Colorado regulators admit scale of illegal hemp market exceeds public knowledge
The Marijuana Enforcement Division acknowledges that chemically converted hemp is pervasive in dispensaries, confirming independent testing findings while legislative reform efforts stall.
During a private virtual meeting in March, officials from the Colorado Marijuana Enforcement Division acknowledged that the volume of chemically converted hemp sold illegally as marijuana is significantly higher than previously disclosed. Kyle Lambert, the division’s deputy senior director, told industry representatives that the number of hemp-derived products is larger than the agency can quantify. He stated that suspicious transactions within the state’s seed-to-sale tracking system were extensive, noting that the volume of anomalies would likely surprise observers.
The remarks confirmed independent testing conducted by ProPublica and The Denver Gazette, which found signs of hemp in marijuana vapes sold at dispensaries. The investigations also identified contamination with toxic chemicals in some hemp-derived products. Manufacturers use solvents to convert cannabidiol in hemp into tetrahydrocannabinol, creating products that can be more potent than marijuana-derived ones and sometimes contain harmful substances.
Industry lobbyists described the issue as an existential threat to Colorado’s legal recreational marijuana market. Jordan Wellington, a marijuana industry lobbyist, stated during the meeting that illicit hemp use has become pervasive, affecting roughly half the market. He warned that rampant use of hemp and other illicit material is putting pressure on compliant manufacturers to cut corners to survive, describing the situation as fully metastasised.
Lambert highlighted significant fraud in sales transaction reporting, where businesses often report unrealistic nominal sales values, such as a penny or dollar a pound, to mask the true value of products. This practice potentially costs the state millions in excise tax revenue. He admitted that the division lacks the resources to conduct extensive surveillance or trace the origin of products, stating the agency is not equipped to perform the types of investigations required to fully root out the fraud.
Despite these concerns, legislative efforts to overhaul marijuana testing and safety regulations failed during the current session. The Cannabis Consumer Protection Act, which would have placed a ballot measure before voters to overhaul contaminant testing, collapsed as different segments of the industry clashed over provisions. Senator Marc Snyder indicated plans to revisit regulatory issues in the 2027 legislative session, citing the challenges of being the first state to legalise recreational cannabis.
