Intoxicating Hemp Rulemaking: Shaping State Regulatory Framework Through Comment Participation

Matter Overview

Following a wave of state legislative activity targeting intoxicating hemp-derived cannabinoids (delta-8 THC, delta-10 THC, HHC, THCO, and related compounds), a coalition of hemp processors and retailers engaged Hoban Law Group to lead their participation in a state's formal notice-and-comment rulemaking on intoxicating hemp regulation. The proposed rule would define which hemp-derived products were subject to a new potency cap and retail restriction framework. The draft rule, as published, would have applied the potency cap to a broader set of products than the statute authorized, effectively creating new product categories subject to restriction that the legislature had not addressed.

Work Performed

Hoban conducted a statutory construction analysis of the enabling legislation, mapping each provision of the proposed rule against the specific statutory authority cited. The analysis identified three provisions in the proposed rule that exceeded the agency's grant of rulemaking authority: (1) the definition of "intoxicating hemp product" was broader than the statutory definition; (2) the potency threshold methodology diverged from the laboratory testing standard specified in the statute; and (3) the retail restriction applied to products that were expressly excluded from regulation under a statutory carve-out.

We prepared a 34-page comment letter on behalf of the coalition, organized around the ultra vires provisions. Each comment was anchored to the specific statutory text, supported by the legislative history of the enabling act, and accompanied by an alternative regulatory text that would achieve the agency's stated public health objective within its statutory authority.

Hoban also organized a coalition sign-on to the comment and coordinated testimony from five coalition members at the public hearing, which Hoban representatives attended and introduced.

Outcome

The agency's final rule incorporated three of Hoban's four proposed definitional revisions. The definition of "intoxicating hemp product" was narrowed to match the statutory text. The potency methodology was revised to align with the statutory laboratory standard. The retail carve-out was preserved for the product categories the statute excluded. One coalition position — on the age verification requirement threshold — was not adopted.

Lessons Learned

Regulatory comment practice is one of the highest-leverage investments a cannabis or hemp company can make. Agencies adopt comments that are anchored to statutory text with alternative regulatory language; they ignore comments that only express opposition. A well-organized coalition comment with coordinated hearing testimony has a materially higher adoption rate than individual comments. The window for influence is the comment period — not the litigation that follows a final rule.

Engage Hoban Law Group

Hoban Law Group represents hemp and cannabis industry participants in state and federal rulemaking proceedings. [Schedule a consultation](/consultation?source=matter&matter_slug=intoxicating-hemp-state-regulatory-comment-2024&matter_type=cannabis-regulatory-compliance).