Perhaps "nefarious" is too strong a term, but the intent (at least in states that have legal cannabis) AFAICT, is to avoid the regulations around testing for adulterants, potency, etc.
In most states with legalized cannabis, testing for a variety of harmful ingredients and the potency of specific products is required for those taking part in the legalized cannabis trade.
Those growing, packaging and distributing "hemp" products are not subject to such testing regulations.
That may not be nefarious, but avoiding such regulation increases the likelihood of harmful additives (chemical pesticides and other adulterants) and unknown potencies. This would likely increase the chances that unscrupulous vendors will sell (knowingly or unknowingly) harmful/dangerous products.
And given that the products are essentially the same, that gives those who don't have to pay for testing or go through the marketplaces defined by state laws, giving those folks an advantage over those who follow state law.
What's more, folks who avoid extant law through this loophole, are not incentivized to make safe, tested products.
So maybe not "nefarious," but certainly anti-consumer with perverse incentives to create and sell harmful products.
My (perhaps incorrect) understanding is that the majority of the sales are happening in the 26 states without recreational marijuana, however, and that many consumers in the recreational states are still choosing to go with the dispensary product vs. head shop/liquor store/etc.
As someone in a non-rec state, as much as I would prefer the dispensary option with stricter regulations, it's still much more regulated than "the dude whose house i show up with and venmo him some money and get a bag that came from god knows where"
I don't know if that's the case, but it wouldn't surprise me at all.
I'm not sure what you mean WRT "hemp" being more "regulated" than the black market. Even though I live in a (now) legalized state, there's still a thriving black market, both for folks who have been growing for decades who maintain a positive reputation among distributors/wholesalers, and those who purchase out-of-state product (that's tested and sold legally in those other states) without tax or records, and can then undercut the legal dispensaries.
I'm not familiar enough with the "hemp" growers/sellers, but IIUC, since it's not supposed to be used as a mind-altering substance, the testing and purity regulations may not apply.
All that said, things are a mess WRT to cannabis in the US. Some states are doing it well, others are not. And the Federal government, while not irrelevant, has not made progress in this area -- and that includes the "hemp" loophole which (and I could be mistaken here) isn't regulated at all.
Hopefully sometime in the future the states and the federal governments will get it right. Which is often how these types of issues are addressed in the US -- study the issue carefully, choose the path that is least effective and most harmful, then iterate, trying less bad and less harmful "solutions" as you go along.
Presumably we'll get there eventually.
Just basic laws around farming. For example, lead arsenate is banned in the US, and I trust the hemp farmers to not be using it as much as I trust any similar operation, but someone illegally growing stuff? They're already breaking the law. And who knows where it was grown to begin with?
And in general, there are companies behind all of this. There are names. Legal recourse if shit goes wrong. Who am I going to sue if I find out that the shit Bob has been selling me has been full of harmful pesticides or if the oil was full of some harmful additive, etc.?
Legal recourse is definitely an upside of not dealing with a black market. I agree.
I'm not familiar with the laws around hemp growing and/or the Federal loophole, but I hope you're right about at least minimal regulation (and legal recourse for) of non-consumable products, especially if they're being consumed (can you sue the makers of clothing or rope if you get sick eating or smoking their products?).
As I said, hopefully we'll eventually get to a sane policy regarding cannabis.
Someone growing the same plant that is regulated by California but decides they don't need testing or licenses is just plain anti-social. You can't not know you're doing something wrong in that case.
I'm more concerned with ending an absurd prohibition, personally.