In a commercial kitchen near Raleigh, North Carolina, entrepreneur Nicholas Hohns prepares THC-infused gummies, a product emblematic of a rapidly growing but increasingly uncertain segment of the hemp industry. The industry, which produces impairing hemp-derived products distinct from the regulated marijuana market, faces potential collapse after recent federal legislative action seeks to close a legal loophole that has allowed these products to proliferate.
The controversy centers on the 2018 farm bill, spearheaded by Kentucky Republican Senator Mitch McConnell, which legalized industrial hemp defined as cannabis containing less than 0.3% delta-9 tetrahydrocannabinol (THC) by weight. This definition inadvertently created a loophole enabling products containing hemp-derived THC to be sold widely, including edibles, beverages, and smokable flowers that deliver psychoactive effects similar to marijuana.
Unlike marijuana, hemp has historically been cultivated for fiber, food, and wellness products, with low THC content. However, the federal statute’s specific THC measurement threshold allowed for potent hemp-based products to enter markets nationwide, sometimes sold at mainstream retailers and convenience stores, and often accessible to teenagers. This development prompted many states to impose regulations or outright bans on impairing hemp products.
The federal government moved to address these concerns last year, when McConnell included a provision in a spending bill to ban hemp products with more than 0.4 milligrams of total THC per container. This measure delayed the ban’s enforcement for one year, which the recent continuing resolution extended until December 11, 2023, to allow more time for legislative consideration of alternative regulatory approaches.
Industry advocates argue the ban would devastate a market estimated to generate $28.3 billion in retail revenue annually, supporting about 225,000 jobs and contributing $2.1 billion in state sales taxes, according to a recent Whitney Economics report. Companies like Kentucky’s Cornbread Hemp, which employs over 100 people and distributes products across 18 states, say the proposed 0.4-milligram THC limit would be untenable, potentially forcing shutdowns. They have proposed compromise measures such as restricting sales to adults over 21 and setting higher THC thresholds per package.
Critics of the industry, including public health advocates and regulated marijuana businesses, support the ban, citing safety concerns and unfair competition. Kevin Sabet, head of Smart Approaches to Marijuana, emphasized the risks posed by unregulated products, while Cory Harris, representing state-legal cannabis operations, characterized the industry’s prior growth as reliant on a legal gray area that posed inherent business risks.
Some businesses have already scaled back operations amid uncertainty. Drinkin’ Buds, a cannabis beverage company in Wisconsin, has halted production, with its co-founder actively pursuing employment elsewhere. Meanwhile, retailers like Total Wine & More have defended the hemp THC sector, noting cannabis-infused beverages have helped offset declines in traditional alcohol sales.
As December approaches, stakeholders on all sides await further congressional action to clarify the legal landscape for hemp-derived THC products, with many businesses bracing for significant disruption should the ban take effect without regulatory alternatives.