On February 9, Attorney General William Tong sued five Connecticut retailers for violating the state’s Unfair Trade Practices Act (UTPA) by selling allegedly illegal delta-8 tetrahydrocannabinol (THC) products, many of which mimicked snack foods and candies popular among youth.
Tetrahydrocannabinol (THC) is typically associated with the high consumers feel when consuming marijuana products. Delta-8 THC is a naturally occurring chemical compound found in small traces in hemp and marijuana plants. Cannabidiol (CBD) in hemp can be chemically converted to produce THC, including delta-8 THC. Delta-8 THC is frequently infused into edibles and sold as a smokable concentrate in vape pens. Delta-8 THC produces psychoactive effects similar to those obtained from marijuana (read more about the rise in delta-8 THC products here). Because these products are derived from hemp, the federal Drug Enforcement Administration equates them with federally-legal hemp products so long as they do not contain more than 0.3% delta-9 THC. Under Connecticut law, however, products containing more than 0.3% total THC on a dry weight basis are cannabis (marijuana) products governed by Connecticut’s Responsible and Equitable Regulation of Adult-Use Cannabis Act (RERACA), which requires they only be sold by licensed marijuana dispensaries.
The AG’s office made a series of unannounced visits to vape shops and gas stations in December 2022 and found delta-8 THC products for sale at every vape shop it visited, as well as one gas station. In the summons to Raheem Mini Mart, the AG’s office alleged that, among other things, (1) products found at the retail location contained THC levels exceeding 0.3%; (2) the retailer did not hold a retail cannabis establishment license; (3) the packaging did not meet RERACA standards for cannabis products nor included the proper warning labels; and (4) the products were not cultivated or produced in Connecticut’s Department of Consumer Protection-licensed facilities. The AG claimed the defendant violated the UTPA by misleading Connecticut consumers to believe that it “legally” sold delta-8 products, while further violating RERACA public policy to promote a safe, regulated cannabis market. Consequently, the AG sought to enjoin the retailer from further violations, as well as civil penalties, disgorgement of related profits, restitution, attorneys’ fees, lawsuit costs, and any other relief the court deems appropriate.
In addition to the five lawsuits, AG Tong also began sending warning letters to all Connecticut-licensed electronic vaping retailers, putting them on notice that many products purporting to contain delta-8 THC and sold in state retail shops may be illegal. The AG cautioned that these products may not meet the packaging, testing, and labeling safeguards established to ensure safe production and cannabis product sales in the state. In particular, packaging often appealing to minors mimicked popular snack foods, increasing the risk that children could consume them.
Why It Matters
As the popularity of delta-8 THC products continues to grow, state AGs renew their concern over the risks associated with unregulated, hemp-derived products with high amounts of THC, especially regarding the unintentional ingestion of these products by children. The FDA also published a May 2022 consumer update, warning about the potential negative health effects of these products. Absent any comprehensive federal legislation, we will likely see increased regulation of hemp-derived THC products at the state level, along with state AG-related enforcement actions.
Troutman Pepper State Attorneys General Team
|Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
|Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.