From Bud to Boardroom | Season 1, Episode 6: The Future of Hemp-Infused Beverages: Insights from a Legal Expert

Sarah Westby: Can you tell us a little bit about your professional background and how you became interested in cannabis and hemp law?

Michelle Bodian: Sure. I feel like everyone has an origin story. Um, mine starts with a focus in environmental law, was the plan for undergrad and law school. And I did practice it for a number of years, a kind of a boutique environmental law firm in Connecticut, actually, um, over there in Milford. So, executed on the goal for a while. And from that, from environmental law transitioned to into agriculture law from agriculture law was looking for my next jump, my next transition. And that was right around the 2018 Farm Bill. So looked around to see what, what was new, what was innovative. Um, and at that point it was hemp regulatory.

So a little bit unique here. I didn't start on the marijuana side of the plant. I started on the hemp plant. Um, hemp side did that for a number of years, transitioned over when Connecticut, Connecticut and New York and New Jersey were opening up, um, you know, their adult use programs. And so kind of my transition was unusual from environment to agriculture, to hemp to marijuana, and then, you know, back here to hemp land.

So a little bit of a circle.

Sarah Westby: Interesting. Yeah. I always really enjoy hearing people's origin stories because everyone comes from a different place and it, it's really cool to see how people end up in cannabis and hemp. Um, so in your prior experience, were you doing mostly counseling and compliance or were you doing some corporate work as well?

Michelle Bodian: Primarily regulatory, I mean, pretty much for all of my career, but within regulatory, you know, commercial contracting is such a, such a part of that, but certainly no, no M&A, no tax, no appointment. Uh, more more regulatory on, on both sides of the plant. And even previous, um, previous to my role at in cannabis and hemp.

Sarah Westby: Tell us a little bit about the company that you work for now and, and how you came to that position.

Michelle Bodian: Sure. So, Nowadays is a hemp beverage company. Um, our sole ingredient at this point is hemp delta nine, THC, kind of naturally derived. We don't use any other cannabinoids. Uh, the company itself is just about two years old. Uh, it was launched to give consumers in an alternative, those that may be. We're interested, um, in the products that were available through traditional marijuana markets or weren't comfortable stepping foot into a dispensary.

So kind of looking for something new that a, a non-everyday marijuana user, uh, kind of a product type or, or form or delivery or retail experience that was a little bit different. That that was Nowadays goal. Um. And they've launched actually a little unusual. Most of the hemp beverages you see out into the market are, are 12 ounce ready to drink, RTD, products, typically in a can. Uh, certainly in Connecticut, that's, that's what's available based upon what the laws say. But, uh, Nowadays actually launched with a spirit analog, so no alcohol in any of these products, but a 375 ml. Bottle that looks no different than a tequila or vodka, um, with a couple different dose options. But the idea is to have it be shelf stable sitting on your bar cart.

And the idea to give the consumer the flexibility to make, make a drink how they see fit. Um, so that was our signature product. It's still our, our top seller. But then after that we introduced. Um, a two ounce version of that kind of an on the go or an introduction if someone doesn't want, want to buy the whole bottle, kind of try a little one serving two ounce essential shot. And then our last to market product, maybe over a little over a year ago at this point, was an RTD a canned, uh, a canned seltzer and, and 12 and 16 ounces.

Sarah Westby: That's really interesting. I was on your website and I saw that Nowadays has some very innovative and unique products for consumers, and I think that that's a great addition to the market where, you know, you do see a lot of, uh, seltzers, um, but not a whole lot of other product forms for, for THC infused beverages, so that's exciting for consumers.

Michelle Bodian: Yeah, I mean, just giving that flexibility and, you know, wanted it to be something. I mean, RTDs generally aren't that old. I mean, only a few years, you know, high noon and other products that are on the market versus, you know, a gin or a tequila or spirit. You know, most people are familiar with and they've been on the market for a long time, so. They, you know, before my time, but as I understand it, they were looking for a product that would compliment, um, compliment while these other products that consumers are already familiar with. But instead of the active ingredient, you know, being a, a grain that's alkalized essentially, you know, hemp being then turned into that intoxicant.

