News Track: THC drink producers have mixed reactions to impacts of impending law

Over the last year, THC products have been popping up across Iowa: convenience stores, breweries, liquor shops, restaurants and even as an accessory on the shelves of retailers who specialize in other products.

The new hemp-based products, legalized federally in 2018 by the passage of the Farm Bill, became the only legal outlet for Iowans to access the psychoactive component that causes a high in cannabis or marijuana.

Hemp has less than 0.3 percent THC by weight. Cannabis or marijuana, whether sold in states that have legalized it for recreational use or sold under Iowa’s medical cannabis program, has more than 0.3 percent THC. What gives hemp-based products the ability to generate a high for users is its dosage — how many milligrams of THC it has.

But as the country continues to muddle through a patchwork of state-by-state cannabis legalization, the buzzing hemp-based market generated some confusion, too. Aside from labels, the hemp-based products legal in Iowa were virtually indistinguishable to the eye from cannabis products produced in states that have legalized them, including Iowa neighbors Minnesota, Illinois and Missouri.

With few regulations on the seltzers, sodas, candies and edible products, many voiced concerns about the new “wild west” market. Chief among concerns voiced by the public and producers were having no legal age limit for purchase, no cap on the number of milligrams a THC product can have and no uniform standards for packaging or labeling.

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What has happened since?

The mushrooming industry could soon be significantly regulated under a bill sent April 2 to Gov. Kim Reynolds for a signature.

House File 2605 would restrict the potency of THC products, ban sale to minors under 21 and change labeling standards in Iowa. It would also proactively prohibit the sale of alcoholic beverages containing THC, which do not currently exist in the Iowa commercial market.

The reactions from the companies who produce THC drinks are mixed, but skew toward disappointment and frustration.

At Climbing Kites, one of the biggest brands in the burgeoning market with a majority share owned by Big Grove Brewery, leaders say the measure would allow much of the status quo to continue for their line of hemp-based non-alcoholic seltzers.

“This (bill) doesn't impact Climbing Kites production with our beverage portfolio,” said Nick Iversen, brand manager of Climbing Kites.

Its line of products, which are already packaged at 10 milligrams or less THC, will simply need a change in labeling to comply with new regulations. For the 10-milligram mixed berry can, the producer’s strongest drink, the number of serving sizes in each can would be changed to accommodate the law’s cap of 4 milligrams THC per serving.

That flavor, which currently defines a serving size as 12 ounces on each can, could change the label to say that each can contains four smaller serving sizes.

“The amendments to the Iowa Hemp Act are reasonable, responsible, common sense policies around an emerging category that’s doing a lot of good for a lot of people in Iowa as well as small businesses across the state,” Iversen said. “It provides an opportunity for this category to grow and thrive and impact the economy.”

The company, which has been working to educate legislators and the public about its new line of hemp-based drinks, was registered as “undecided” on the bill by a lobbyist representing it. That declaration was in line with the vast majority of the lobbying presence that was either undecided or against the bill.

“We feel good with the outcome,” Iversen said. “The worst case scenario (was that) the state doesn’t allow this category to exist anymore.”

But other producers aren’t as optimistic about the changes.

River Bluff Collective, an Illinois-founded cannabis company that moved its headquarters to Dubuque in March, would be forced to make a sharp pivot after hedging its bets on THC product growth in Iowa. Before the opening this spring, the company had hoped to produce about 75 percent of its product lines in Iowa, instead of across the river in East Dubuque, Ill.

Under a new law, the company would be limited to selling non-intoxicating cannabidiol (CBD) tinctures and topicals, for now, as they reformulate most of their edible products. Most of their current hemp-based THC products, if the new law goes into effect, will be restricted to their Illinois and Wisconsin stores.

“Disappointed is probably the most appropriate word for how we are feeling. While we are always in support of regulations that make sense to protect businesses and consumers, the way this law is written will hurt the Iowa hemp industry and companies in a big way,” said Ali Gansemer, founder and owner of River Bluff Collective. “However, we do see a path forward.”

Before the legislative session was underway, the company had hoped to see age restrictions, cannabis testing standards and child-resistant packaging become law.

WLD WTR, a Minnesota-based brand that has grown rapidly in the Iowa market while partnering with Iowa establishments like ReUnion Brewery for new beverage lines, would have to find new homes for some of its most popular drinks started specifically for Iowa.

“Our 25 mg (drink) is our most popular beverage in Iowa. It’s cheaper to make, so the profit margins are better,” said Cameron Merritt, owner of parent company Wild Mind Ales. “That entire line would go away. We would have to find other markets for that."

For other products, WLD WTR would need to produce cans specifically for Iowa, where the proposed THC serving size cap would be different from the standard of 5 milligrams set in other states the company sells in.

Merritt also believes that the proposed law would significantly reduce competition in Iowa, particularly from larger national brands that don’t want to make different batches for the relatively small Iowa market.

While he remains upbeat about the brand’s potential for growth in Iowa, he said the uncertainty overshadowing the industry may have a chilling effect.

“To do this to an industry that’s just starting and will generate so much revenue for your state is absolutely shortsighted,” Merritt said. “All these stores that have contributed to the economic development of Iowa are going to go under because they can’t carry (enough) products now.”

Retail owner Mike Thorson, whose Don’t Worry Be Hempy shop has seen a boom in Cedar Rapids with a broad spectrum of products, is more worried about the affects the THC regulation will have on non-intoxicating products, like those designed around CBD.

He estimates that he would have to remove about 85 percent of his products — oils, balms and salves — based on current interpretations of the bill. With a 10-milligram THC cap on products, containers of a CBD oil with 30 milligrams of THC — a container meant to be used over time — would be outlawed.

“What they’ve passed is, to put it shortly, absolutely ridiculous. The majority of non-intoxicating products will be removed,” Thorson said. “Climbing Kites will be fine. But what am I going to do, offer one type of water?”

Finding manufacturers willing to cater to Iowa’s potential new law has been another concern.

“The water is so muddy, I can’t even find a manufacturer who wants to deal with it,” he said.

Comments: Features reporter Elijah Decious can be reached at (319) 398-8340 or elijah.decious@thegazette.com.