The state of Colorado has a marijuana enforcement division (MED), a senior official in the department’s Marijuana Enforcement Division acknowledged this privately. illegal hemp market The cannabis industry is facing an existential threat because the amount of illegal marijuana being sold in Canada and other countries is much larger than what has been publicly reported. Kyle Lambert said that in a March gathering with representatives from the cannabis industry, “the volume of chemicals converted hemp products” being sold under the name marijuana are much larger than what can be quantified. The Denver Gazette’s and ProPublica’s tests, conducted in March by the MED deputy senior director Kyle Lambert, found that marijuana vapes purchased from licensed dispensaries contained hemp.
Hemp Diversion Scale and Market Impact
It is the result of federal legislation that legalized industrial Hemp in 2018. Industrial hemp contains only trace quantities of Tetrahydrocannabinol. Federal lawmakers wanted to promote agriculture by providing access to CBD, a non-intoxicating substance. However, manufacturers developed toxic solvents to convert CBD into THC. They can contain more harmful chemicals and be potent than conventional marijuana.
Colorado is one of the first States to ban the sale in the state of hemp-derived intoxicating products. Manufacturers are allowed to export these products. Industry sources indicate that certain companies in Colorado are still using cheaper hemp-derived distilates to create vapes, edibles and other products. Jordan Wellington from the marijuana lobby described the current situation at the meeting as “fully metastatic,” implying that it is affecting approximately half of market. The widespread use of illicit hemp materials and other illegal substances, he said, is forcing compliant manufacturers into compromising standards. This poses a serious threat to the integrity of the marijuana industry.
Regulation Oversight Challenges and Enforcement
Colorado’s tracking system “seed to sale” was designed to track marijuana sales and production from the cultivation stage to retail. Its goal was to ensure safety and prevent product diversion. MED officials admitted at the March meeting, however, that this system was not effective in deterring fraud. Lambert stated that “the extent of suspicious transaction in the system would probably blow your mind,” showing substantial data anomalies which hinder proactive enforcement.
It is believed that the alleged fraud committed in reporting sales transactions has also resulted in the loss of millions in marijuana excise taxes for state. The manufacturers declared nominal sale prices of as little as one penny per pound or even a dollar for unprocessed cannabis, which would otherwise sell at more than $600 per kilogram on the open markets. This is due to the limited resource of 26 investigators who oversee approximately 2,100 cannabis businesses.
Legislative efforts and roadblocks
MED published a notice following internal discussion, indicating that it would take legal action to stop companies from selling marijuana-like hemp products and they will also pursue emergency rules. These rules are not in place yet, and reforms broader than this failed to pass during the last legislative session.
The Cannabis Consumer Protection Act was introduced by state senators Kyle Mullica (left) and Marc Snyder (right). This ballot initiative proposed an overhaul of marijuana product testing in Colorado, aligning it with other states.
- Obligation of private labs to collect samples of marijuana for testing prior to market.
- Colorado Department of Public Health and Environment will take on the responsibility for safety and testing, which was previously under the Marijuana Enforcement Division.
- The funding of a program to allow regulators the opportunity to collect marijuana samples and tests them at random from dispensaries.
The bill failed due to disagreements between industry groups over the proposed tax for highly concentrated THC, and also because consumer safety organizations were unhappy with the proposal. They wanted stricter limits on potency. Jared Polis, the Governor of Colorado, also voiced concerns over potential overregulation. Senator Snyder stated that he would revisit the topic in 2027. He wants to equip regulators with better tools to fight fraud on the regulated marketplace.
Disclaimer: The information contained in this article is not intended to be a substitute for medical advice. Hemp Gazette is not a medical provider and does not offer diagnoses or treatment plans. Consult a healthcare professional before you make any decision regarding your health. Therapeutic Goods Administration of Australia has not evaluated statements about the therapeutic benefits of cannabinoids, hemp or cannabis. TGA regulations allow Australians to access medical cannabis through prescription.