Department flags compliance gaps in hemp/cannabinoid retail market, seeks one-time funding for specialized products oversight

Cody James, deputy director of the Department of Agriculture and Food’s Specialized Products Division, and Dr. Brandon Forsyth, director of Laboratory Services and Specialized Products, told the Natural Resources, Agriculture and Environmental Quality Appropriations Subcommittee that industrial hemp/cannabinoid retail markets have produced compliance and public‑safety concerns and that program revenue has declined as product‑registration rules changed.

James said the division oversees both medical cannabis and industrial hemp product lines, and that medical cannabis licensing remains tightly controlled through cultivators, processors, testing labs and 15 pharmacies. He said the medical cannabis program delivered more than 89,000 pounds of flower in 2024 and that pharmacies and processors ship tested products to registered patients.

On industrial hemp and cannabinoid products sold at retail, James and Forsyth said compliance issues are more common. James reported 602 retail inspections in 2024 that discovered 898 unregistered products. He said product‑registration fee revenue, previously a core funding source for the hemp program, fell after statutory and rule changes that narrowed what products require registration; the division asked the committee for a one‑time building block of $600,500 to cover an operating shortfall while the new tax and fee structure takes effect.

Dr. Brandon Forsyth described lab testing and market problems encountered elsewhere and the consequences when testing is inconsistent. Forsyth cited national examples where low regulatory limits encouraged labs to report marginal levels as pass/fail and where some laboratories’ reporting patterns suggested fabricated or unreliable data. He told the committee that reliable, impartial laboratory testing is important for public safety and that state labs have an important role because they have no financial incentive to produce favorable results for producers.

“Either these labs that are participating in this testing are remarkably incompetent or they're actively fabricating data,” Dr. Forsyth said, describing published examples of anomalous lab‑reporting patterns. He used the examples to explain why strong testing and enforcement capacity matters if product standards and consumer‑safety protections are to be effective.

Inspectors and laboratory staff told the committee they have found smokeable flower and vape cartridges in some retail stores and smoke shops that tested at very high levels of THC or carried cannabinoids (such as delta‑8) that are not permitted under state law. The department recounted enforcement actions in which officers seized suspect products — in one response noted earlier by the regulatory division, staff and partners seized about $200,000 in products tied to a mushroom‑infused gummy recall with adverse events reported nationally.

The department summarized its enforcement approach: letters of concern, warning letters, notices of violation or citations and, where appropriate, product seizure and destruction. Staff said they work with state narcotics and local law enforcement for investigations when necessary.

Why it matters: Committee members heard the department’s argument that the industrial hemp/cannabinoid market’s rapid product proliferation has created enforcement and consumer‑safety challenges. The division said declining product‑registration revenue reduces its ability to inspect, test and follow up on unregistered or dangerous products and asked for one‑time funding while the new fee/tax regime stabilizes.

Next steps: The division requested one‑time supplemental funding ($600,500 in the presentation) to address near‑term shortfalls and said the department will continue enforcement and lab confirmation testing; no committee vote on the request was recorded in the transcript.