IT'S AT.

>> Cathy: GOOD TO SEE YOU AGAIN.

>> Eric: ALWAYS GREAT STUFF, THANKS, MAN.

>> Cathy: THANK YOU.

WE'RE GOING TO GO OVER TO THE OTHER SIDE OF THE STUDIO RIGHT NOW AND DIVE A LITTLE DEEPER INTO THE FEDERAL HEMP BAN THAT BECAME PART OF THE EDGED OF THE SHUTDOWN.

PART OF THE ENDING OF THE SHUTDOWN.

WE'LL BE RIGHT BACK.

♪ ♪ >> Eric: END OF THE SHUTDOWN CAME WITH AN UNEXPECTED FEDERAL BAN ON HEMP PRODUCTS THAT WOULD START A YEAR FROM NOW.

HERE IN MINNESOTA, THAT WOULD EFFECTIVELY END THE HEMP-DERIVED THC BEVERAGE INDUSTRY, A LARGE PART OF THE CRAFT BREWERY BUSINESS.

WILL THE LAW BE TWEAKED BEFORE IT STARTS?

HOW DOES ALL OF THIS FIT IN WITH THE STATE'S LEGALIZED CANNABIS INDUSTRY?

ERIC TAUBEL HEADS UP THE MINNESOTA OFFICE OF CANNABIS MANAGEMENT.

DFL STATE SENATOR LINDSEY PORT WAS THE CHIEF AUTHOR OF LEGALIZED CANNABIS IN THE SENATE.

HERE TOO, REPUBLICAN STATE REPRESENTATIVE NOLAN WEST, A CO-AUTHOR ON THE HOUSE BILL.

DO YOU HAVE A PLAN B?

IS THIS ALL OR NOTHING?

HOW DO YOU SEE THIS?

>> WELL, IT'S NOT MY PLAN, LET'S BE CLEAR ABOUT THAT.

WE'LL HAVE TO SEE HOW IT SHAKES OUT.

THERE'S A YEAR.

CONGRESS DOESN'T DO MUCH IN A YEAR.

BUT THERE ALWAYS COULD BE A RESCHEDULING OF.

CANNABIS HAS BEEN ON THE HORIZON.

IF WE'RE GOING TO TREAT IT LIKE CANNABIS, THAT WOULD HELP THE SITUATION QUITE A LOT.

>> Eric: YEAH, THIS RELATES LIKE MARIJUANA, IS A SCHEDULE III ILLEGAL SUBSTANCE, RIGHT?

IN FEDERAL TERMS.

>> IT DOES NOW.

>> Eric: YEAH.

>> WHICH COMPLETELY UPENDS AN ENTIRE INDUSTRY THAT WAS BUILT AFTER CONGRESS LEGALIZED HEMP IN 2018.

>> Cathy: SO WHAT'S BEHIND THIS, DO YOU THINK?

>> SO, ONE OF THE CHALLENGING THINGS ABOUT THE HEMP INDUSTRY IS THAT IT'S FEDERALLY LEGAL, OR IT WAS, AND IT WILL BE FOR THE NEXT YEAR, BUT IT'S NOT REALLY REGULATED IN ANY WAY AT THE FEDERAL LEVEL.

AND, SO, STATES HAVE BEEN LEFT TO MAKE DECISIONS ABOUT HOW THEY WANT TO REGULATE THIS MARKET.

THE LEGISLATORS ERE WITH ME TODAY MADE REALLY GREAT CHOICES IN 2022 WHEN THEY SAW THE FARM BILL IN 2018 START TO ALLOW THESE PRODUCTS TO CREATE A MINIMALLY VIABLE REGULATORY ENVIRONMENT THAT LIMITED HOW MANY MILLIGRAMS COULD BE IN A SERVING, REQUIRED CERTAIN KIND OF LABELING AND PACKAGING, AND THEN IN 2023, WHEN WE LEGALIZED CANNABIS, THEY REALLY INCREASED THE REGULATORY OVERSIGHT.

SO MINNESOTA IS UNIQUE AMONGST OTHER STATES IN THAT WE HAVE A WELL-REGULATED HEMP MARKET.

BUT IN AN INTERSTATE MARKET, YOUR REGULATORY STRENGTH IS REALLY THE WEAKEST STATE.

