ight years ago, Jay Barrios sold $20,000 worth of Tesla stock to open a vape shop near Ft. Lauderdale. He quickly pivoted from slinging nicotine to CBD, the non-psychoactive compound in cannabis. At one point, he kicked himself after realizing he would’ve had a quarter of a million dollars if he just held onto his Tesla shares. But last year, his company No Cap Hemp Co hit pay dirt: he launched a Delta-8 THC brand that sells vaporizers, edibles and flower that give users a legal high, thanks to a legal loophole.
Legal High: The latest trend in the hemp industry is Delta-8 THC, a psychoactive cannabinoid that can be infused in edibles, turned into vaping oil and sprayed on hemp flowers.
Delta-8 THC is having a moment as it’s quickly become the most exciting, and most intoxicating, product in the hemp industry. A cousin compound to Delta-9 THC, the main ingredient in cannabis, Delta-8 is being sold across the country thanks to an exception in marijuana laws made by the 2018 Farm Bill that legalized cannabinoids derived from hemp. Barrios is part of a growing group of entrepreneurs getting rich while they can.
For now, Delta-8 products can be found seemingly everywhere outside of legal cannabis dispensaries: gas stations, head shops, bodegas. But it might not be for long. Lawyers in the cannabis industry warn that it’s a grey area that will likely change and hemp industry trade groups are against the sale of Delta-8.
“This is nerve-racking,” says Barrios, who is 33 years old. “We have lawyers working around the clock. Even then, I still lose sleep at night.”
Barrios might be losing sleep, but he’s making money. Sales at No Cap Hemp Co. have jump 200% every month for the last year and he says he’ll hit $10 million in sales by 2022. He sells his products in 38 states and is headquartered in Davie, Florida, where his business is permitted under the state’s hemp and food production laws. Despite Florida having a large, regulated medical marijuana market, Barrios, is all in on hemp.
“Hemp is the future, bro,” he says. “I see hemp and bitcoin side to side right now.”
The Delta-8 THC market might not be as hot as crypto, but there are signs that Delta-8 could take a bite out of other trends like CBD or nicotine vaping.
On a Saturday night inside Noble’s Smoke Shop down the shore in Point Pleasant, New Jersey, a man buys a package of Delta-8 edibles for his girlfriend and a moment later, a woman in her twenties grabs two pre-rolled hemp joints that have been dipped in Delta-8 oil and dusted with kief. The smoke shop is not a licensed dispensary, but the owner, Paul An, says the Farm Bill made all the products on his shelves legal.
“Delta-8 products sell better than Juul,” An says, referring to the nicotine vaporizer that became popular with teens and young adults.
How High: Delta-8 THC gives users a mellower high than Delta-9 THC, the main compound in marijuana.
he hemp industry, in general, prides itself as its own distinct industry, separate from legal cannabis. Marijuana and hemp are the same plant, but hemp is defined as a marijuana plant with less than .3% Delta-9 THC. Hemp is used to make everything from clothing to food to CBD. But many in hemp draw the line when it comes to psychoactive effects.
Jonathan Miller, a lawyer for the U.S. Hemp Roundtable and the U.S. Hemp Authority, says the trade groups will be speaking with the Food and Drug Administration and the Drug Enforcement Administration about the differences between CBD and Delta-8. He realizes that companies selling Delta-8 online and through convenience stores are adhering to the Farm Bill as written, but he views it as a loophole.
“We’re alarmed by the rise of products marketing themselves as hemp and as intoxicating,” says Miller. “These products might be legal right now, but we believe they go against the spirit of the law.”
Despite following the exact language of the Farm Bill, Barrios says about $10,000 to $50,000 worth of product gets turned over to law enforcement each month. A package will break open in transit and FedEx or UPS will turn over what looks like weed to the local cops.
Josh Manning, who runs Snap Dragon Hemp, a hemp grower and processor licensed by the state of Tennessee, says Delta-8 has been a game-changer for his Chattanooga-based business. Last year, Delta-8 was 20% of his sales and he brought in about $60,000 a month. Now Delta-8 makes up 80% of his sales and he makes more than $200,000 a month.
