A new ban threatens over 90% of hemp cannabinoid products. The industry mobilizes, advocating for regulation over prohibition to secure its future.
The American hemp industry faces an existential challenge after Congress approved and President Trump signed into law an effective ban on hemp cannabinoids last November. Under the language of the ban, which is set to go into effect this coming November, a huge percentage of hemp products will become illegal, defined as controlled substances because of their cannabinoid content.
Hemp, defined as cannabis containing less than 0.3 percent delta-9 THC by dry weight, was legalized under the 2018 farm bill. Innovative operators in the field soon discovered they could extract intoxicating cannabinoids from hemp and soon flooded the market with legal, unregulated, psychoactive products such as drinks, edibles, vapes, and gummies. That led to last year's congressional backlash, where lawmakers in November voted to shift from measuring only delta-9 THC to a "total THC" standard that includes other intoxicating isomers. That law also placed a limit of 0.4 milligrams of total THC per container and explicitly banned synthetic cannabinoids, such as delta-8 and delta-10 THC, THCA, and HHC. That means more than 90 percent of intoxicating hemp products will become illegal as of November 12.
Hemp interests and other interested stakeholders are not just sitting back to await their doom. Instead, the industry is mobilizing to try to get Congress to replace its prohibitionist approach with a regulatory one. Short-term, some advocates are calling for the one-year moratorium on enforcement of the ban to be extended to three years (until November 2028), giving the parties involved more time to find a way to a long-term solution. Long-term, the most economically and politically viable way forward is through the regulation of what has been a Wild West hemp market—not its prohibition, advocates say.
"We're fighting on both tracks," said Jonathan Miller, general counsel for the US Hemp Roundtable, a coalition of dozens of leading hemp organizations and companies "We prefer to fix the issue through robust regulation, but that takes time, so having an extension would be helpful in making sure that regulatory pathway is available," he told the American Hemp Monitor.
"There are some proposals that will be introduced soon," Miller said, pointing especially to a draft bill from Rep. Morgan Griffith (R-VA). "The Griffith bill looks like a very viable vehicle. We are looking for some improvements, and they are open to that. We will likely see a new or amended version in coming weeks."
Miller also pointed to a pair of bills that aim to push back the date the ban will go into effect, House Resolution 7010 from Rep. Jim Baird (R-IN) and Senate Bill 386 from Sen. Amy Klobuchar (D-MN), with Sens. Jeff Merkley (D-OR) and Rand Paul (R-KY) as cosponsors.
"We are cautiously optimistic we can fix this," Miller said. "The industry is united in trying to replace the ban with robust regulations and is working together very well to find a solution that works best for all. People recognize the devastating impact that will occur if nothing is done. I think we will see some movement."
Chris Fontes wears many hats in the hemp industry. He is the founder of the High Spirits beverage company, chair of policy for the Cannabis Beverages Association, a strategic advisor for the Hemp Beverage Alliance, a board member of the US Hemp Roundtable, and president of the hemp certification program the US Hemp Authority.
While federal hemp restrictions are not set to kick in until November 12, Fontes says the looming threat is already having an impact.
"For my company, which I think is typical of what other drink companies are seeing, sales have slowed somewhat," he told the American Hemp Monitor. "Legacy alcohol distributors had been picking up hemp drinks as a safety net with beer and wine sales declining, and it's been a lifeline for them. But that's not their core business, so now they are hedging their bets, stockpiling inventory, not bringing on new brands.
"And the retailer chains are slowing a bit; they are waiting for some clarity before deploying assets," Fontes said. "All of that is resulting is a thinning of distribution through traditional channels. We're probably down 50 percent in the first quarter of this year from the fourth quarter last year. This has already had a big impact on us."
When asked about the hemp cannabinoid beverage industry's prospects if Congress fails to approve a new regulatory scheme before the restrictions kick in, Fontes didn't mince words.
"If this doesn't happen by November, we all go out of business," he said. "If there are no changes by then, no one will be able to function legally. There's a really narrow business model where you might be able to make some CBD isolates, but that's a tiny percentage of the market."
Even though the US Hemp Roundtable is backing the effort to postpone implementation of the cannabinoid ban, Fontes doesn’t see that as the path forward.
"The best bet is some form of regulatory package, which will likely come through a bill not yet publicly released," he said. "I don't think a standalone bill will get passed; it will be a marker bill that will get beat up in committee and then copy-pasted into some sort of must-pass legislation. But everything is in chaos right now because of Iran."
"That there are already bills out there is a good sign, but we have to get something into a must-pass vehicle. If we get the package, we don't need to get that moratorium. I think a moratorium alone without some sort of guard rails is not likely right now. Almost all the representatives say to us, 'We give you 18 months and you'll just keep selling shit to kids.' They see a moratorium as passing the buck, and they have legitimate concerns," Fontes said.
Fontes suggested a successful bill could leave the heavy regulatory lifting to the relevant federal agencies instead of having Congress fight over milligrams.
"It would be regulatory light, with age restrictions and proper warning, and would say things like 'FDA you have to do this and you have a year and a half.' That could be pretty easy, and we could get big wins that would address most of the concerns."
For that to happen, though, hempsters are going to have to fend off some actors in the broader cannabis milieu. Some medical marijuana and adult use operators in legal marijuana states do not want intoxicating hemp products nipping at their heels.
"There are a handful of marijuana industry players that view hemp as competition and are leading the effort to kill the retail sales of our products both federally and at the state level," Miller said. "But the marijuana industry is not monolithic and there is a lot of support for hemp. We are hopeful more marijuana groups will come to our aid; no one likes prohibition."
That includes the National Organization for the Reform of Marijuana Laws (NORML), the pioneering marijuana legalization group that has been around since 1970.
"Our position is that prohibition doesn’t work and will create a net negative," said NORML political director Morgan Fox. "Where prohibition remains the law of the land, sometimes the unregulated market is the only place people can access cannabinoid medicines," he told the Monitor. "But the presence of bad actors in those markets is a real problem for consumers. The best approach to such products is thoughtful regulation."
But, Fox suggested, perhaps a broader approach is warranted.
"It's a potential box canyon for us to focus on any individual silo of products when the best way forward is to deschedule cannabis," he said. "It's a potentially long road ahead, but if we can use descheduling to undo what Congress inadvisedly passed regarding intoxicating cannabinoid products, we can achieve a better way to regulate. What Congress did was pass job destruction and pushing folks back into underground markets."