Nick Cimadon was living in Guam and transitioning out of the Navy when he was able to obtain a Connecticut cannabis food and beverage license. He enjoyed the Navy, but both he and his wife are Connecticut natives, and it offered a chance to build a business back home.

Four years later, Cimadon’s business, SoundView, is divided in two. He produces cannabis edibles like gummies and chocolate bars using cannabis sourced from Connecticut. The other aspect of his business? THC seltzers using hemp from out of state. 

Now, with federal law governing hemp likely to change, the future of his business is in question. 

“This is uncharted territory,” he said. “This was out of left field. No one saw this coming.”

Nearly 2 million THC seltzers were sold in a four-month span this year in Connecticut. But included in the federal bill that has led to the reopening of the federal government is a measure that closes a loophole that allowed hemp-derived THC products, such as infused seltzers, to be sold across the country.

What it will mean on a state-by-state basis is not yet fully understood. But there are fears that it could have a major impact or even lead to the disallowance of selling the beverages here. 

“Our early analysis is this may not be all that impactful on the Connecticut market,” said state Rep. Roland Lemar, D-New Haven, who chairs the legislative General Law Committee. “We’re going to need the attorney general’s office, Department of Consumer Protection, governor’s office and our team at House Dems to evaluate it over the coming weeks to see what that impact really is.”

When it comes specifically to THC-laden beverages, Connecticut marketers may be able to continue operations if the products are grown, processed and sold within the state’s borders.

“That is the important distinction – if you are sourcing it in Connecticut, producing it in Connecticut and selling it in Connecticut,” Lemar said. “I think it needs to be all three of those things. If you’re not transporting it across state lines in any of its forms, we think our marketplace protections would make it so that you are OK.”

That provision would, among other things, reduce the amount of allowable THC in products derived from legal hemp to trace amounts, effectively dooming the hemp cultivation and processing industry, said Mike Goodenough, a Connecticut-based hemp grower and manufacturer. 

“This is horrendous to so many businesses. This cripples us, hands down,” Goodenough claimed. 

The bill as written maintains the status quo for a full year, giving states and manufacturers time to reconfigure statutes and operations, if needed. 

Kaitlyn Krasselt, spokeswoman for the state Department of Consumer Protection, noted 1.988 million THC seltzers were sold in Connecticut in the four months between May and September. 

“If the (federal) law passes in its current form, we are reviewing the potential impact to Connecticut’s industry and working with the legislature to determine what changes they may want to make in Connecticut,” she said. 

The compound in cannabis that creates the effect of a “high,” THC, exists only in small amounts in hemp, but the plant can be processed to isolate THC and infuse it into edible substances such as candies and seltzers.

The 2018 federal Farm Bill that legalized hemp made no provision for that process, which allowed products containing large amounts of THC to be sold legally in gas stations, smokeshops and elsewhere, said Larry Cafero, executive director of Wine and Spirits Wholesalers of Connecticut.

“These THC hemp-derived seltzers, which had no regulation when they initially came out, had 25 milligrams, in some cases, of THC in a 12-ounce can. They were being sold in convenience stores and bodegas, and these little gas station markets, and there was no age limit,” Cafero said. “A 12-year-old could go buy it as if he or she would be buying a soda.”

Connecticut legislators sought to close that loophole and last year carved out an exception for beverages infused with hemp-derived THC, allowing beverages with low levels of hemp-derived THC to be sold in Connecticut package stores and cannabis dispensaries. 

Cannabis business analyst Whitney Economics wrote in September that the total potential THC seltzer market in the United States “is valued, conservatively, at between $9.9 billion and $14.9 billion.”

Cafero said the legal sale of THC seltzers was important for his members and their customers because of a continued decrease in alcohol sales. Whitney’s report echoed similar sentiments, citing a 10% drop in alcohol consumption since 2021.

“It’s so popular because people, in many cases, are choosing that as a beverage, as opposed to an alcohol-based beverage,” Cafero said of THC seltzers.

There are several Connecticut-based THC seltzer manufacturers, sold legally both in package stores and cannabis dispensaries. 

“Lighthouse is made in Connecticut. Float House is made in Connecticut. Muze is made in Connecticut. Hi People is made in Connecticut. SoundView is made in Connecticut,” said Ben Zachs, who runs cannabis retailer Fine Fettle. 

But many of those seltzer manufacturers may not obtain the THC from Connecticut-grown hemp, and many transport their finished products to other states. 

“A lot of them would say, ‘Well, we’re selling a lot of drinks outside the state, and this really lowers our captured market,’” Zachs said. 

Lemar said, “I think a number of Connecticut-based businesses were looking at business opportunities outside of the state that they’re now being precluded from. I don’t think there’s much interest in just watching these Connecticut businesses just go under because of this new federal restriction.”

Cimadon suggested the easiest solution may be to “collapse it into cannabis,” putting hemp and cannabis into the same program, regulated by the state. But that could create additional problems. Cannabis edibles in Connecticut are subject to different rules than those with THC derived from hemp, including around packaging and potency, which could mean a huge shift for the entire industry.

Connecticut hemp producers would need to get new state licenses and, unlike cannabis, which is illegal federally but legal in Connecticut, hemp growers are required to be federally licensed by the U.S. Department of Agriculture. Connecticut has a hemp plan filed with the USDA, and a provision in Connecticut’s hemp laws requires state statutes to mirror federal laws. 

Lemar said there will be discussions in the coming months about “what do we need to do in Connecticut to ensure that our regulations and our authorizations are consistent with federal law?”