"We were getting kicked out of stores three years ago because they didn't think the stuff was legal. They were like get that out of here," explained the owner and founder of Carolindica, a Wake County cannabis store.
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Fast forward to 2023 and Karazin's company is manufacturing and distributing products across state lines.
"So we actually are starting to lose track of exactly how far it's gotten now, but mostly centered on the southeast, like Georgia, South Carolina, North Carolina, especially here in Raleigh. I would say confidently we're in about 100 stores," Karazin said.
He isn't the only business seeing an uptick in production as awareness of hemp-related products expands. While the hemp industry explodes across the state, there is very little regulation around the products: No licenses are needed to sell the products; there aren't even any age limits to purchase the items.
"It's a weird state of affairs; a very unsettled state of affairs," explained Phil Dixon, a professor at the UNC School of Government who has tracked the changing hemp industry.
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Between 2018 and 2021 there was a 110% increase in hemp growers in North Carolina. By early 2020, the state had nearly 1,300 registered processors, according to data from the North Carolina Department of Agriculture & Consumer Services. However, now the number is unknown and no one is tracking it.
"It's just the Wild West," Dixon said. "Here we just--we've authorized hemp, but we haven't really set up a regulatory structure for it."
The North Carolina Industrial Hemp Pilot Program ended in 2022, which means the state no longer regulates production and processors don't have many rules to follow. Production and oversight switched over to the U.S. Department of Agriculture. USDA mostly monitors hemp before businesses process it into product. Experts said at that point it's up to the Federal Drug Administration (FDA) to perform oversight.
"There's a little bit of federal regulation from the FDA as far as how it can be marketed, what kind of medicinal claims can be made and restrictions on putting it into food or drink. But those are not widely enforced, and there is still no real protection for consumers, such as quality assurance or testing for contaminants," Dixon said.
Without requirements, it's left up to businesses to choose to do their own testing, which comes with a cost.
"Everything we sell gets third-party lab tested here in Raleigh. A lot of businesses don't do that kind of stuff," Karazin said.
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Karazin explained he pays extra for his hemp to be tested 2-3 times before they send it off to retail stores. He said it costs around $100 an item for testing but can reach up to $500. Additionally, his business has an in-house testing machine.
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The lack of necessity paired with high cost means many businesses just choose not to test, which concerns Dr. Volker Bornemann.
"The sources are sometimes different from what they claim they are and the product composition is not what it says on the box. And that is, in my opinion, it's the problem predominantly for the consumer because in the end the consumer does not know what they're buying and what they're consuming," he said.
Dr. Volker Bornemann's company Avazyme has been involved in testing hemp-related products since North Carolina kicked off its Hemp Pilot Program in 2015.
Avazyme did all the testing for the state to ensure that thousands of samples from the fields were in compliance, but with the program ending, testing for hemp products at his lab has dropped. The testing Avazyme still does is mostly connected with research studies, not individual stores.
"It's a money-losing proposition at this point in time," Bornemann said.
He said 15% of the lab's revenue used to come from hemp testing. Now, that percentage has been reduced to an estimated less than 5%.
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He said he often finds heavy metals, pesticides and mycotoxins in product samples.
"Especially, the Delta-8 THC products are often quite dirty. They frequently do not contain what they say they contain. So the Delta-8 THC amounts are much lower than they claim. The Delta-9 THC amounts are oftentimes significant," he explained.
He said in some cases a product has Delta-9 THC amounts that are double the 0.3% federally allowed in hemp, but there aren't many consequences, despite the law setting that standard.
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"Right now, the consumer is really taking a big, big risk, consuming these products because they are not adequately tested and you don't know what you're buying," Bornemann said.
Karazin said more regulations would help consumer safety but there needs to be a balance so businesses can still thrive.
"Ultimately, it gives us a lot of freedom and control, which is great for us, but also opens those doors for kind of those bad apples," Karazin said.
He explained that there's little stopping people from purchasing packaging from Amazon and selling any product they want inside of it.
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However, he and Dixon believe most people in the business are trying to follow the law and move the industry in the best direction.
"There's less and less of those bad apples kind of that you'd have to worry about," Karazin said.
Tips for consumers:
- Do your research on businesses and products before buying
- Don't be afraid to ask questions about production and testing
- In some cases, products may have stamps and businesses may have a certificate of analysis