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Georgia’s New Hemp Legislation: A Mixed Bag for Local Businesses

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Georgia's New Hemp Legislation A Mixed Bag for Local Businesses

On the last day of its legislative session, known as “Sine Die,” the Georgia legislature approved Senate Bill 494, which sets out a new regulatory structure along with various rules and requirements for entities involved in the sale or manufacture of hemp and hemp products.

Governor Brian Kemp signed the legislation into law on April 30, 2024, with its provisions set to become effective on October 1 of this year. The Georgia Department of Agriculture has announced that it will provide a “grace period” to help businesses adjust to the new regulatory environment.

Prior to this date, the Department was tasked with rolling out several of the bill’s mandates, including new licensing requirements for hemp manufacturers and retailers. Certain elements of the bill, like the updated age restrictions for purchasing hemp products and the enhanced testing protocols, are expected to be implemented more quickly.

The following outlines key points from the new legislation, although the practical application and enforcement by the Department of Agriculture and other relevant state and local authorities are yet to be determined.

Table of Contents:

Firstly, it’s crucial to recognize what hasn’t changed with the new hemp legislation in Georgia. Since 2019, the state has categorized a wide array of cannabis and cannabis extracts containing less than 0.3% delta-9-tetrahydrocannabinol (Delta-9-THC) as “hemp,” thereby legalizing them.

This legalization encompassed various previously illegal cannabinoids, including CBD, CBG, Delta-8, Delta-10, HHC, THCV, and more, marking their first legal recognition in Georgia. Despite this, there have been instances of misinterpretation by law enforcement, leading to unwarranted raids on small businesses.

Furthermore, since the initial legalization, there have been efforts by anti-cannabis advocacy groups to ban or restrict access to certain cannabinoids like Delta-8-THC and other hemp-derived extracts. However, with the enactment of SB 494, the legislature has dismissed most of these restrictive proposals, ensuring that the majority of hemp-derived cannabinoids remain legally available under state law, as long as they contain less than 0.3% Delta-9-THC. Notably, an attempt to classify Delta-8, Delta-10, HHC, and other similar extracts under the same stringent threshold as Delta-9-THC was explicitly rejected.

The law now more precisely protects companies and customers who deal in “consumable hemp products,” which are hemp products intended for ingestion, absorption, or inhalation by people or animals.

However, it is important to highlight that the new law contains specific clauses likely to be interpreted as prohibiting the sale of many popular hemp products, particularly hemp-infused flowers and certain edible products, with the exception of gummies. These aspects of the law could significantly impact how hemp products are marketed and sold in Georgia.

Clarity and Restrictions on Edibles

The law clarifies the legal standing of hemp edibles, particularly gummies and non-alcoholic beverages, by explicitly excluding these from the definition of “food products.” This change follows previous legal ambiguities that led to enforcement actions against businesses selling THC-infused gummies. However, the law prohibits the sale of other hemp-infused food products like cookies and brownies, which could negatively impact businesses that have invested in these popular product lines.

The Closure of the THCA Loophole and Its Impact

One of the more controversial changes brought about by Georgia’s Senate Bill 494 is the introduction of a new testing standard for Delta-9-THC, which includes THCA in the total THC content calculation. This change is poised to significantly reshape the market landscape for THCA products.

SB 494 requires testing of hemp and consumable hemp products to ascertain their “total delta-9-THC concentration,” which now takes into consideration the product’s combined THCA and delta-9-THC content. To comply with the new legal standards, these products must collectively maintain a THC concentration below 0.3%. 

The legislation specifies two methods for assessing this total THC concentration:

1. Testing a sample after it has undergone decarboxylation, a process that converts THCA into delta-9-THC, ensures all potential THC is measured.

2. Calculating the amount of delta-9-THCA by multiplying it by 0.877 (to account for the molecular weight change during decarboxylation) and adding this figure to the existing delta-9-THC concentration.

These stringent requirements mean that many products rich in THCA are likely to exceed the new THC threshold, rendering them illegal under the new state regulations. However, there is a silver lining for businesses that have faced legal challenges over THCA products in the past. This legislation provides them with a basis to argue that their products were compliant with previous laws at the time of any legal action.

This change is significant, marking a tough stance against THCA products, which will likely lead to a reduction in their availability within Georgia’s hemp market. It underscores the state’s commitment to tightening regulations around the types of hemp products sold and could have far-reaching implications for producers and consumers alike.

The Implications of Georgia’s Potential Ban on Hemp Flower Sales

Senate Bill 494 introduces a significant and potentially contentious provision that could impact the hemp industry in Georgia. The new legislation explicitly prohibits the sale of “the flower or leaves of the Cannabis sativa L. plant,” irrespective of the total delta-9-THC concentration found within these parts of the plant. This development represents a decisive move to regulate more strictly the types of hemp products available in the market.

