Upcoming bill aims to make THC drinks more available in Colorado bars, restaurants

Mon, Mar 30

Key Points

A proposed Colorado bill aims to increase the allowable THC content in hemp-derived beverages from 1.75 mg to 10 mg per serving and remove the current CBD-to-THC ratio requirement, expanding their availability in bars, restaurants, liquor, and grocery stores.
The legislation is supported by some lawmakers and industry advocates who see it as a way to provide consumers more choices, boost state tax revenue by an estimated $30 million annually, and keep Colorado competitive in the hemp beverage market.
The bill faces opposition from marijuana industry representatives and youth advocates who warn it could bypass existing marijuana regulations, create unfair advantages for hemp companies, and increase youth exposure to intoxicating products in everyday settings.
The regulatory framework would place hemp-derived THC beverages under agricultural and liquor enforcement agencies rather than the Marijuana Enforcement Division, raising concerns about inconsistent oversight and calls for uniform testing and safety standards across hemp and marijuana products.

Hemp-derived beverages that offer a cannabis buzz could become more widely available at bars and restaurants in Colorado if a planned bill passes the state legislature.

The bill, expected to be introduced in the coming weeks, would change state laws by increasing the amount of tetrahydrocannabinol (THC) permitted in hemp drinks, making them more attractive to hospitality venues, liquor and grocery stores. The bill will be sponsored by Sen. Julie Gonzales and Reps. Matthew Martinez and Steven Woodrow, according to the Colorado Hemp Beverage Coalition, a newly formed lobby group that helped draft the language.

Right now, hemp-derived THC beverages are permitted for sale in bars and liquor stores, but only if they contain 1.75 milligrams of THC or less per serving, and only if the ratio of CBD to THC is at least 15:1. That’s why you may see brands like Cann seltzers at your local liquor store or sometimes even in bars.

The soon-to-be proposed beverage bill intends to get rid of the CBD ratio requirement and increase the THC limit to 10 milligrams per 12-ounce serving. Brian Vicente, founding partner at cannabis law firm Vicente LLP and one of the architects of the bill, expects drink manufacturers to offer even lower doses, such as 3 to 5 milligrams per serving. Any product exceeding 10 milligrams would need to be sold at dispensaries.

Vicente said loosening hemp restrictions will give consumers more choices when they are out on the town and also generate tax revenue at a time when Colorado faces a budget shortfall. Additionally, Vicente believes this will help Colorado remain competitive with other states where hemp-derived products have proliferated.

“We think it could bring in about $30 million in tax revenue to the state annually,” said Vicente, whose firm was a founding member of the Colorado Hemp Beverage Coalition. “We were the first state to legalize marijuana and regulate it, and since that time we’ve been lapped by a number of other states that have really embraced beverages.”

Rep. Woodrow agrees. “We’ve found that as industry has matured, so has the consumer base, and folks want an alternative to smoking and vaping. Of course, we have edibles people can ingest, but more and more folks are interested in THC beverages,” he said.

The bill, however, is facing pushback from the marijuana industry and youth advocates. One Chance to Grow Up, a youth drug prevention organization, expects it would lead to the expansion of intoxicating products into everyday locations where Colorado kids live, play and shop for snacks.

“This isn’t just a policy shift. This would be a fundamental change threatening the landscape of our communities,” Henny Lasley, One Chance’s executive director, said in a statement.

Chuck Smith, CEO of marijuana industry trade group Colorado Leads, believes the proposed legislation will enable hemp companies to circumvent the state’s regulated marijuana manufacturing and compliance systems, including its consumer safety measures and taxes.

“The bill, in essence, would bypass the entire regulated industry that we’ve all worked so hard to build since 2012,” Smith said. “I’m all for opening up and expanding the markets and certainly bringing a low-dose beverage to the average consumer that doesn’t have a relationship with cannabis or doesn’t frequent dispensaries. But let’s do it in a controlled fashion where it comes through a regulated framework that’s been built for almost 15 years.”

To understand why the two cohorts that specialize in making THC products are at odds, it is important to first understand the distinction between marijuana and hemp.

Both hemp and marijuana are cannabis plants, but they are regulated differently because hemp is typically low in THC, the mind-altering cannabinoid that’s known for producing a “high,” while marijuana has an abundance of the cannabinoid. Both at the state and federal levels, hemp is regulated as an agricultural commodity while marijuana is regulated as a drug.

