Congress Delays Federal Hemp THC Ban to Dec. 11 as Industry Seeks Rules

A short-term government funding bill signed by President Donald Trump last month moved the start date of the federal ban on intoxicating hemp-derived THC from Nov. 12 to Dec. 11, handing Congress three extra weeks to decide whether to regulate a sprawling market for impairing hemp products or let it disappear.

The reprieve is narrow and the deadline is now the whole fight. America's multibillion-dollar trade in hemp-derived seltzers, gummies, vapes and smokable flower — a segment distinct from the regulated legal marijuana industry — faces potential elimination after lawmakers voted to close a loophole in federal law that allowed it to flourish.

"It's such a weird spot to be in," said Nicholas Hohns, who runs Deutermann Farms in Clayton, North Carolina, and makes potent THC gummies in a commercial kitchen outside Raleigh. "You worked 100 hours a week for the past four years, and, yeah, you made some money. But now you might have nothing to show for it."

How the loophole opened

Marijuana and hemp are the same plant, cannabis. Marijuana is cultivated for high concentrations of THC in its flowers, while low-THC hemp was historically grown for fiber, food and wellness products — "rope, not dope," as the farmers who backed legalization put it.

To give those farmers a new cash crop, Kentucky Republican Sen. Mitch McConnell pushed industrial hemp legalization through the 2018 farm bill. But the way that law defined hemp — as containing less than 0.3 percent of a specific form of THC, delta-9, by weight — left an opening. Beverages and snacks could meet the threshold and still carry more than enough THC to get a person high.

Untested vape oil, gummy candies, chips and sodas laden with hemp-derived THC spread across the country, including into gas stations and convenience stores, where they were available even to teenagers. Some sellers moved marijuana under the theory that raw cannabis contains THC-A, a form that turns into impairing delta-9 only when heated or burned. The products evaded state bans on recreational marijuana or undercut heavily taxed, regulated cannabis in states where it is legal. Dozens of states responded by regulating or banning impairing hemp products on their own.

What the ban does

McConnell closed the loophole late last year, inserting a hemp THC ban into the measure that ended the longest government shutdown in history. The provision limits the amount of THC in hemp products to 0.4 milligrams per container, a level low enough to rule out intoxicating doses, and it originally was not scheduled to take effect for a year.

That is the clock the September funding bill reset, from mid-November to Dec. 11. Industry advocates and some lawmakers are using the extra time to press for a different outcome: rules rather than a flat ban.

The industry's counteroffer

The sector's proposed framework would restrict impairing products to buyers 21 and older, cap how much THC can go into a single package, and bar imported cannabis compounds. The industry group U.S. Hemp Roundtable argues the alternative is worse than regulation.

The 0.4-milligram ceiling is so low that it would also sweep in some non-impairing CBD products, such as topical lotions, said Jonathan Miller, the roundtable's general counsel.

The owners of Kentucky's Cornbread Hemp say they would accept a cap of, say, 5 milligrams per product if that is what it takes to win support in Congress. They have 105 employees, sell hemp beverages in 18 states and expect to bring in $65 million this year.

"If it goes through in December, this place is toast — it's gone," said co-owner Eric Zipperle. Jim Higdon is the other owner.

A supply chain already contracting

The uncertainty is already rippling through companies that built their business around the loophole. Drinkin' Buds, a cannabis beverage company in Sheboygan, Wisconsin, has mothballed production, and co-founder Matt Swanson removed himself from the payroll on Thursday. "There's just so much uncertainty," he said. "I'm actively looking for employment."

Hohns, who entered the hemp business after losing a job as a personal trainer during the COVID-19 pandemic, has kept his capital spending minimal and is weighing a pivot to other products, such as creatine gummies. He described giving himself a window of "18 months to two years" in the market when he started. "No way is the government just going to sit here and let us do this when this was supposed to be for fiber, plastics, building materials, rope," he recalled thinking.

Allies and opponents line up

The industry's defenders include alcohol retailers such as Total Wine & More, which have leaned on cannabis seltzer sales to offset declining alcohol volume.

Opponents say the products are a public health problem in their own right. "I have sympathy for people losing their jobs, but I also have sympathy for the many, many more people whose lives are affected by this," said Kevin Sabet, chief executive of Smart Approaches to Marijuana. Marijuana dependence and heavy use of high-potency THC products are recognized behavioral health concerns, and clinicians say potency and access are two of the variables that shape risk.

The regulated legal marijuana industry, which views hemp THC as unfair competition, also supports the ban. Cory Harris, a lobbyist for state-legal cannabis operators, suggested the dire predictions are overstated: even if interstate sales of products like THC seltzers and gummies end, some could find a home in legal in-state markets, and states such as North Carolina could set up their own hemp programs.

"If you go from having virtually no rules to suddenly having an awful lot of rules, that's a buzzkill," Harris said. "Welcome to our world. But if you establish your whole business within a legally questionable loophole, that's just sort of the risk you take."

The stakes on the clock

A report last month from Whitney Economics, which studies the market, estimated that the ban threatens to reduce retail revenues by $28.3 billion, displace 225,000 jobs and cut state sales tax potential by $2.1 billion.

Whether that argument moves Congress before Dec. 11 is now the central question for an industry that grew up in a gap in a 2018 law — and that has weeks left to persuade lawmakers to write new rules instead of shutting it down.