Sarah Westby: Tell us a little bit about how your day-to-day has changed. Moving from a law firm partner to general counsel for a hemp beverage company.

Michelle Bodian: Sure. I mean, the, the subject matter hasn't changed too much in the day to day. You know, it, it's more the fun side for me, I'd say has changed a little bit where. You know, you, you know, um, more than anyone that you often get a series of questions, not a lot of context, and then don't necessarily know the end of the story, whether anyone took the advice or didn't take the advice or how the puzzle pieces fit together.

I mean, of course, unless there's some disaster and a boomerang's back for follow up, but typically it's just, you know, one, um. One stop in the assembly line is kind of how I was feeling, on the transition team. So providing a lot of advice and getting to know clients, but not necessarily seeing the business side.

So the transition in terms of the legal and subject matter and the agreements and all of that. Bits are still the same, but with an added fun, fun of being able to see from. Thought to planning, to execution, to deployment, just kind of the entire step of the process. Um, so that's been really fun to see now that, now that I'm in house versus outside counsel.

Sarah Westby: Yeah, I think a, a lot of us law firm lawyers kind of wonder what it's like to make that move. So that, that's an interesting take on it. Um, I do often wonder about, you know, the business side of things and, and what the companies do with that advice. So that's, um, that's interesting to hear. Now I know that you had to stay on top of cannabis and hemp regulation very closely in your prior position.

Um, and if, you know, you follow your LinkedIn as I do, that does not seem to have changed at all. But you know, from your perspective. Is there a a different type of significance or is there a different type of method that you use when you're following these trends or you know, something different that you do with that information when you get it?

Michelle Bodian: I'll say just being beverage focused has been a little freeing. So previously tracking, you know, not only hemp and marijuana regulations in a number of states, obviously hemp nationally, on the marijuana side, I primarily focused on New York and Connecticut marijuana laws. But that by itself was a lot to track between. Laws, regulation, guidance, FAQs, random emails people send around. Um, but on the hemp side, it was even more complicated by the variety of form factors. So different rules, different standards, whether it's a topical or an edible gummy, or whether it was a beverage or an inhalable. And then within the hail bowl, is it a vape?

Is it a pre-roll? Is it loose flower? So the tracking bit hasn't changed that much. But the ability to say, Hmm, not relevant. I don't actually need to read. I could just skim, has drastically changed and made things a lot easier.

Sarah Westby: Gotcha. That probably allows you to dig in a little bit more because I know exactly what you mean. There are, there are so many resources and there are so many different laws and regulations to stay on top of it. It can be difficult sometimes to sort through it all. Um, is there anything that is beverage specific that you're watching in terms of trends or laws and regulations apart from the cannabis and hemp side?

Michelle Bodian: I mean, the intersection with alcohol is huge. Um, you know, I traditionally, since being in this space, have focused my. Yeah, my conference energy, my time and attention over the years on more hemp and cannabis focused conferencing and programming and news sourcing, but with beverages being sold alongside beer, wine, and spirits, where a lot of them are going through the three tier model or being sold via wholesale, like the intersection. Of what alcohol is saying about this category, as well as the lessons learned, like I find myself actually just doing my planning for the rest of the year and early next year, you know, spending more and more time interacting with the alcohol industry than I am with the marijuana hemp industry.

Sarah Westby: That is interesting and you know, I think from my perspective, I see a lot of alcohol focused companies split on this. You know, some are jumping into hemp infused and others are live. Being against it, is that your experience too, or do you have a different take on it?

Michelle Bodian: Yeah, I mean some are, you know, anti any change, whether that's hemp or a vodka or td. Some are embracing it, some are not sure how they feel and you know, same, I'd say argue same feelings that are happening on the marijuana side towards hemp beverages are happening on the alcohol side. Um, but I think there's also. know, a shift from week to week or month to month. So somebody who might have been lobbying against it or who is neutral now, you know, maybe has come over, come over to the other side, and is advocating or at least advocating for, or at least not advocating against. So it also involves pretty quick from who you thought. The players were who, you know, who were the friendlies, who were the ones you needed to convince, and then it just flip flops at any given week. Um, the chess board is constantly changing, which is fun.

