Are Delta-8 THC Sales Damaging the Legal Cannabis Market? How about $2 billion in delta-8-THC sales over the last 24 months?

Delta-8 THC products have gained significant popularity as an alternative to traditional marijuana in recent years, with sales exceeding $2 billion. A recent report from the Brightfield Group, a cannabis analytics company, suggests that the growing popularity of delta-8 THC products is attracting the attention of other cannabis industries and prompting them to act.

Delta-8-THC is a psychoactive cannabinoid derived from hemp that is said to have similar effects to traditional marijuana-derived delta-9-THC, but with a milder effect. The natural occurrence of Delta-8 THC is in small amounts. However, the products available on the market are made by chemically converting CBD into Delta-8 molecules.

Creation of Delta-8 THC products

Delta-8 THC products emerged after the 2018 Farm Bill, which legalized growing hemp with a THC concentration of less than 0.3% at the federal level. This legislation allowed companies to manufacture a variety of products containing non-psychoactive cannabinoids. These include CBD, CBG, and other cannabinoids with psychoactive effects that are milder than THC and are not considered illegal because they are derived from hemp.

However, there have been concerns about the safety of delta-8-THC and similar products. This is because converting CBD molecules into THC molecules requires the expertise of a skilled chemist to ensure safety as improper or inaccurate techniques can lead to high levels of impurities in the final product. In addition, the human health effects of consuming these contaminants are not yet known.

But despite these concerns, the report highlights significant overlap between users of CBD, cannabis, Delta-8, and other emerging cannabinoid products.

According to the report, 35% of CBD users have purchased hemp-derived psychoactive products in the past six months. Given consumers’ tendency to try new products, they tend to switch to Delta-8 over time, especially if the cost differential remains favorable. Additionally, in states where marijuana is legal, nearly a quarter of marijuana users are considering purchasing Delta-8 products in the future.

In states where marijuana remains illegal, delta-8-THC has emerged as an accessible and inexpensive way to experience psychoactive cannabis. It can be purchased legally or by mail order and offers consumers a less risky (from a legal standpoint) alternative to acquiring marijuana illegally.

A study published last year also confirms this trend. The study found that public interest in delta-8-THC has increased rapidly in 2020 and 2021, and has been exceptionally high in states where recreational cannabis has not been decriminalized or legalized. However, the report notes that the growing popularity of Delta-8 in places where marijuana is still illegal could negatively impact marijuana legalization efforts.

According to the report, support for legalization measures could wane as Delta-8 continues to gain popularity and gain a foothold in places where Delta-9 is restricted. This means that funding for grassroots campaigns could slow, impeding progress towards full legalization in the US

Additionally, there seems to be a significant amount of confusion between Delta-8 and Delta-9, the main ingredient in marijuana, even in states where it’s legal. The report states that retailers selling Delta-8 products market themselves as dispensaries but do not make it clear that the compound is derived from hemp.

changes in consumer behavior

The authors also noted changes in consumer behavior in the CBD market, providing better insight into the impact of the Delta 8 market on the cannabis industry. According to the Brightfield Group report, there has been a decline in online CBD purchases since their peak in November 2020. The group saw a sharp drop in online sales from November 2021 (reportedly down 53% from Q4 2021 to Q3 2022).

During this period of decline, there was a 42% increase in smoker and store purchases, giving consumers more opportunities to be exposed to hemp-derived THC products. With 64% of CBD users reporting occasional cannabis use, these users may be inclined to switch to THC, particularly in regions where adult use of THC is illegal.

How CBD Companies Can Handle the Rising Popularity of Delta-8 THC Products

The report suggests strategies cannabis and CBD companies can employ to counter the rising popularity of delta-8 THC products.

To compete in the unregulated delta-8 THC market, companies in the CBD and cannabis industry should emphasize the importance of safety and testing for hemp-derived psychoactive products. They should point out the lack of testing and oversight for delta-8 THC products, which can make them potentially more harmful than naturally-derived products like CBD.

According to the report, an alternative strategy for CBD and cannabis companies is to “diversify” into the delta-8 THC market by adding delta-8 and other similar products to their product offerings. CBD companies should consider investing in introducing hemp-derived cannabinoids into non-legal THC markets to gain regional brand awareness before full legalization occurs. While this might cause confusion later, it’s a way to establish the brand while regulatory and legal matters are sorted out.

Meanwhile, many companies in this space are choosing to ignore delta-8 THC products in hopes that they will be banned by the 2023 Farm Bill or disappear naturally. The legal status of Delta-8 and similar compounds is uncertain, and not engaging with them may be the best decision for a company.

While the legal status of delta-8-THC is unclear, some states have taken steps to try to ban it. The Food and Drug Administration (FDA) reported more than 100 cases of adverse effects associated with the use of delta-8 THC products between December 2020 and February 2022. In May, the FDA issued warning letters to five companies that were selling these products without a license for illegally marketing treatments for medical conditions, mislabeling drugs, and adding delta-8-THC to foods.

Conclusion

It’s unclear what the future holds for products like delta-8-THC and other hemp-derived cannabinoids with psychoactive effects. This is because the forthcoming Farm Bill, due to be drafted in 2023 and set to come into force in 2024, has the potential to significantly impact the current unregulated market. The Farm Bill could regulate this gray market by banning these products outright or taking no action at all. It’s a waiting game to see which way the bill will go.

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