Before opening his storefront in downtown Chattanooga, Manning invited the local police to come by and test his hemp so they could see how he’s abiding by the state’s laws. “I told them: ‘It’s going to smell like the real thing, it’s going to look like the real thing, but we won’t push the THC limits,” he says.
Manning believes his company is compliant but says there are bad actors flaunting the rules. “Regulations are likely to come down—there are too many gas stations selling it,” says Manning.
America’s Most Blunted: Most Delta-8 flower products are hemp nugs that have been either dipped in Delta-8 oil or sprayed with a Delta-8 isolate.
he 2018 Farm Bill explicitly legalizes all hemp-derived cannabinoids, extracts and derivatives with no qualifications. At first pass, this seems like Delta-8, so long as it’s derived from hemp, is 100% legal under the bill. However, there are three issues that create ambiguity.
First, members of Congress passed the bill with the idea that hemp products were benign and non-intoxicating, Delta-8 is intoxicating.
The second issue is that Delta-8 is included in the DEA’s list of controlled substances along with Delta-9.
And the third issue, which might create the greatest argument against hemp-derived Delta-8, is that the compound doesn’t appear in hemp with enough volume to extract and use. Delta-8 products are made synthetically from CBD that had been extracted from hemp and put through an isolation and distillation process. That synthesis, Garrett Graff, a lawyer and managing partner at cannabis-focused Hoban Law Group, creates a “complicated, legal mine field.” Graff also says that the intent around a product—is it meant to get a user high or ease pain, also presents an “unresolved, ambiguous portion of the law.”
Lifted Made, a Zion, Illinois-based Delta-8 company, is one of the largest companies in the hemp-derived cannabinoid industry and is known for its brand Urb. Nick Warrender, who founded the company in his parents’ house six years ago as a nicotine vape company, pivoted to Delta-8 almost two years ago. Lifted Made is traded over-the-counter, has a $50 million market cap and generated $4.1 million in revenue in 2019. It ships Delta-8 edibles, vapes and flower to most states in the U.S. and he’s confident that he follows the law exactly as written.
“The way [the federal government] defines THC is very specific. It’s not very grey. It’s black and white,” he says. “From a scientific standpoint, cannabis and hemp are the same plant, but under the law they are completely different things. It’s rather ridiculous.”
Warrender says Lifted Made only synthesizes Delta-8 from CBD derived from hemp, so he’s operating within the guidelines of the Farm Bill.
till, many cannabis investors see Delta-8 being sold outside the legal cannabis industry as an unnecessary risk. “You’re playing a game around uncertainty, which we don’t need to do anymore,” says Morgan Paxhia, an investor who runs a $150 million cannabis fund with his sister Emily Paxhia. “The last thing you need is for the government stepping in.”
Others in the legal cannabis industry view entrepreneurs selling hemp-derived Delta-8 products outside of state licensed dispensaries as a ticking time bomb. Dennis Hunter, the cofounder of Santa Rosa, California-based cannabis company CannaCraft, knows how intense the government’s wrath can be. In 1998, the feds raided Hunter’s marijuana grow and he spent six years in prison.
“I think there are Delta-8 companies that have a good legal argument, but they might find themselves in court and shut down,” he says. “I don’t think the FDA and DEA believe they have a good argument.”
When ask what will happen to his business if Delta-8 is banned, Barrios says he’ll find a way to bring another legal cannabinoid to market.
“They can make Delta-8 illegal all they want. It’s not going to stop our industry,” Barrios says. “We’re going to keep innovating and coming out with legal forms of hemp. This helps people, bro. This isn’t for getting high.”
For now, Delta-8 companies not doing business in the regulated cannabis industry are walking a legal tight rope made from hemp. But Delta-8 is just the first minor cannabinoid to make a big splash.
“We’re also doing Delta-10, it’s like a super sativa,” Warrender says. “It blasts you rather nice.”
I am a staff writer on the vices beat, covering cannabis, gambling and more. I believe in the many virtues of vices. Previously at Forbes, I covered the world’s richest