Unique Cannabis Divides the Cannabis Extract Industry

A rare cannabinoid that mimics the effects of delta-9 THC, but can be easily produced from CBD, has attracted headlines and provided substantial profits for extractors battling plummeting prices for other cannabis extracts.

However, the popularity of cannabinoids (delta-8 THC) has created a sharp divide between the cannabis and hemp sides of the cannabis space.

Some say that delta-8 offers a good alternative to the weakness and anxiety that some potent THC products can cause for consumers seeking an intoxicating buzz.

(Delta-8 is an isomer of delta-9 THC that appears to be less likely to bind to cannabinoid receptors, resulting in milder effects.)

But others warn that delta-8 is simply a knockoff of the real product promoted by unethical extractors who try to sell excess CBD and sell intoxicating products in jurisdictions where delta-9 THC is not legally used.

Some fear that the popularity of delta-8 threatens the politicians who approve cannabis and its extracts, but fail to realize that some of these extracts, which could threaten the cannabis industry, could get people high simply by following the instructions widely used on YouTube.

In this case, cannabis entrepreneurs are debating whether to add delta-8 poppers when the weather is hot or stick with the more common cannabinoids that are easier to understand the legal status of.

"It's just starting to take off."

Longtime cannabis extractors admit the delta-8 trend caught them off guard. The isomer has long been considered a weaker variant of the all-too-familiar THC form.

So James Hurlston, CEO of Ratoon Agroprocessing in Marion, N.C., was surprised when he responded to a social media post last year that his lab had produced delta-8 from a batch of CBD isolate.

"I just put it out there - 'Hey, we made it into delta-8. Has anyone else done this? The response-oh, my goodness! It's just starting to take off."

Harold Jarboe, owner of Tennessee Native, a Nashville-based company that grows cannabis and produces CBD, was also surprised.

Last year, in response to customer demand, he began making delta-8 from his CBD isolate. now, his delta-8 sells more than CBD.

He says of delta-8 THC, "It was the cannabinoid of its time."

For years, we've heard this from customers: 'Do you have anything stronger?' And (delta-8) isn't real, it's not really strong, but it's stronger, and that takes some of the edge off the day."

Jarboe then began selling delta-8 products to customers who could even legally use regular THC products.

"You can spend a lot of money (on delta-8 THC) to stand out. . but it doesn't dominate you as much as delta-9 does."

Deliverance Reduction

The customer response to delta-8 isn't the only reason supercritical carbon dioxide extraction machines manufacturers are excited about it. The wholesale value of cannabis makes it nearly irresistible.

Several extractors told Marijuana Business Daily that wholesale prices for delta-8 range from $1,500 to $2,000 per kilo, depending on quantity and quality. Prices were even higher last year.

In stark contrast, wholesale prices for CBD isolate have dropped to $600 per kilo or less due to abundant supply.

Another attraction: the legal ambiguity of cannabinoids makes it attractive to test new markets and sales volumes in stores where traditional THC manufacturers still prohibit sales, such as convenience stores.

Of course, legal opinions vary as to whether delta-8 THC is derived from cannabis extracts is legal or not.

Some say that since marijuana and all its derivatives are legal, delta-8 THC is obvious.

Others point to US Drug Enforcement Administration (DEA) rules regarding the tetrahydrocannabinol content of cannabis processing, which would seem to make delta-8 THC an illegal synthetic version of its most famous cousin, delta-9 THC.

At least one retailer (a south Texas-based smoke store operator) has been charged with drug offenses for selling marijuana-derived delta-8 THC products. (The case is pending and the DEA rules are being legally challenged by the Cannabis Industry Association.)

For Garrett Graff, an attorney with the Hoban Law Group in Denver, the situation looks a lot like the legal jungle that faced CBD in its early days.

That's because local law enforcement was left to sort through some of the mixed messages of federal law, which led to uneven enforcement.

"It's a complex issue," Graves said of the legality of delta-8. "There are potential conflicts of law that have not been resolved by the courts."

The Future of Delta-8

There are some legal issues in the marijuana industry, says the clock is ticking on the 8-axis.

Sean Santa, a Bethesda, Maryland-based investment banker who helps cannabis companies raise money, said delta-8 products are often fought over for consumers who want to use delta-9 THC.

"I believe it's a fad," Santa said of delta-8 products.

"At the moment, it has this niche market because of the legal gray area. But when that goes away, I think (delta-8) will be completely removed."

Jonathan Miller, an attorney with the U.S. Cannabis Roundtable industry activist group, said this legal gray area is sparking discussions in Congress and state legislatures about unpopular restrictions on how marijuana can be used.

"Basically, (lawmakers) are concerned that the 2018 Farm Bill will somehow open up loopholes for unregulated intoxicating products," he said.

"And we've been talking to a lot of people in the cannabis industry. They're disturbed that there are competing products being sold at gas stations without being regulated, when they have to go through dispensaries and comply with some very strict regulations."

Miller predicts many delta-8 THC restrictions have been proposed even in states with adult-use marijuana.

"Anything that's intoxicating should be treated like adult-use marijuana," Miller said. "It shouldn't be easily available at gas stations and vape stores, unregulated."

The makers of delta-8 say the product will have a place in the larger marijuana economy regardless of regulation.

"I don't like delta-9; I don't like the anxiety," said Craig Henderson, CEO of Boulder, Colorado-based Extract Labs.

"But I do like to reduce inflammation. I do like to sleep better. I do like the slight mood changes and maybe feeling better during the day.

"And there are a lot of people like me."