Colorado Regulators Reveal Alarming Scale of Illegal Hemp Sales Disguised as Marijuana

Colorado lawmakers abandoned a bill that would have allowed voters to decide on overhauling marijuana contaminant testing, despite regulators’ concerns about the scale of illegal hemp sales disguised as marijuana products.

A top regulator from Colorado’s Marijuana Enforcement Division admitted in a private meeting with industry representatives that the amount of chemically converted hemp being illegally sold as marijuana is far greater than the agency has publicly disclosed. The remarks confirmed investigations by The Denver Gazette and ProPublica, which found signs of hemp in marijuana vapes sold at dispensaries, as well as reports of toxic contamination in some hemp-derived vapes.

The virtual meeting, an audio recording of which was reviewed by the news organizations, was held in March by Colorado Leads, a marijuana industry trade group. Participants described the problem as having “metastasized” and now posing an “existential threat” to the nation’s first legal recreational marijuana market.

Regulators Struggle to Quantify the Problem

During the meeting, Kyle Lambert, the enforcement division’s deputy senior director, stated that the number of hemp-derived products is “larger than we can quantify.” He warned that the prevalence of banned hemp is driving down marijuana prices in Colorado and facilitating the diversion of high-grade marijuana to black markets in other states.

Lambert also highlighted anomalies in the state’s tracking system for marijuana production and sales, noting that the extent of suspicious transactions “would probably explode your minds.” Two weeks after the meeting, the division sent a bulletin to the industry announcing plans to crack down on companies illegally selling cheaper and potentially hazardous hemp products as marijuana, including emergency rule proposals. However, no action has been taken yet, and other reform efforts failed during this year’s legislative session.

Legislative Inaction Despite Regulatory Concerns

Despite the regulators’ concerns, Colorado lawmakers—who were not present at the March briefing—abandoned a bill that would have let voters decide whether to overhaul how marijuana products are tested for contaminants. The Denver Gazette and ProPublica found that other states have adopted stronger safety measures.

Dominique Mendiola, the senior director of the Marijuana Enforcement Division, issued a statement asserting that the agency has “consistently been proactive in pursuing the necessary rules, legislation and authority to combat this issue.”

“Lambert was speaking frankly to highlight the scale and complexity of the problem, as nominal-dollar transactions do not amount to definitive evidence of non-compliance.”

Mendiola added that investigations into such transactions require extensive resources and can take significant time.

Origins of the Hemp-Marijuana Substitution Problem

The issue of companies substituting hemp for marijuana dates back to 2018, when Congress legalized hemp—a close cousin of marijuana with only trace amounts of THC, the psychoactive compound that produces a high. Federal lawmakers intended to support farmers while addressing advocates’ claims that hemp’s high levels of nonintoxicating CBD could help with conditions like seizures, pain, and sleep.

However, hemp manufacturers quickly developed methods to convert CBD from hemp into THC, undermining regulatory oversight and complicating enforcement efforts.