The North Carolina Senate had put forth a bipartisan piece of legislation, SB 265, earlier in the session that was progressive and business-friendly. SB 265 would have dramatically overhauled North Carolina’s state hemp regulations. Although the legislation would have required additional compliance measures (i.e., labelling and product testing), overall the proposed regulations were favorable to the hemp industry.

 Unfortunately, SB 265 did not pass by the crossover deadline (e.g., the last day for bills to be approved by both the NC House and Senate and subsequently sent to the governor for passage), and most onlookers thought new hemp regulations would not be forthcoming for this session of the NC legislature. 

Earlier this session, the North Carolina House also passed a relatively straightforward two-page bill that prohibited the use of Delta 8 and Delta 9 products on school grounds, HB 328. The Senate rewrote that bill, but kept the school grounds portion of the proposal. In the most current version of HB 328, the bill incorporated many provisions of SB 265, but with some very substantial differences, which, if passed in its current form, would dramatically impact the manufacture, sale and distribution of hemp products in North Carolina. 

Hemp-Derived Consumable Products

Both bills specifically define:

Hemp-derived cannabinoid- any phytocannabinoid found in hemp, including delta-9 tetrahydrocannabinol (delta-9 THC), tetrahydrocannabinolic acid (THCA), cannabidiol (CBD), cannabidiolic acid (CBDA), cannabinol (CBN), cannabigerol (CBG), cannabichromene (CBC), cannabicyclol (CBL), cannabivarin (CBV), tetrahydrocannabivarin (THCV), cannabidivarin (CBDV), cannabicitran (CBT), delta-7 tetrahydrocannabinol (delta-7 THC), delta-8 tetrahydrocannibinol (delta-8 THC), or delta-10 tetrahydrocannibinol  (delta-10 THC). This term also includes any synthetic cannabinoid derived 1 from hemp and contained in a hemp-derived consumable product. 

Hemp-derived consumable product- a final form hemp product that is intended for human ingestion or inhalation that contains a delta-9 THC concentration of not more than three-tenths of one percent (0.3%) on a dry weight basis, but may contain concentrations of other hemp-derived cannabinoids, in excess of that amount. This term does not include hemp products intended for topical application or seeds or seed-derived ingredients that are generally recognized as safe by the United States Food and Drug 9 Administration (FDA).

Serving– a quantity of a hemp-derived consumable product reasonably suitable for a person's use in a single day.

Most importantly, HB 328 defines “prohibited hemp-derived consumable product” as a hemp product that contains concentrations of hemp-derived cannabinoids other than delta-9 THC.

The hemp derived cannabinoids which are delineated in SB 265 (e.g., including any phytocannabinoid found in hemp, including delta-9 tetrahydrocannabinol (delta-9 THC), tetrahydrocannabinolic acid (THCA), cannabidiol (CBD), cannabidiolic acid (CBDA), cannabinol (CBN), cannabigerol, cannabichromene, cannabicyclol (CBL), cannabivarin (CBV), tetrahydrocannabivarin (THCV), cannabidivarin  (CBDV), cannabicitran (CBT), delta-7 tetrahydrocannabinol (delta-7 THC), delta-8 tetrahydrocannibinol (delta-8 THC), or delta-10 tetrahydrocannibinol) would be prohibited for manufacture, distribution, marketing or sale in North Carolina.

Sales and Transfer Restrictions and Testing Requirements on Consumable Hemp-Derived Products

Both SB 265 and HB 328 require purchasers of hemp-derived consumable products to be at least 21 years of age. Both bills contain similar, although not identical, provisions regarding sales restrictions and corresponding penalties for sales in violation of the regulations, along with sales and transfer restrictions on producers. Likewise, both bills contain provisions associated with the unlawful manufacture and distribution of hemp-derived consumable products.  Additionally, both pieces of legislation require testing by the manufacturer prior to distribution. HB 328 expounds on the exact substances that are not permissible for inclusion in hemp-derived consumable products. 

Of note, HB 328 does not contain “compromise” language by which the Alcohol Law Enforcement Division of the Department of Public Safety (ALE) could accept an offer in compromise to pay a penalty in lieu of revoking the seller’s or manufacturer’s license. 

HB 328 also contains a unique provision which also makes it a Class A1 misdemeanor for any person who possesses a prohibited hemp-derived consumable product.

Additional Requirements and Restrictions for Packaging, Labelling, and Advertising

Packaging, labeling and advertising requirements and restrictions are comparably spelled out in HB 328 and SB 265. The requirements are common-sensical and are being observed already by most players in the hemp industry. 

However, there are significant differences with respect to the serving sizes of: non-liquid ingestible products (i.e., gummies); liquid ingestible products (ie., tinctures or beverages); and inhalable products for vaporization (i.e., HDC vapes). 

HB 328 permits no more than 10 mg of delta-9 THC in non-liquid ingestible products, whereas SB 265 permits up to 75 mg in the aggregate of delta-9, delta-10, delta-7 and delta-8 THC.  Regarding liquid products, HB 328 permits up to 10 mg of delta-9 THC and SB 265 would have permitted up to 25 mg in the aggregate of delta-9, delta-10, delta-7 and delta-8 THC.  Finally, HB 328 permits no more than 3 ml of delta-9 THC in vape products, whereas SB 265 would have permitted up to 5 ml in the aggregate of delta-9, delta-10, delta-7 and delta-8 THC.

Further, SB 265 contained a Safe Harbor provision, a "Safe Harbor Hemp Product," which permitted the manufacture and storage of hemp-derived consumable products that are designated for export from North Carolina but are not permitted to be sold or distributed in North Carolina. HB 328 does not contain a similar provision. 

Licensing 

SB 265 would have only required one license for manufacturing, distributing, and selling hemp-derived consumable products, and had a graduated fee schedule based on the applicant's gross from the year prior to the submission of an application. In contrast, HB 328 requires a license for each individual activity, and the fees are considerably higher than those proposed in SB 265. Development of applications, licensure, adoption and development of rules and collection and remittance of fees.

Of note, HB 328 contains a wholly new concept: the requirement for ALE to develop a seed-to-shelf track and trace for hemp-derived consumable products, with scant information as to how the program would be implemented or enforced. 

Enforcement

Both bills contemplate ALE as the regulatory body responsible for enforcing the hemp regulations for the State of North Carolina. SB 265 though would have required ALE to report violations to the North Carolina Department of Revenue, and required high-performance liquid chromatography or a method to ensure the cannabinoids are not modified during the testing process. HB 328 does not contain similar provisions. Further, HB 328 does not directly discuss the disposition of seized hemp derived consumable products after a civil forfeiture but does address criminal forfeiture. 

Kratom

HB 328 would require kratom to be added as a Schedule VI Controlled Substance pursuant to the NC Controlled Substance Act G.S. 90-94

Kratom is defined as any quantity 3 of mitragynine or 7 hydroxymytragynine or both, extracted from the leaf of 4 the plant Mitragyna speciosa.

Kratom would be included in the same category as marijuana and synthetic cannabinoids, and thus unsaleable in the State of North Carolina. 

Conclusion

The North Carolina Legislature has indicated it wishes to pass all “policy bills”, which would include HB 328, prior to the summer recess in July. As reported by Clayton Henkel NC Newsline HB 328 won unanimous support Tuesday in both the Senate Health and Senate Finance Committees. The measure now moves to the Judiciary Committee as senators appears intent on fast-tracking the bill ahead of a floor vote.

We will continue to monitor HB 328 and provide you with any updates as they become available.