Delta-8 and similar hemp products could be regulated and taxed under new SC proposal

Delta-8 THC hemp products have boomed in popularity, becoming ubiquitous in gas stations and vape shops nationwide, including in South Carolina. Now, a state lawmaker wants South Carolina to regulate and tax the products. A hemp lawyer thinks it’s not a bad idea.

Hemp can be used to make fiber for textiles, but it can also be used for the cannabinoids, which are types of chemicals, it contains. Whether and how products boasting those chemicals can be sold in South Carolina has been a point of contention among law enforcement, hemp advocates and business owners for years.

Rep. Rosalyn Henderson-Myers, D-Spartanburg, has filed a bill for the upcoming legislative session that seeks to create regulations around delta-8 and similar products, which are often sold at gas stations and vape shops, sometimes despite warnings from law enforcement that the products are considered illegal in the state. Henderson-Myers said the intention of the bill is to prevent children from accessing the products.

Henderson-Myers said she was surprised to find that there are no specific regulations for hemp-derived cannabinoid products and said she believes it was an oversight when the state legalized hemp. She said decided to sponsor the bill after parents came to her with concerns about students taking delta-8 gummies and getting sick at school.

“I felt there needed to be some restrictions and some guidance,” she said.

Hemp attorney Rod Kight said there’s a need for more hemp regulations nationwide, in part because hemp products are often treated as illegal.

“These products are not controlled substances in South Carolina. So the quote-unquote enforcement that we’re seeing is a misguided view of the existing law,” Kight said. “That’s why I think it’s important that a bill like this gets passed so it’s absolutely and unambiguously clear.”

Kight, who is based in North Carolina, represents a variety of hemp-focused businesses and works to respond to the rapidly changing legal landscape around hemp. One of his clients is Mike Sims, whose Columbia store Crowntown Cannabis was raided in January on claims that the shop was selling marijuana. Kight asserts Sims’ store was selling hemp-derived products and that the items were not illegal. But he said that situation is one reason why he supports a bill like Henderson-Myers’. He added that hemp-industry leaders generally support more regulation to keep products safe and the industry competitive.

What the bill would do

The proposed law would create a slate of new rules for the production and sale of delta-8 and other hemp products in South Carolina.

First, a person would have to be 21 years or older to purchase the cannabinoid products. The age restrictions are the main focus of the bill, and Henderson-Myers said it is meant to be narrowly tailored to that purpose.

The bill also seeks to create a tax for the products being sold by retailers, taxing the products at 5% of their sales price. The revenue from the tax would be used to pay for regulating the industry, according to the bill language.

Producers and retailers would have to be licensed by the state, and any hemp-derived cannabinoid product produced or sold in the state must be tested for pesticides and toxins and to ensure it contains only the legal amount of delta-9 THC.

The license would be in addition to other required business licensing. The annual licensing fee would be $500 for producers and $250 for retailers, according to the prefiled bill draft.

Products would also have to have a variety of safety labeling and be contained in child-resistant packaging.

Kight said the bill addresses the main components that most players in the hemp industry care about and agree with.

He also said he will be watching to see how the bill changes over time. He expects challenges not only from those traditionally opposed to legalizing cannabis, but also from the marijuana lobby, which Kight said sees hemp as a competitor.

A similar bill is being debated in North Carolina.

Kight said it would not be surprising to see small changes made to the bill that would make it more onerous for small businesses, and less effective for people who want to buy the products. He said he will be paying attention to the taxation element, and to any quantity caps being proposed as the bill moves forward.

Henderson-Myers said she does not anticipate pushback on the bill because it is intended to prevent children’s access to the products. The bill was prefiled Nov. 16 and referred to the state House committee on medical, military, public and municipal affairs. Henderson-Myers has served in the S.C. House of Representatives since 2017.

What are these hemp products?

Some of the confusion over delta-8 and similar products comes down to how the law treats the cannabinoids found in hemp.

Delta-9 THC is the most famous of these cannabinoids and is most responsible for the psychoactive properties of marijuana. Hemp can legally contain a small amount of delta-9, but it also contains more than 100 other cannabinoids. Those cannabinoids can be extracted and used in a variety of formats, including in vape pens, as edible gummies, or sprayed over dried hemp flower.

The cannabinoid delta-8 THC naturally occurs in small amounts in both hemp and marijuana and has milder psychoactive properties than delta-9.

While THC — tetrahydrocannabinol — is a controlled substance in South Carolina, the 2018 federal Farm Bill and South Carolina’s 2019 Hemp Farming Act both permit a small amount of delta-9 THC to be present in hemp. But those laws don’t address other THC variants such as delta-8 or delta-10.

Many in the hemp industry argue that because the law does not forbid other variants of THC, including delta-8, it’s not illegal. Advocates argue further that if hemp is legal, anything derived from that hemp is also legal. Kight said many people in the hemp industry do support more regulation.

The U.S. Drug Enforcement Agency has said delta-8 derived from hemp is not a controlled substance, but synthetic delta-8 is a controlled substance. A federal court in California has agreed that hemp-derived delta-8 is legal under federal law, in part because federal statute “is silent with regard to delta-8 THC.”

The South Carolina Attorney General’s Office has taken a different view.

“Our office agrees with SLED’s essential analysis that the Hemp Farming Act did not legalize THC except as defined in lawful hemp,” the attorney general’s 2021 opinion reads. “If the General Assembly intended to undertake legalization of THC on the scale that the industry posits, they would have done so expressly and unambiguously.”

While the opinion has been out since late 2021, retailers selling delta-8 and similar products have seen inconsistent responses from law enforcement. In February, Columbia police said they would start cracking down on delta-8 products. But months went by, and most stores were still selling them. Then in September, the police department sent letters to more than 30 stores warning them that if they are still selling delta-8, they are violating the law.

Henderson-Myers said she believes the South Carolina 2019 Hemp Farming Act legalized the hemp products and said because of that she wants a law that ensures high school-aged and younger students can’t buy them. She added that she believes the Legislature will need to have a conversation with law enforcement to clarify the legality of hemp products.

Editor’s note: This article has been updated with comments from the bill’s sponsor, Rep. Rosalyn Henderson-Myers.