Conversion Oil proposition could devastate Michigan’s marijuana growers

Grasshopper Farms Outdoor Cannabis Grow

Grasshopper Farms Outdoor Cannabis GrowGrown In Magazine’s Mike Fourcher reports that new rules proposed yesterday by Michigan cannabis regulators have the potential to dramatically impact Michigan’s marijuana market:

Combined with a recent executive order issued by Gov. Gretchen Whitmer moving hemp oversight from the state’s Department of Agriculture to the newly named Michigan Cannabis Regulatory Agency (it remains the “Marijuana Regulatory Agency” until April 13, 2022), the new rules would create a regulated pathway for industrial hemp with high levels of the CBD cannabinoid to be processed into THC.

Much of the oral testimony at a hearing Wednesday morning held by the soon-to-be renamed Marijuana Regulatory Agency (MRA) was in favor of the new rules because it was taking into account a practice that is already widely conducted by the underground. And according to the MRA’s own advisors, CBD distillate is widely available and inexpensive.

“A significant amount of CBD isolate and CBD distillate has been produced, creating a surplus of CBD that is easily obtainable at very low cost throughout the country,” testified Aaron Duckworth, a member of the MRA Scientific Advisory Workgroup and vice president of research and development for Fluresh. “More recently the ability to synthesize or convert CBD into delta-9 or other minor cannabinoids…have come to light.”

“You’re buying CBD isolate with no THC present and you’re converting it in an acidic reaction to close the carbon ring on CBD, effectively changing the molecule from CBD to delta-9 THC,” explained Marx. “It is much less [expensive] because CBD is much cheaper. You can procure CBD with a much lower pricing system. You’re talking $200 for a kilogram of CBD isolate. You’re normally paying $7,000 per liter of THC distillate.”

…THC-cannabis growers, who have paid $40,000 per class C license in Michigan already have big sunk costs, says attorney Thomas Lavigne of Cannabis Counsel. “They might be priced out of the hemp market by hemp growers, in particular the outdoor growers,” he told Grown In after testifying Wednesday morning.

One person’s pricing crisis could be another’s bonanza, points out Michigan NORML executive director Rick Thompson.

“Our market is in its infancy. Our price structure is in a race to the bottom. We’re at $187 an ounce [for wholesale flower], according to the MRA right now. That is a difficult to sustain business model when you’re doing that wholesale. When you introduce a cheaper price the only companies that could sustain that are MSOs, who can offset their losses in Michigan with profits somewhere else,” said Thompson.

Read on for lots more in a detailed article on a complex issue at Grown In & also listen to Thompson and others talk about conversion oil on the Jazz Cabbage Cafe podcast.