Sarah Westby: And that's typical, typical for cannabis and hemp, right? Um, it seems like. This, this trend towards, you know, consumer preference for non-alcohol and THC infused is growing and increasing and, and hard to avoid. So it would make sense that the, the, some of the alcohol companies are coming around on that.

Michelle Bodian: Yeah. And then, you know, time will tell how, how this all lands. But yeah, it's been interesting watching the evolution and, and the players move around of what side they were on versus they are today.

Sarah Westby: So shifting gears to talk a little bit more about what the future holds. I know that the House appropriations bill is kind of this dark cloud hanging over the industry right now. Um, and everyone has thoughts about the likelihood that it'll pass and what might change. So what are your thoughts about that bill and what are you most concerned about?

Michelle Bodian: Sure, and I guess by the time listeners are listening to it, we'll see if any of my predictions are are true. So. Right now, um, you know, the house has adjourned for summer without voting on, you know, full floor votes on appropriation. So they'll be back in September. But in the Senate side, we do have a live, um, live language that could be scheduled on a Senate floor vote this week that could have, you know, huge ramifications for all hemp products, not just hemp beverages. And, you know, essentially the negative or bad language would set. Leave it up to HHS. So FDA to set the quantifiable limits of how much THC is allowed in products. And, you know, general thought is HHS and FDA based upon the, everything they've said about THC to date, you know, they're gonna set that quantifiable limit at at zero where, you know, 0.1 or some other super, super slow, low threshold, um, that would essentially knock out most of the industry. So that language, um. Does exist. It passed through both a House and Senate committee and that was up for Senate for a full, um, a full vote again as soon as this week. The Senate is set to adjourn, though at the end of the week, um, for their August recess. So. A lot of different things at play with appropriations.

A lot of that has nothing to do with hemp. But on the hemp side, there's been a couple of champions that wanna see this language change and has been lobbying and directly working, um, with Senator McConnell's office who's. one spearheading this language. So I mean, my prediction naturally derived Delta nine as like the cannabinoid, not necessarily as a finished product probably will be okay, but obviously devil in the details.

And whether it's this appropriation language or continuing re resolution or an eventual farm bill, you know, I think we've gotten. Too big of an industry at this point where Congress has known what's gone on and said, wait a second, we do need some type of regulatory framework. So, you know, silver lining as I see it, we all want some federal certainty.

We don't want in every. Four to five year farm bill that threatens to wipe us out. We do want a structure, you know, we all might disagree what that structure looks like, but as a business we all want a federal, you know, a federal blanket of regulatory certainty. So I'm hoping, you know, kind of this negative language does galvanize the industry to work together.

Once we get through playing defense, we can work on offense and try to build out that, that regulatory framework. So I don't think the language is gonna. completely out of appropriations as is. I think there's gonna be an amendment or two and hopefully more along the line, but I don't think this is the end of the story.

And you know, hopefully this industry's here for years. So hopefully we're, we're working on some federal, um, federal stability for years.

Sarah Westby: That's good to hear. I know when I read the bill, the thing that concerned me most was the, the prohibition on any quantifiable amounts of THC, and I think that. Redefining THC to mean total THC and sweep in Delta eight, Delta nine, maybe THCA. That makes sense based on a lot of the adulterated and unlicensed Delta eight products that you see on the market and kind of this whole shadow industry that you see, you know, particularly in Connecticut with the smoke shops and gasoline convenience stores selling these unlicensed products.

But to. To take out anything with quantifiable amounts of THC when you have some really good, legitimate tested, regulated hemp derived products that are generally low THC and wipe out that entire industry just seems to to be a very thoughtless and callous approach and, and I'm hoping that you're right in your prediction.

Michelle Bodian: Yeah, and I mean, we're also like, each year Congress doesn't act. More states acting, and I might not love their regulatory frameworks, but you know, Connecticut has milligram limits for beverage and gummies. You know, New York, I don't love their limits either, but they have 'em like each year Congress doesn't act.

States are acting. And so. I also don't love the idea of completely wiping that off the map. You know, if the elected officials and voters that put them in, you know, office have decided in Kentucky that five milligrams of beverage is what the state wants, like, I would love for the federal government to respect that and leave it to be a state's decision.

