A surge in hemp-derived THC products that reshaped convenience store shelves and fueled a fast-growing market appears to be heading toward a sharp slowdown. Tucked inside the bill that brought an end to the recent federal shutdown is a clause that would outlaw hemp-derived THC products nationwide.
That measure, scheduled for November 2026, has sent the $24 billion hemp sector scrambling for answers and time. Supporters and critics agree on one thing; this change would close a loophole created six years ago by the Farm Bill 2018, although some disagree on whether that is a good thing.
The 2018 bill defined hemp as cannabis containing less than 0.3% delta-9 THC. That wording created a loophole, allowing operators to produce products with enough THC to cause impairment. Businesses found even more room to maneuver by converting CBD, a compound that does not intoxicate, into other forms of THC, such as delta-10 and delta-8.
Within a few years, vape cartridges, candies, sodas, chips, and baked products using hemp-derived THC had spread nationwide with little oversight. In some states, teenagers could buy them at gas stations.
In legal cannabis markets, they competed directly with regulated and taxed products. In prohibition states, they skirted bans on recreational cannabis. Several states, including Indiana, later reported more calls to poison control centers involving young children. With federal action stalled until now, states moved on their own. Some restricted sales, others banned items outright.
Influential Senator Mitch McConnell, who was instrumental in shaping the 2018 hemp legislation, added the federal ban to the recent measure that ended the 43-day shutdown.
Parts of the legal cannabis industry have welcomed the development, arguing that the hemp sector has been allowed to dodge taxes and safety rules. Anti-cannabis groups have also praised the move.
However, hemp producers hope that Congress will use the one-year window to craft national standards instead of shutting the industry down. They argue that stricter age limits, rules against synthetic cannabinoids, and bans on child-focused marketing could address concerns without wiping out the entire industry.
Industry representatives warn the ban could put over 300,000 jobs at risk and cost states an estimated $1.5 billion in tax revenue. Some business owners say their companies would not survive.
Several lawmakers are now pushing for a middle path. Senator Rand Paul attempted to remove the ban from the funding bill, though the effort failed. Minnesota’s Senators, Tina Smith and Amy Klobuchar, have called for hearings and suggested that states be allowed to create their own regulations.
The marijuana industry, including entities like Canopy Growth Corp. (NASDAQ: CGC) (TSX: WEED), will be following the discussions in the wake of this federal hemp-sourced THC ban to see how it reshapes the hemp and cannabis industries.
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