On Friday, Michigan regulators announced that the plan to allow hemp-derived cannabinoids to be converted into THC was being withdrawn. The announcement came only two days after the Michigan Marijuana Regulatory Agency (MRA) was renamed and given new authority over the state’s hemp industry under an executive order issued by Governor Gretchen Witmer earlier this year.

The MRA proposed that cannabis growers could sell their hemp to licensed marijuana processors. They would then convert CBD to THC using a laboratory process. The Cannabis Regulatory Agency announced Friday that it would reject the proposal.

“After receiving a significant amount of public comment regarding safety concerns and the lack of scientific and public health data related to the conversion process outlined in the proposed industrial hemp rules … the Cannabis Regulatory Agency (CRA) has withdrawn this request for rulemaking,” the agency announced on Friday.

The plan would have given Michigan’s hemp farmers a new outlet for their crop, opening the state’s regulated cannabis market to products containing hemp-derived THC. The proposal could have also created a better marketplace for licensed marijuana growers who are subject to more strict and costly regulations than those of hemp farmers.

Proposal to allow hemp THC is rejected by the cannabis industry

Reps from the licensed cannabis industry opposed this plan, which included Denise Policella of Cannabis Business Association of Michigan. This trade group is made up of cannabis processors, growers and retailers. MLive reports that the conversion of hemp CBD to cannabinoids produces unidentified byproducts, which may prove to be hazardous to users. The main focus of opposition to the group’s trade group has been on consumer safety concerns. However, MLive co-founder and the attorney acknowledged that there were other factors.

“Of course, there’s a business component to it,” said Policella.

Opponents of the plan also noted that Michigan’s small hemp farmers would probably not be the beneficiaries of the proposal. Instead, the hemp for THC conversion would come from larger and better-run operations outside of Michigan.

“The industrial hemp portion of this was never going to come from Michigan,” Policella said. “Michigan can’t compete with Kentucky and North Carolina on hemp. They’ve got a year-round growing season that we don’t have. They have 100,000-acre hemp farms that we don’t have in Michigan.”

After the proposed rules were announced earlier this year, Policella said the plan would “induce a huge amount of hemp importation from all over the country into Michigan, which will drop the price of marijuana and hemp down to almost nothing.”

“The profit margins on marijuana products will be so low that this will, in turn drive the dispensaries out of business,” Policella said in February.

Friday’s announcement that the proposal to allow hemp-derived THC products into the licensed cannabis market was made only two days after Whitmer’s executive order to reorganize the state’s cannabis regulators. In the reorganization the MRA changed to the CRA, taking over regulatory responsibility for retailers, processors, and distributors of hemp. Michigan Department of Agriculture and Rural Development (MDARD) will still oversee the cultivation of hemp in the state.

“This administrative change will help Michigan continue to lead the country in its approach to cannabis by growing the hemp and marijuana economies, creating jobs, and investing in local communities,” CRA Executive Director Andrew Brisbo said in a statement from the agency. “The new CRA will pick up where the MRA left off—continuing to establish Michigan as the national model for a regulatory program that stimulates business growth while preserving safe consumer access to cannabis.”