A growing U.S. industry built around hemp-derived THC products is confronting an uncertain future as Congress moves toward tighter federal restrictions that could force many businesses to close.
In North Carolina, entrepreneur Nicholas Hohns has built a company producing high-potency THC edibles. His operation grew rapidly after the COVID-19 pandemic, after he lost a personal trainer job. Now, he is considering other products, including creatine gummies, in case new federal rules make his current business impossible.
The dispute centers on a provision in the 2018 farm bill that legalized industrial hemp. The law classified hemp as cannabis containing no more than 0.3 percent delta-9 THC on a weight basis. That definition created an opening for manufacturers to produce beverages, candies, and other products containing enough hemp-derived THC to cause intoxication while remaining within the legal threshold.
The market expanded nationwide, with THC gummies, drinks, vape products, and other items appearing in convenience stores, gas stations, and other retailers. Some products were available in places that prohibit recreational marijuana, while others competed with licensed cannabis businesses in states where marijuana is legal.
Congress later moved to close the loophole. A provision included in legislation ending a prolonged government shutdown established a federal limit of 0.4 mg of THC per package. The restriction was initially scheduled to take effect one year after passage.
A temporary government-funding measure subsequently pushed the effective date from November to December, providing lawmakers additional time to consider alternatives.
Industry representatives are urging Congress to regulate the products instead of eliminating them. Proposed changes include restricting sales to adults aged 21 and over, imposing package-level THC limits, and prohibiting imported cannabis compounds.
Kentucky-based Cornbread Hemp is among the businesses seeking a compromise. Company executives say they could accept a significantly lower THC level, potentially around 5 milligrams per product, but argue that the proposed federal threshold would make their operations unviable. The company employs more than 100 people and sells hemp beverages across numerous states.
Industry advocates also warn that the proposed limit could affect some CBD products that do not produce intoxication, including certain topical treatments.
Not everyone opposes the crackdown. Public health advocates argue that loosely regulated intoxicating hemp products can pose risks, particularly when they are sold outside established cannabis regulations.
Licensed marijuana businesses also support the restrictions, saying hemp-derived THC products have benefited from a regulatory gap. Their representatives argue that companies built around the loophole should expect major changes as federal oversight increases.
For business owners such as Hohns, however, the debate is about whether years of investment can survive the coming rules. Some companies have already halted production, while others are preparing for a market in which their existing products may no longer be legally viable.
The situation is still very much in flux, and anything can happen on the regulatory front. Various businesses like Innovative Industrial Properties Inc. (NYSE: IIPR) that serve cannabis businesses will be monitoring how discussions progress on matters of THC products made from hemp.
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