Though marijuana is still considered a Schedule I controlled substance, the 2018 Farm Bill removed hemp from the Controlled Substances Act and legalized its cultivation nationwide. That enabled the proliferation of cannabidiol (CBD) products, and permitted hemp to be used in manufacturing non-consumable products like clothing, building materials and bioplastics. However, even though hemp is defined as a low-THC variety of cannabis (less than 0.3% per plant), the cannabinoid can be extracted and concentrated into doses that cause intoxication. Manufacturers also use chemical processes to convert CBD from hemp into THC.

Federal legalization via the Farm Bill effectively created a loophole for intoxicating hemp drinks, edibles, vapes and more to reach every corner of the U.S., including markets where marijuana remains illegal. That loophole is expected to be closed when a nationwide ban on most hemp-derived products takes effect later this year.

As it stands in Colorado, the vast majority of THC products are only permitted to be sold in dispensaries. Perhaps the only exceptions are hemp products that meet the CBD-to-THC ratio and top out at 1.75 milligrams of THC. Like marijuana products, those are also served only to adults 21 and up.

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Given that the bill aims to expand the availability of THC drinks in venues that traditionally serve alcohol, it’s likely hospitality staff would be required to take training to understand the cannabinoid's effects and how not to overserve someone, Vicente said. It would allow THC beverages in the Colorado marketplace even if they are banned federally, he added.

From a regulatory standpoint, Vicente expects hemp testing to remain under the purview of the Colorado Department of Public Health and Environment and grant additional power to the Department of Revenue's Liquor Enforcement Division to oversee retail sales. Oversight would not involve the state's Marijuana Enforcement Division.

That seems unfair to Smith, since the law would structure the same cannabinoid under two different regulatory standards.

"Even an out-of-state hemp company could easily buy a manufacturing license and participate in the same regulated marketplace we participate in and then work together to expand that into the alcohol distribution model they are portraying," he said. "They don't want to do that because they don’t like the regulations, they don't want to have to pay the taxes. They basically want an unfair advantage against folks that have put blood, sweat and tears to build this industry from scratch."

In Rep. Woodrow's view, legacy marijuana producers are not being left out of the equation. The average consumer does not delineate between hemp and marijuana in the same way regulations do, he said, and there's opportunity for marijuana producers to enter the hemp space, as well.

"I would anticipate growers and manufacturers are paying very close attention to consumer behaviors and preferences. Instead of denying that, we should do our part, if we can, to facilitate it in a safe and responsible way," he said.

Even though THC beverages have long been available in Colorado dispensaries, the category hasn’t taken off because pot shops are not equipped for storing and showcasing a robust selection of bottles and cans. There usually isn't room for the coolers or large displays you typically see at retail stores, or enough space to store cases, Smith said.

"Dispensaries just aren’t designed for that," he said. "So, as much as an accessible category that is for consumers, operationally, the way the regulated dispensary environment is, it’s very difficult."

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Elsewhere around the country, hemp-derived beverages have boomed in popularity because they are often available where customers are accustomed to buying drinks, Vicente said. In Minnesota, for example, THC beverages have bolstered craft breweries amid declines in beer sales.

But locally, alcohol and THC are rarely permitted to co-mingle. Cannabis lounges are prohibited from selling beer, wine and liquor, and restaurants and bars serving alcohol are prohibited from selling marijuana products. While breweries are permitted to make hemp drinks on the same premises where they make beer, the products themselves cannot be comingled, said Gabi Johnston, spokesperson for CDPHE.

"A brewery would need to maintain separate production streams for its beer and its hemp products," she said.

Matt Baumgartner, CEO of Keef Brands, sees both sides of the hemp-derived beverage debate. Founded in 2010, Keef Brands is one of the most well-known THC-infused drink manufacturers, and it uses both marijuana and hemp. Though it began by creating products for medical marijuana patients in Colorado, the business has expanded to include hemp beverages, which now make up about 50% of Keef Brands business, Baumgartner said.

The company typically sells hemp drinks in states that do not have legal recreational cannabis markets, and marijuana-derived drinks in states like Colorado that do. Baumgartner sees potential for both to co-exist locally, likening it to how beer used to be available.

“Kind of like (getting) the 3.2% beer at convenience stores and you can get your full-strength beer at a liquor store, if we want to look at it that way,” he said. “Beverage is still a very small percentage – 2% – of total cannabis sales in dispensaries in Colorado. If it’s beverages only and they are taking gummies and flower out of it, which they are, it can only help boost cannabis beverage awareness to the dispensary level.”

Still, Baumgartner believes hemp products should be tested the same way and according to the same standards that marijuana products are to ensure they are safe for consumption and that the dose is accurate.

“If the same testing properties are in place, I think it should level the playing field,” he said.

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