New cannabis law presents opportunities, challenges for Farms
Thanks to a significant change in the law, the Eden Prairie-based Peterson Farms can now add THC-infused food and beverages to Verist, its full line of farm-crafted CBD remedies.
This new law took effect on Aug. 1 and allows the sale and consumption of certain THC-edible products to those age 21 and older. The product must contain no more than five milligrams of THC in a single serving and no more than 50 milligrams of THC per package.
The Petersons maintain their vertical or “farm to table” business model with Verist. They grow the hemp, harvest it, turn it into finished consumer products and sell those products to retailers and consumers.
I recently had a conversation with fourth-generation owners and managers Aaron and Nicola Peterson about what the new law means to their CBD business. They explained to me that the new Minnesota law provides them with new opportunities but also new challenges.
According to Aaron and Nicola, the new law solves two important problems: It removes a confusing and, in their view, an unnecessary distinction about what type of THC is legal, and now it is legal to sell consumable CBD products.
The new law no longer makes a distinction between specific types of THC. Because of a previous loophole in federal law, Delta-8 THC was legal and Delta-9 THC was not. Delta-8 THC was generally considered beneficial because of its alleged medicinal properties, and Delta-9 THC was best known for its psychoactive properties. Under the new law, Delta-8 THC products previously unrestricted due to a federal loophole are now subject to Minnesota’s five-milligram serving limit. Also, the new law now makes it legal for the first time in Minnesota to produce and sell products containing Delta-9 THC.
The new law opens larger, more lucrative markets for Verist. The Verist line of CBD products now contains edibles. Currently, it is selling THC gummies in various flavors and looking to include a drink line, probably a seltzer.
However, there are still substantial challenges to be overcome before the Petersons see the success they have experienced with their other business ventures.
For starters, there are still very open questions about what kind of product this is from an existential standpoint. Is it just a recreational product, or are there legitimate medical benefits derived from using these products? While Aaron and Nicola have no objection to the recreational use of the products, they believe there are many other benefits. Some medical benefits are now accepted, such as helping chemo patients and relieving some specific forms of epilepsy and certain anxiety disorders.
While many believe CBD is effective in treating a broad range of common problems, including inflammation, chronic pain, migraines, autoimmune diseases, depression and anxiety, that is, at this point, only a belief and not evidence-based medicine.
In addition, Aaron states that because the law still mandates that the plants grown have such a low THC content, that this mandates inefficiency.
“If we were allowed to grow a higher THC content cannabis it would be less input to get the same output,” Aaron said.
The currently mandated .03% THC level of the hemp crop requires far more resources to grow and handle. The plants cannot be mechanically harvested and have other specific requirements regarding how they are physically handled. In Aaron’s view, it would be much better if they were allowed to grow plants with higher THC content. This would enable the hemp farmers to operate more efficiently, use fewer resources and be more competitive.
Aaron believes it would be better to tax the THC at the point of sale. He also believes that requiring Minnesota farmers to grow such low THC content puts them at a significant disadvantage. That disadvantage will be much greater if they are required to compete with out-of-state growers who now have years of experience growing higher THC-content crops.
Perhaps the greatest problem is with advertising, or more accurately stated, a lack of advertising. They have not been able to promote the product through any of the traditional forms of advertising. They cannot advertise their product on radio, television, billboards or social media. Although technically it is not illegal per se to do such advertising, because there are still legality questions at a federal level, their advertising business is refused. This makes it very difficult for them to expand their business and develop strong brand recognition in Verist.
The bottom line for the Petersons is they are cautiously optimistic, but Verist is still a development stage business. They have expended the effort and resources to learn how to grow, harvest and store the cannabis crop, turn it into finished products and sell it to retailers and customers.
That expertise has been hard won, and they would like to be able to put it to good use. Progress has been made, but there are still significant legal and regulatory issues that need to be addressed. Until those issues are addressed the future of the CBD business in Minnesota is uncertain.