Sarah Westby: Yeah. So let's talk a little bit more about state regulations and they really run the gamut. So how do you, and how does. Nowadays, navigate this complex state by state patchwork and, and how do you develop a marketing strategy around these ever changing laws?

Michelle Bodian: It's a whole thing. Um,

Sarah Westby: I can't imagine.

Michelle Bodian: Yeah, and I, you know, regardless of what your strategy is, I mean, eyes wide open, knowing it's gonna immediately get, get, you know, knocked out the window. I mean, the upside is, you know, most states are in legislative session. From January to June, outside of like that insane time when Connecticut had like 48 hour effective dates to take inventory, like outside of that, typically effective dates for new laws aren't until July or October or even the following January.

So our approach, you know, the earlier, you know, the direction a state might be going, the sooner you could react and collaborate with your partners. You know, obviously. Warrior hat, but also government affairs hat, you know, getting, getting involved to help shape the laws, how, how we would like them is one battle. But you know, the second item, if you know what's coming a year from now, that's plenty of time to react and plan with our partners and say, Hey, you know, right now we're selling X product, but a year from now we're gonna only be able to sell y or you know, a milligram changing from a five milligram to a three milligram. You know, basically time is our friend to plan and react, and the sooner we know the information, the sooner we can get that marketing strategy. And then it's not just us in a vacuum working through our manufacturing partners. Um, you know, if we need to get special tops that are child resistant, the sooner we can order and plan that.

We're working with our, our retail partners or our wholesale partners, we're updating the website. You know, the sooner we can do all of this and plan for it, the better. So to me, it's just getting involved and knowing what's coming is our strongest marketing plan. I.

Sarah Westby: It sounds like if you're gonna be in the. Business. You have to be willing to be flexible and nimble and change on a dime, whether that's your formulation, your labeling, your packaging, your website, and you just have to assume that you're going to be making those changes on a pretty regular basis.

Michelle Bodian: Yeah, and the more you are strategic and what partners you pick that understand that, I mean, if you're with a new partner that's never made this category, you know, there's pluses and minuses, but something, if it's a new brewery that you've convinced to sell MTHC beverages and manufacture them, but they're not aware of the fact that this can change overnight.

Or that even the state where it's being manufactured in could, you could lose that. And if you don't contract around that reality or have those conversations upfront, it can get pretty challenging. But if you're working with a, a wholesaler in a market that's been selling for a year and they know, you know, like in Kentucky, they know that one legislative session later, you completely have to change the SKUs that are available. Working with partners that understand this space and the, you know, lots of potential upside, but also the need to be nimble really helps.

Sarah Westby: Are there any states that have regulatory friendly structures for hemp infused beverages or that have even eased their restrictions on hemp derived products? Or is the trend really seem to be going towards more restrictions everywhere.

Michelle Bodian: Um. Unpredictable. I mean, the, the trend that has emerged has seemingly been in states with an adult use market. Um, typically there is more resistance to hemp THC, whether that's a beverage or a gummy. So a, a New York. A California, Massachusetts type, Washington, Colorado. So some of these more mature marijuana adult use markets tends to work either legislatively or through a public health angle to try to prohibit hemp THC versus states with maybe no adult use or a very light medical marijuana program. They've actually put in strong legislative frameworks to allow the category so. Georgia, Louisiana, Tennessee, Kentucky. These are the states that have testing, labeling, milligram taxation, like really robust frameworks, um, on the hemp side that don't necessarily have medical or adult use or maybe are just coming online.

Sarah Westby: Now turning to some of the. Court decisions that we've seen on on hemp restrictions. Some federal courts have started to weigh in on these bills and these laws in response to legal challenges. And we've recently seen decisions out of the federal appellate courts in the fourth and eighth circuits, and overall, these decisions pretty resoundingly have upheld state's authority to restrict hemp sales within their borders, including even changing the definition of hemp as it's defined in the farm bill to just include delta eight, delta nine, THC, um, defining interstate commerce pretty narrowly, um, to only really prohibit, um, states from restricting transportation of hemp products through the state.

