New laws, locations and legal loopholes: How Knucklehead’s hemp business is expanding

New laws, locations and legal loopholes: How Knucklehead’s hemp business is expanding

Behind the creaky glass door of the Knuckleheads store on Madison’s iconic State Street, an unmistakable aroma of a green substance fills the air. The store's interior reveals shelves full of exotic water pipes, each a riot of various colors and designs. However, this isn’t the type of store you’d expect — everything you see and smell is legal, safe and profitable in Wisconsin.

Knuckleheads has been a fixture on State Street since 2003, primarily selling nicotine and tobacco products. Nevertheless, a few years ago, federal law and Knuckleheads business plan underwent significant changes, leading to new locations and the birth of an entirely new industry, one that would soon be easy to manipulate.

In December 2018, Congress passed the Agricultural Improvement Act, known as the Farm Bill, which removed hemp and hemp-derived products from the legal definition of cannabis. As a result, hemp-derived products were no longer considered federally illegal Schedule I drugs under the Controlled Substances Act, according to law.com.

"Delta-8 and delta-9 are both derived from the hemp isolation of the plant, and they are both legal in Wisconsin due to the Farm Bill," said Emily Ackerman, assistant general manager at Knuckleheads on State Street.

Inside Knuckleheads' State Street store. Photo by Noah Maze.

Although marijuana and hemp belong to the same plant species, their distinction lies in their tetrahydrocannabinol (THC) content. Hemp is a cannabis plant containing less than 0.3% THC, whereas marijuana is a cannabis plant with over 0.3% THC, according to Healthline.

"The Farm Bill imposes significant restrictions on delta-9, specifically because it is the hemp equivalent of THC, both structurally and chemically very similar, if not identical to THC," Ackerman added.

The Farm Bill restricted any delta-9 derived product to a 0.3% dry weight basis, meaning anything above that threshold is not considered legal in Wisconsin.

However, companies such as Knuckleheads have devised ways to sell products with high delta-9 content while adhering to the 0.3% restriction.

"It's a little bit annoying, but that's why you see it in gummies, because you can alter the size of the gummy to make sure you have enough milligrams to actually feel something," said Ackerman. “So that’s how we for a long time were getting around the Farm Bill.”

This isn't the only strategy that companies like Knuckleheads have employed to work within the boundaries of the law.

Knuckleheads’ most popular products right now are THCA “in any form,” said Ackerman. “I don’t wanna say we’re exploiting, because it’s the laws they have made themselves, but when you combust THCA it turns into delta-9.”

THCA is a naturally occurring cannabinoid, known as the non-psychoactive precursor to THC. When heated, THCA undergoes a chemical change that converts it into THC, according to Origins Behavioral Healthcare.

“It’s very fun and exciting because we can put however much THCA we want in something, because it’s not delta-9. Even though it’s going to turn into delta-9 in your system,” said Ackerman.

If all of this appears perplexing to you, you're not alone.

“Even as a worker in the industry, it’s still pretty confusing,” said Kaya Teela, an inventory head at Knuckleheads.

Either way, one thing is clear — these products have gained immense popularity and accessibility across the state of Wisconsin.

Delta-8 and delta-9 can be purchased at gas stations, smoke shops, CBD shops and convenience stores throughout the state, according to Teela.

Knuckleheads is selling over 200 of their pre-rolled “Mike Tyson” THCA joints a week, according to Ackerman. The highest demand she’s seen in her time with the company.

To meet the surging demand, Knuckleheads has expanded and extended its hours on State Street. They recently opened a new store on Regent Street near Edgewood College.

“I feel like we’re able to access more of the students that live over there that don't want to make the 30 minute walk on to State Street,” said Teela.

Meanwhile, the Knuckleheads on State Street recently changed its closing time on Fridays and Saturdays from 10 p.m. to midnight, aiming to attract more late-night customers and bar-goers, according to Teela.

“I think a lot of people are realizing how profitable hemp can be, and is, and will be, especially with this THCA, and what a crazy loophole that is for us to work with,” said Ackerman.

The front of Knucklehead's store on State Street. Photo by Noah Maze.
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