However, the law does not entirely close the door on all products derived from the hemp plant. It makes an important distinction by allowing the sale of hemp products that include “extracts or derivatives” of the flower or leaves. This exemption suggests that while the raw, unprocessed flower cannot be sold, products made from processed extracts, such as oils or edibles containing cannabinoids like CBD and Delta-8-THC, are still permissible.

This nuanced approach to regulation leaves some room for interpretation, which could lead to varying enforcement outcomes. Law enforcement agencies might interpret the ban broadly, potentially seeing it as inclusive of all types of flower products, including those that have been processed or infused with cannabinoids. This could lead to a crackdown on a wide range of products that have become popular among consumers, particularly those that use processed hemp flowers.

Retailers and producers will need to carefully navigate these new regulations, paying close attention to how the Department of Agriculture and other regulatory bodies choose to enforce this provision. The ambiguity surrounding what constitutes an “extract or derivative” could lead to inconsistencies in enforcement until further clarification is provided.

The potential ban on selling raw hemp flowers will likely be unpopular among those in the industry who rely on the sale of these products. It underscores the need for ongoing dialogue and possibly future legislative adjustments to ensure that the regulations do not unduly stifle the growth of the hemp industry while balancing the state’s goal of ensuring product safety and compliance

New Licensing Requirements Under Georgia’s SB 494

SB 494 introduces comprehensive changes to licensing for the hemp industry in Georgia, significantly expanding the scope of who must hold a license. Previously, only hemp farmers were required to be licensed. Now, the Department of Agriculture will also issue specific licenses to manufacturers, retailers, wholesalers, and testing labs involved with hemp products. These include a “manufacturer license” for producers, a “retail consumable hemp establishment license” for retailers, and a “wholesale consumable hemp license” for wholesalers. Testing labs must register with the state and meet defined standards of testing accuracy.

Operating without these licenses under the new law could result in misdemeanor charges, escalating to a high and aggravated level for repeated offenses. Substantial fines are also imposed for non-compliance with licensing rules. Additionally, the law stipulates that no licenses will be granted to individuals convicted of a felony drug crime within the past ten years. This tightening of regulations ensures that all segments of the hemp industry in Georgia are regulated and compliant with state standards.

Enhanced Testing and Labeling Requirements

SB 494 introduces stringent testing standards for hemp products in Georgia, mandating that manufacturers provide a comprehensive “full panel certificate of analysis” for each product. This certificate, which must be renewed annually, should detail the quantities of THC, CBD, CBDA, CBG, CBGA, CBN, HHC, and other relevant compounds as specified by the Department of Agriculture.

Additionally, any hemp product containing THC is now required to display a sticker authorized by the Department of Agriculture, alerting consumers to the THC content. This must be accompanied by either a display of the certificate of analysis or a QR code that links directly to the testing results, enhancing product transparency and consumer knowledge.

The Department of Agriculture is also empowered under the new law to oversee and enforce these provisions actively. Businesses found in violation of these testing and labeling standards, or selling products that surpass the legal THC limits, will face serious repercussions. Their products may be confiscated and destroyed, and they could be subjected to misdemeanor charges. These measures aim to ensure compliance and maintain high safety and quality standards within the industry.

Age Restrictions and Stringent Advertising Rules

Setting the age limit for purchasing hemp products at 21 aligns with existing practices but formalizes the restriction, potentially narrowing the consumer base. More restrictive advertising rules, particularly those banning packaging attractive to children and resembling popular snacks, might limit creative marketing strategies, impacting brand visibility and consumer appeal.

Overview of SB 494’s Impact on the Hemp Industry

SB 494 has been met with mixed reactions, with many recognizing its role in providing clearer legal frameworks and safeguarding consumer interests. In light of last-minute lobbying efforts that may have severely restricted access to hemp-derived products like Delta-8-THC and Delta-10-THC, many have welcomed the legislation’s introduction of necessary safeguards that improve consumer safety and ensure product integrity.

Restrictions that the bill also introduces, though, might have a big effect on our company and others in the sector. The prohibition on hemp-infused food products and flowers—both popular for their health benefits and consumer appeal—poses a particular challenge, potentially affecting sales and business operations. Furthermore, the vague legal language and new testing requirements aimed at the THCA market are likely to lead to litigation, while potential conflicts with the Federal Farm Bill could create further legal uncertainties.

Despite these hurdles, we at ATLRx are committed to adapting to these changes and continuing to provide our customers with high-quality products. We are closely monitoring the developments and are prepared to make the necessary adjustments to comply with new regulations. For those in the hemp industry facing uncertainties or legal challenges, or anyone affected by enforcement actions related to hemp products, ATLRx is here to offer support and guidance. Do not hesitate to reach out to us for assistance as we navigate these evolving legal landscapes together.

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