BECAUSE THERE'S NO FEDERAL REGULATION AND A LOT OF STATES HAVE NO STATE REGULATION, THE REALITY IS THAT MINNESOTA'S MARKET CAN BE INFILTRATED BY PRODUCTS THAT DON'T GO THROUGH THE SAME QUALITY CONTROLS THAT THE PRODUCTS WE'RE PURCHASING AND SEEING MADE BY OUR MINNESOTA BREWERIES, OUR MINNESOTA MANUFACTURING COMPANIES AND THINGS LIKE THAT.

AND, SO, I THINK A LOT OF LEGISLATORS FROM STATES, UNLIKE MINNESOTA, REACTED STRONGLY TO THE LACK OF ANY REGULATORY OVERSIGHT OF THESE PRODUCTS AND TOOK WHAT SEEMS LIKE A PRETTY EXTREME MEASURE TO CREATE A TOTAL BAN.

OF.

>> Cathy: I HAD A FRIEND OF MINE ASK ME THE OTHER DAY, SO, OKAY, IF THIS IS GOING TO HAPPEN, WHY BOTHER WITH HEMP?

IF CANNABIS IS LEGALIZED, WHY SHOULD WE WORRY ABOUT HEMP?

>> THAT'S A REALLY GOOD QUESTION.

THE BIGGEST FEATURE WAS, YOU COULD OPERATE AS A REGULAR BUSINESS WHEN YOU DO HEMP.

THAT'S WHY YOU SEE ALL THESE BREWERIES AND DISTRIBUTORS IN YOUR LIQUOR STORE, ALL HAVE THESE HEMP-DERIVED PRODUCTS.

NOW THEY HAVE TO RETHINK THOSE AT LEAST WITHIN THE NEXT YEAR AND THAT DRIVES A HUGE PORTION OF THEIR REVENUE, A HUGE PORTION, WE'RE TALKING 30, 40% OF THE REVENUE OF SOME OF THESE STORES BECAUSE THE MARGINS ARE HUGE.

IT'S GOING GOING TO BE A BREWERY APOCALYPSE IF THIS IS ALL JUST UNDONE.

THE BREWERIES OUR PEOPLE LOVE ARE GOING TO BE GONE.

SO CONGRESS NEEDS TO ACT.

>> Eric: WHAT ARE YOU GETTING FROM THE MINNESOTA CONGRESSIONAL DELEGATION?

>> I SPOKE WITH OUR SENATORS' OFFICES THIS MORNINGINGS -- THIS MORNING, AND OUR CONGRESSIONAL DELEGATION VERY STRONGLY, YOU KNOW, SPOKE AGAINST THIS, VOTED AGAINST IT.

AND BOTH OF OUR SENATORS' OFFICES ARE COMMITTED TO WORKING WITH THE INDUSTRY, TRYING TO FIND A SOLUTION.

BUT THEY CKNOWLEDGE THAT CONGRESS IS ITS OWN BEAST AND IT'S A CHALLENGE TO MOVE PROGRESS THROUGH.

>> Eric: A THEORY ON WHAT HAPPENED HERE, SENATOR McCONNELL, KENTUCKY, HAD THE AMENDMENT.

TWO DOZEN DISTILLERIES IN HIS STATE, INCLUDING JIM BEAM AND MAKERS MARK, HE'S JUST PROTECTING A LOCAL INDUSTRY, I SUPPOSE, IN KENTUCKY.

>> YEAH, OPERATORS IN HIGHLY REGULATED INDUSTRIES LOVE TO USE REGULATIONS TO DEFEND THEIR TURF.

AND, YEAH, I WOULD SAY THAT'S EXACTLY WHERE IT CAME FROM.

BUT TO MINNESOTA'S CREDIT, OUR INDUSTRY HERE, THE ALCOHOL INDUSTRY, EMBRACED IT AND REALLY BENEFITTED FROM IT.

THEY DIDN'T TRY AND MURDER IT.

>> Eric: I THINK BOTH OF OU HAVE SAID THAT THERE WOULD BE KIND OF A MARIJUANA BILL EVERY YEAR TWEAKING IT, LIKE YOU HAVE THE LIQUOR BILL EVERY YEAR.

IS THIS GOING TO AFFECT ONE WAY OR ANOTHER WHAT YOU DO ON THC AND MARIJUANA IN THE 2026 SESSION?