And finding that many of these laws don't discriminate against out-of-state interests and therefore don't violate the dormant commerce clause. Um, so I'm interested on your take on these decisions and, you know, this is reaching back a little bit to your, your private practice experience, but what avenues might some of these companies have to challenge overly restrictive state regimes?

Michelle Bodian: Once the law is baked, legal challenges, especially with more or less infinite appeal options. I mean, obviously at some point you would run out and the Supreme Court probably won't take up your case.

But you know, most of these decisions start at the trial court, then appellate, then Supreme, which to me is no, no certainty by which to build a business. I mean, we saw this out of Arkansas. You referenced the eighth citcuit and Biogen getting overturned. I mean, that took, know what, like two years almost to work its way through the system.

And in the meantime you've got businesses that have been established and employees and tax, like whole, whole ecosystems have sprung up in the time it takes these cases to work their way through the system. So to me, it's less about challenging state laws once they're in existence and getting involved early, like the number of businesses that don't have a relationship with their elected officials, number of individuals that don't have a relationship like you are, you are voting to put people in office that then potentially vote to put you out of business.

So, and it's so much harder. To, you know, go make a friend when you need a friend, and the clock is ticking. Versus now, like, literally now, when we're in the off season for most states, um, and about to be in the off season and recess for the federal government, like just to get on my soapbox and preach, like, now's the time to reach out to your elected officials.

Say, hi, here's the business I'm in. Here's what I'm doing. Here's why it's safe. Here's why I bring tax dollars and revenue. Here's how my business employees, people. make those connections and that conversation now in order to not even get to the place of needing to challenge restrictive laws, but instead work with elected officials to get the laws in place that would allow them to have a successful and thriving business.

Sarah Westby: I agree. And since I've been advising cannabis companies over the last several years, particularly in Connecticut, I find myself increasingly advising them to do just that.

Michelle Bodian: I mean, you, you try and even if you have the strongest legal arguments, that doesn't necessarily mean you're gonna win. And even if you win, that doesn't mean the state's not gonna further appeal it, which is then more time and more money like that. I mean, it's not a quick fix or any sort of certainty.

Sarah Westby: Right. It really is a last resort. Um, but I, I've noticed with cannabis more so than in, in other industries I've worked in how important those legislative efforts really are. And, and many of the companies that I've. Spoken with and, and will be speaking with for this podcast, say the same thing that you've, you've gotta get on top of the legislative efforts.

You have to make those connections. You need to show your face and speak in hearings and, you know, really personalize the cause and, and educate too. I think the education is a really big piece of it that business owners who get into this may not have on their radar.

Michelle Bodian: Yeah, I totally agree, and I like the thought that either regulator, you know, state regulators or state legislators are sitting around plotting how to put business. like put companies out of business is just like so to me, but I know that's how sometimes it feels. But yeah, to your point, a lack of education, you know, whether it's a, a regulation or a law or a bill. You know, these are people, most of 'em have other jobs, at least at the legislature, at the regulatory, you know, state level. Usually cannabis or hemp is just one responsibility and they have a whole host of other things on their plate. I don't think any of this is born outta malice to your point about education, like, but take the time to say, hey. Here's how the business runs. If you pass X, whatever law or regulation, the impact's gonna be y. And here's, let me explain how I've been operating or want to operate, or what's industry norm like? It varies so much, but helping educate. So that people can be empowered the decision makers with the information.

Sarah Westby: Definitely, I think in Connecticut and in other states, the the countervailing interests that the legislators are dealing with are, you know, the harm to kids and the fear that these products are just going to proliferate on the gray market, on the illegal market, and if we just ban them all. That's the quickest, simplest solution.

And it's definitive and, and we can show that we have this strong enforcement presence and that this is important to us. And I think that's where the education comes in to say, well, you know, not necessarily if you have a strong, robust legal market for cannabis and hemp products, and you can clearly distinguish them between the illegal products on the market, that's where you're gonna have the most success, and that's how you're gonna most effectively keep these bad products out of the hands of children. But if you ban everything, you're eliminating those good regulated options

Michelle Bodian: Yeah.

Sarah Westby: and I think that's a difficult. Thing to educate people on when they, when they can take the easier approach of banning everything.

But I think that's where the efforts need to go because in Connecticut we've seen a lot of CBD and hemp businesses, and hemp farmers who are really struggling now when, when they had good business models just a couple years ago.

