Marijuana Business Magazine - May-June 2018

Regulatory Headache Like the cannabis sector, the alcohol industry faces a web of regulations – in this case from both the states and the feds. Consequently, hemp, CBD and extraction companies must be aware of the complicated regulatory process when wading into the alcohol business. The U.S. Drug Enforcement Admin- istration’s declaration in December 2016 that CBD is a Schedule I controlled substance – like marijuana and heroin – complicated matters. Last year, a Colo- rado craft beer producer, Dad & Dude’s Breweria, butted heads with the feds over the brewery’s production of a non-THC, CBD-infused beer. Dad & Dude’s had previously won approval for the brew from the federal Alcohol and Tobacco Tax and Trade Bureau (TTB).The brewery, which continues to sell the beer on its premises, is for now locked in a legal battle with the DEA as well as the agency. The TTB, meanwhile, presents other hurdles. Any alcohol company that sells across state lines, for example, must secure approval from the agency. Back in 2000, the agency’s predecessor issued requirements covering formulas, processes and labels for domestic hemp products.The policy requires all alcoholic beverages that contain hemp or a hemp component to submit a lab report stating the amount of THC in the hemp, a move that dovetails with the DEA’s policy. “It follows the DEA’s rules, and the intent of those rules are to ensure the product is THC-free or has trace amounts,” said Ryan Malkin of Malkin Law, a Miami Beach, Florida, firm that specializes in alcohol law. In December 2017, Weatherford, Texas-based TVM Wines received TTB approval to manufacture and sell its hemp wine across state lines. The process took two years and 28 different paperwork submissions to the agency, said Elease Hill, TVM co- owner and vice president of sales and marketing. Hill said the key was to supply the agency with lab tests showing the hempseed oil used in her sweet, citrus-based wines had less than 4 parts per million THC, and that the oil was derived from hemp stalks, roots or stems rather than flowers or resin, which is considered a Schedule I substance by the DEA. “You have to be careful where you get your hempseed oil from,” Hill said. “I had one that was 3% THC, from mature hemp stalks, and the DEA said that was too high, so the oil must be coming from hemp resin.” Hill found her suppliers through a list provided by the Texas Hemp Industries Association and by simply Googling hempseed oil companies. She read product reviews and then called the companies to check their references and lab work documentation. Smoke Wallin is chief marketing officer for Vertical, a California-based company developing a CBD oil that can be infused into alcohol. Photo courtesy of Smoke Wallin Tony Magee is the founder and executive chairman of Lagunitas Brewing in Petaluma, California. Photo courtesy of Lagunitas Brewing 44 • Marijuana Business Magazine • May-June 2018