Untaxed Synthetic THC May Be Where Lawmakers Look Next For Road Money

(Source: MIRS.news, Published 09/22/2025) The cannabis market fight over synthetic THC on party store and gas station shelves may be coming to Lansing this week as legislative leaders look under sofa cushions for new road funding money.

On one side is the attractiveness of taxing a product that's currently lightly regulated and not taxed. On the other side are those looking to ban these synthetic THC products while warning against going after the regulated market.

Cannabis Consumer Advocacy Founder Cassin Coleman said there are intoxicating beverages and edibles that exist between the food space and regulated marijuana space, not regulated by either, that could be taxed under a bill expected to be proposed soon. It is a fight that has echoed through the cannabis industry for several years. They've waited for a rule change in the Cannabis Regulatory Agency (CRA), but were told to go elsewhere.

"Director (Brian) Hanna said, 'You got to go to your lawmakers,' so we did. He said, 'Hey, we need your help' and lawmakers stepped up to the plate and said, 'OK, let's look at these solutions'. Let's see if we can get everybody on board, and I would like to think that a lot of people are on board at this point," Coleman said.

The proposal comes at an inflection point of the budget negotiations, but it isn't a new idea and one that has been tackled by different states across the country since the space was opened because of a loophole in the 2018 Farm Bill Act that allowed 0.03 percent THC to exist in hemp beverages and edibles that are sold outside dispensaries.

"We're glad to see Chair Joseph Aragona (R-Clinton Township) step up to take these things head on, so that we can actually put some guardrails in place, make sure these things aren't being available to kids, and also put some normal consumer packaged goods regulations around them," Coleman said.

She said there is no actual tracking of the synthetic market outside the regulated area, but the beverage portion of the market is around 10 to 20 percent of the alcohol market in the state and that could potentially double with regulation.

The market across the United States was in the ballpark of $81 billion, which is not regulated by the licensed cannabis industry, and with a possible $1.62 billion in sales through the state on just hemp-derived food, there is a potentially $200 million state revenue stream untapped because of one type of product already on the shelves.

"They're all illegal, and they always have been illegal in the same way that raw milk is illegal, and the state has always had the ability, if they so choose, to stop producers of this, to find them, to seize and destroy these adulterated food products. They've chosen not to do so," she said.

Coleman said the lack of enforcement of the Michigan food codes has created this market already, which needed guardrails for the products already being purchased.

She said many of the hemp manufacturers were meeting the standards being asked of by the laws for food production requirements.

"I hear licensed cannabis folks being against allowing competition, but then I go to their shops and I see that they have these products already on their walls. So are they really against it, or are they just not aware that these products are already on their walls?" she said.

Coleman said there was an industry wake-up call that happened after a study found nearly 60 percent of the cannabis in the regulated market contained synthetics, but she said not all the product is coming from out of state.

She said there were 271 hemp processors licensed in Michigan and several of them ship direct to consumers.

"I believe that we've come up with common sense regulations. We give consumers what they expect to see on a package. Consumers expect to see all this stuff on everything, whether they're buying a doll, crayons, or milk. Give the consumer a label they're used to seeing. Do testing that's normal for food products, because consumers are eating things and they expect that they're safe from the most basic things like salmonella and e. coli," she said.

Western Michigan University Food Marketing Professor Nick YOUNG was part of the study that found the synthetics and said the entire market existed in a gray area because the hemp-based cannabinoids are being treated almost like ingredients by the Food and Drug Administration.

"This is kind of like an unregulated supplement market, more than it is food and beverage. So what we have is people that are making edibles that know that they're not legal," Young said.

He said that the regulated industry needed to test extensively for pesticides, heavy metals and other chemicals, as the hemp-derived synthetics could still contain the chemicals used in the conversion process and the consumer would never know.

"If they're going to tax it, then it probably needs to fall under a regulatory body to be governed and make sure those taxes are collected. They're properly tracked," he said.

Young said he hadn't looked at the updated CRA rule set that dealt with synthetics that could come up before the Joint Committee on Administrative Rules (JCAR), but said the rule set would only apply to the regulated market, and because there was little enforcement in the hemp space, there was nothing preventing businesses from getting into the hemp-derived synthetic THC market.

He said there was basic reporting for those holding a $1,300 hemp growers license, as opposed to the nearly $24,000 per year needed for the highly regulated adult recreational cannabis license.

"You have two very different systems going after the same consumer base," he said.

Another portion was the regulation of the amount of THC in the product, which is a 12-ounce beverage product; with the 0.03 percent rule for hemp, the beverage would still contain over 100 milligrams of THC.

He said the hemp-derived market was also the same routes that synthetics were being shipped in from across state lines and being injected into the market.

He could see several places just flipping over to hemp licenses after they are blocked from using synthetics in the regulated market by the CRA.

Young said there was also an untapped market with the hemp-based beverage market that has become popular in the health food market.

"We have a really good history in both manufacturing cannabis products and brewing. You have a lot of brewers who are hurting right now because craft beer has gotten saturated, just like cannabis has," he said.

He said Michigan could be an export leader and take a massive portion of that market if regulations and policies were in place.

"There's a place for both hemp and marijuana to exist, but I really think that our legislative bodies are not doing a good enough job creating swim lanes for everyone and now everyone's a competitor with everyone," Young said.