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This newsletter contains drastically lower THC than advertised
THC, THC, THC
Most financial newsletters will be starting with a different acronym today. In cannabis, however, companies can’t get banked anywhere, so they’re unlikely to be impacted too much by the collapse of SVB (Silicon Valley Bank). Yay?
Anyway, we’re talking about the biggest acronym going around cannabis at the moment: THC.
I mean, yes, THC is always a big topic in the industry — Tetrahydrocannabinol is the main psychoactive chemical in cannabis, one of 113 known cannabinoids in the plant.
But THC, specifically the THC % of the end consumer product, has become an unusual source of controversy among industry insiders and politicians. Starting with the latter…
New York proposes caps
Does anyone believe a single stakeholder in the New York cannabis industry has ever taken a hit? It seems less and less likely, given the sometimes nonsensical proposals for the setup and regulations of the nascent legal market.
The latest is a proposed potency cap in the adult-use market. Here’s Sean Teehan with more:
In text justifying the proposal, the bill’s sponsor Assemblymember Phil Steck cites a 2019 study of cannabis-related hospitalization at a Denver hospital, which found numbers of cases of adverse effects increased over the five years since that state legalized adult-use cannabis – although, the study – published in the Annals of Internal Medicine – doesn’t appear to differentiate between weed from the regulated and unregulated markets.
Assemblymember Steck did not respond to requests to his office for an interview for this story.
However, several cannabis industry stakeholders say Steck’s proposal to cap THC concentration in flower products at 15% and all other cannabis products at 25% would be immensely disruptive to the market, and demonstrates confusion about the industry.
“I feel that it is very out-of-touch,” said Brittany Carbone, co-founder of Tricolla Farms, which holds an Adult-Use Conditional Cultivator license. “I think it shows a fundamental lack of understanding of cannabis products, the cannabis market, the cannabis consumer, and overall operations across the entire supply chain.”
Agreed! For starters, as the article points out, that 2019 study primarily identifies cannabis hyperemesis syndrome (a real but rare disorder) as the cause of vomiting. Also, most cases were attributable to edibles that were unlikely to have come primarily from the legal adult-use market; synthetic products may ultimately be to blame, which is beside the point for New York’s market.
The point is that consumers should be allowed to purchase higher potency products — just look at the alcohol market. If I wanted to, I can buy an extremely potent bottle of liquor in any store; moonshine, anyone? And there are legitimate consumer preferences and tastes behind that. You might sip whiskey as an after-dinner drink, or mix grain alcohol in a fruity cocktail that will drastically lower the final potency.
So why try to impose potency limits on weed? Is there any better advertisement for sticking with your plug than ‘the legal market is only going to sell mids.’
Besides, people like mids! Look to the alcohol market again. We’ve talked about Bud Light before; there is a reason it is the top-selling beer in the US, despite its reputation as being essentially water. In this newsletter’s opinion, obsession with THC percentages is a novelty phenomenon, something that will wane as product variety increases and consumers become more informed.
But the crux of the issue is, as Brittany put it, a ‘fundamental lack of understanding of cannabis products,’ specifically the products that are available today. Why is that? Because most of the flower products that you see on the shelves in any market will have percentages higher than 15%. Just look at Canada…
Here’s Kieran Delamont at StratCann with a piece on why “classic” strains are getting harder to find in Canada:
One cultivar, Tangbreath, won several awards; still, the OCS refused to list it, he says, because its THC numbers weren’t high enough. “She comes in at a whopping 15 to 18 percent THC, but hits like 25 percent.”
For consumers, this means that some of cannabis’ most classic strains are either being offered in new, high-THC forms—or not at all.
“With a lot of the classics, it dials back that THC,” Wilson says. “You get to see more of what that THC is about. It strips off a lot of that other stuff, and allows the plant to shine through.”
Officially, wholesale buyers like the OCS say there is no such threshold. “In the last two product calls and needs bulletins, the OCS has not called for or required submitted products to be high in THC, but in contrast has called for products with more CBD and Balance offerings,” an OCS spokesperson says. “Our assortment decisions reflect demand from our customers and the marketplace, and we do see consumers continue to prefer higher THC products.”
Whether official or not, the reluctance of buyers to take on mid-range THC products—anything from 15 to 20 percent THC—is a much discussed factor in today’s cannabis market.
Few, if any, wholesale buyers will admit to it, but growers report that there is, effectively, a threshold of around 20 percent THC. I asked Wilson, is this rumoured threshold really enforced? “It is, of course it is. Of course it is.” Any lower, and you’ll struggle to get listed. That, in turn, influences the kinds of decisions growers are making.
The OCS is the Ontario Cannabis Store, the government-owned wholesaler in Canada’s largest provincial market. If you’re a grower in Ontario, you have to sell to them, and they’re (unofficially) not buying anything below 20%. New York wants to cap it at 15%?!
That’s a fundamental lack of understanding of the market, all right. But there’s another element of the controversy that will of course emerge when talking about official or unofficial caps and floors on THC percentages…
Here’s Brad Racino with a piece highlighting the inaccuracies consumers often see on the shelves:
NY Cannabis Insider bought the eight highest-potency strains of legal recreational cannabis available in New York State on Feb. 24, drove them straight to a state-certified laboratory, placed them in anonymized Ziploc bags and submitted them for potency testing.
What came back has kicked open a hornet’s nest within the NY cannabis ecosystem and led to a regulatory policy change within the past 24 hours that affects every cannabis grower, processor and consumer in the state.
That’s because our lab results, which arrived on Friday, showed that the majority of the best-selling weed available in the nascent marketplace contained drastically lower THC than advertised:
There clearly cannot be a productive conservation on any of this if we can’t even rely on the percentages brands advertise. We won’t get into the specific methods of testing or the motivations of the labs and their brand customers in any of this; it can get complicated, and every market is a bit different. What you need to know is that these testing challenges — or deliberate misinformation campaigns — are being played out all across the industry, frustrating consumers and politicians alike.
Regardless of your stance on potency and what it ultimately means, this will continue to be a talking point as new markets and regulations roll out over time.
This newsletter, for what it's worth, is betting on the mids.1
Not financial advice!