Michelle Bodian: Yeah, and someone said something to me that really resonated the other day that you can't legislate away demand, and

Sarah Westby: Mm-hmm.

Michelle Bodian: that's. Really stuck with me, and

Sarah Westby: Yeah.

Michelle Bodian: the, the data shows that, you know, consumers are demanding this. So I view state and federal legislators as, you know, the guide to help protect. But to your point, if you just ban and prohibit that doesn't, that doesn't get demand doesn't go away.

It just goes away. They're, you know, tested source and therefore you, you know, can buy a lot of things via the mail still these days.

Sarah Westby: Right.

Sarah Westby: So Michelle, I'd like to know where you see this industry going over the next four to five years and, and what's nowadays place in that industry.

Michelle Bodian: Yeah, God, I, this one you'll have to ask me back to, uh, do you an update. I, it's been so unpredictable so far. I mean, if you had asked me four years ago, would hemp beverages be sold at Total Wine and Sue Leonard's, I probably would've laughed in your face. Um, just like to fathom that that reality. So I mean, like I said, each. Each legislative session, more and more states are seeing the realities and embracing it, and particularly on the beverage side as compared to any other form factor. So right now, 15 states expressly allow more than one milligram or one milligram. Of hemp, THC in a beverage like 15 states. And that's a huge change from two years ago. So, you know, let's do the math. You said, where are we gonna be in four states? Let's, you know, triple that in four years and get that many more states that are selling it. And then I think, where are these beverages in particular are finding success via alcohol channels, traditional alcohol channels. There's been some new and interesting partnerships and opportunities have come from that. I mean, we just did a hundred thousand plus person festival two weekends ago in Minnesota. I mean, that's like the first large scale festival where you could sell and buy hemp, THC beverages like I think. On-prem and that experience is gonna continue growing and I think states are gonna continue embracing this 'cause the demand is there.

And so I think more states are gonna express and allow hemp THC beverages.

Sarah Westby: That's exciting and I'm certainly gonna be watching your success and, um, and continue following your LinkedIn on a regular basis because you, you're so insightful and, and closely linked to this industry. Um, and one of the things I've wondered is, with all the information out there, what are some of your go-to resources to stay on top of developments in the law and in this industry?

Michelle Bodian: Oh my God. I have actually no good advice here. Um, and you'd be surprised how manually I am about all of this. Um, but like the human element cannot be under appreciated. A lot of this, and a lot of the information I get is just from human, human to human interactions. Having some trusted people that that share information among themselves has been the best source.

Sarah Westby: Absolutely. I've learned that this is an industry that is very open with sharing information, even amongst competitors and rivals, so that that's. Very on point. I think that the network is, is definitely the best source of information. So Michelle, just uh, sorry. Go ahead.

Michelle Bodian: No, I should, you know, not kick myself and remember to say, you know, the Hemp Beverage Alliance, you know, every state has a Slack channel and everyone's constantly posting like, this bill was filed, or this guidance document got posted. So there's a lot of good trade associations out there. You know, obviously Hemp Beverage Alliance just focused on and hemp beverages.

But, you know, trade associations also are a great source of information, intel. Um, if you're not able to build up those relationships yourself.

Sarah Westby: Yeah, absolutely. We have a great one in Connecticut as well. So in closing, Michelle, where can listeners find Nowadays beverages?

Michelle Bodian: We're not in Connecticut yet. Irony of irony. Um, so we will be there, but we, you know, there's a couple states like Connecticut at three milligrams, Iowa at four milligrams, Virginia, two milligrams, you know. Our second wave is going to be kind of these more specialized SKUs that are only single state. So I guess look for us in probably about six months at every local package store and dispensary. Um, otherwise you're gonna have to, probably closest would be New Jersey right now where you can find our, our full display of the spirits, um, spirits and cans. And unfortunately, due to Connecticut's rules, we can't even ship direct to you. So sorry listeners, but hang tight and we'll get some product into market soon enough.

Sarah Westby: Awesome. Sounds good. Thanks so much for being on Michelle. I appreciate your time.

Michelle Bodian: Yeah, thanks for having me