>> YOU KNOW, AT THE STATE LEVEL, WE HAVE REALLY BUILT OUT A REGULATORY FRAMEWORK THAT, OF COURSE, WILL NEED TWEAKS HERE AND THERE FOR CONTINUED YEARS TO COME.

BUT IT REALLY WAS BUILT AROUND THE FEDERAL WORLD AS WE UNDERSTOOD IT.

SO, HEMP AND HEMP-DERIVED PRODUCTS CAN BE AT A GAS STATION, CAN BE AT A LIQUOR STORE, THEY DON'T HAVE TO BE IN A DISPENSARY LIKE WE PUT CANNABIS BECAUSE IT IS -- IT'S A DIFFERENT KIND OF PRODUCT, IT'S A DIFFERENT LEVEL THAT WE HAD REGULATED AT.

NOW, ALL OF THAT IS SORT OF OUT THE WINDOW, AS FAR AS WILL THESE BUSINESSES EVEN BE AROUND TO BE ABLE TO BE REGULATED?

>> Cathy: TO THAT POINT, AND, THANK YOU, IS THERE SOMETHING THAT -- LIKE A LIFELINE THAT THE STATE COULD THROW THE BUSINESSES OR NO?

>> I THINK, UNFORTUNATELY, THERE'S NO CLEAR PATH AND THERE'S NO EASY FIX.

AS SENATOR PORT SUGGESTED, AND I THINK REPRESENTATIVE WEST MENTIONED, ONE OF THE THINGS THAT MADE THIS INDUSTRY VIABLE FOR BREWERIES AND OTHER BUSINESSES IS THAT IT WASN'T FEDERALLY ILLEGAL, SO YOU DIDN'T FACE THE SAME CHALLENGES THE CANNABIS BUSINESSES FACE IN TERMS OF BANKING, IN TERMS OF TAXES, IN TERMS OF ACCESS TO THINGS LIKE CREDIT CARD EXCHANGE NETWORKS.

>> Eric: ANY HELP FROM OTHER STATES JOINING IN THE OBBYING EFFORT ON CAPITOL HILL?

WHAT ARE THE OTHER STATES UP TO?

>> I'D LIKE TO SEE EVERYBODY GET BEHIND IT, AND I THINK PEOPLE WILL WHEN THEY KIND OF UNDERSTAND WHAT JUST HAPPENED.

YOU KNOW, THIS LAW WAS MIDDLE OF THE NIGHT, BASICALLY, SHOVED INTO A MULTITRILLION-DOLLAR BUDGET, LIKE ANY GOOD LAW.

AND ONCE PEOPLE REALLY REALIZE WHAT HAPPENED, CONGRESS IS GOING TO HEAR FROM A LOT OF PEOPLE.

>> Eric: CHILDREN HAVE BEEN HOSPITALIZED INGESTING THE THC PRODUCTS THAT LOOK LIKE CANDY.

FAIR?

>> FAIR, AND THAT'S WHY WE REGULATE IT IN MINNESOTA.

THAT'S EXACTLY WHY YOU AVE TO PUT REGULATION AROUND IT.

WE HAVE A FRAMEWORK THAT THE REST OF THE STATES, THAT THE REST OF THE COUNTRY COULD ADOPT.

WE HAVE FEDERALLY FIGURED OUT HOW TO REGULATE ALCOHOL, LIKE THIS IS NOT NEW, AND INSTEAD OF REGULATING, CONGRESS THREW THE BABY OUT WITH THE BATH WATER, AND IN MINNESOTA, IT'S GOING TO AVE HUGE IMPACTS.

>> Cathy: WHEN WILL WE START SEEING THOSE IMPACTS?

RIGHT AWAY?

>> WELL, WE DO HAVE A YEAR.

THE BILL GOES INTO EFFECT, THE DEFINITIONAL CHANGE HAPPENS ONE YEAR FROM THE DATE OF ENACTMENT.

AND, SO, CERTAINLY THERE'S NOW A RACE TO THE U.S.

CONGRESS TO TRY TO GET SOMETHING ON THE BOOKS THAT CAN CHANGE THIS.

BUT AS I NOTED, THERE'S REALLY, YOU KNOW, NO EASY FIX FOR US, YOU KNOW, WE NEED THE FEDERAL PARTNERSHIP IN ORDER TO MAKE SOMETHING HAPPEN.

>> Cathy: WOW.

INTERESTING.

THANK YOU SO MUCH FOR EXPLAINING THIS.

>> Eric: GOOD