin’s bill to open the doors for more responsive hemp regulation.

“The Cannabis Control Board would have the authority to deal with hemp products and decide what is safe for consumers as a single regulatory body,” said Meredith Buettner, executive director of PCC. Buettner said it makes the most sense for intoxicating hemp products to be regulated alongside cannabis.

Laughlin argues that “if it’s a consumable cannabis product, it should fall under one clear regulatory structure.”

How and where specific hemp THC products would be sold will be worked out in the legislation, but “intoxicating products should be sold through appropriate, regulated channels,” he said.

Jake Sitler, who owns Lancaster-based Endo THC drinks and testified at the January regulatory hearing, is ready to support any regulation that saves the current hemp framework, like incorporating hemp into a control board, but worries small businesses will get cut out of the deal.

“The hemp industry concern is where our seat is at the table and to make sure new laws are appropriate for our farmers and our industry,” Sitler said. “And that any new regulation isn’t used as a guise to out-regulate small business down the road.”

The bill from Malagari would carve out regulation for hemp-derived Delta-9 THC drinks, which are among some of the most popular intoxicating hemp products, with a national market of $1.5 billion in annual sales.

Malagari, who previously worked in beverage wholesale, wants to see THC drinks regulated similarly to beer and malt-beverage products in Pennsylvania.

Pennsylvania operates a three-tiered system for beer, with licenses at the manufacturing level, distribution level, and retail level. THC drinks would be incorporated into this system, which would begin by allowing established three-tiered license holders to manufacture and sell hemp-derived Delta-9 THC drinks.

Common retail spaces for beer and malt beverages include beer distributors, grocery stores, restaurants, and bars.

This legislation, if passed and signed into law, would not prohibit THC drinks from being sold in medical marijuana dispensaries and could work alongside Laughlin’s CCB bill, Malagari said. But he believes that lawmakers should approach THC beverages differently from hemp-derived flower and vapes.

As an owner of a hemp beverage company, Sitler could benefit from Malagari’s bill, but also wonders if it is too early for beverage carve-outs before a fuller state framework is in place. “A hemp beverage bill with no overarching regulation is putting the cart a bit before the horse,” Sitler said.