Congress Passes Bill to Ban Hemp-Derived THC, Impacting $28 Billion Industry

In a significant legislative move, the U.S. House of Representatives has passed a spending package that includes a ban on hemp-derived THC, a decision poised to disrupt the $28.3 billion hemp industry. This development marks the culmination of efforts by lawmakers to address concerns over the proliferation of intoxicating hemp products, which have been widely available due to loopholes in the 2018 Farm Bill. The bill, supported by a Republican majority, aims to curtail the sale of these products, which are often found in unregulated markets such as gas stations and online platforms

The bill’s passage has sparked concern among hemp businesses and advocates who fear the impact on an industry that has thrived under the previous legal framework. The ban, which takes effect 365 days after President Donald Trump signs it into law, redefines hemp to exclude products with THC concentrations above 0.3 percent. This redefinition effectively closes the THCA loophole, which merchants have exploited to sell products outside of state-regulated marijuana channels, affecting a market valued at hundreds of millions annually

Supporters of the ban, including regulated cannabis companies and alcohol lobbies, argue that it levels the playing field by ensuring all intoxicating products adhere to similar regulatory standards. "The vote closes the hemp loophole," said Rep. Andy Harris, the ban's chief sponsor, highlighting the need to address unregulated sales. However, opposition remains, with figures like Rep. Thomas Massie criticizing the tactics used to push the ban through Congress, indicating a contentious debate around the issue

The regulatory implications of the ban are profound, particularly in states with limited cannabis programs. Critics argue that it may inadvertently bolster the illicit market as legal avenues for THC products diminish. In Texas, for example, where medical cannabis programs are restricted, the ban could leave consumers with fewer legal options, potentially driving demand underground. Meanwhile, businesses are faced with the challenge of navigating a complex legal landscape that could involve federal enforcement and tax implications under the Internal Revenue Code 280E

Looking ahead, industry stakeholders are calling for swift legislative action to mitigate the ban’s impact. Jim Higdon of Cornbread Hemp emphasized the urgency of passing a bill through the House Energy & Commerce Committee to provide clarity and stability for hemp farmers and businesses. Without intervention, the future of rational cannabis laws in the U.S. could be at risk, as the ban threatens to upend established business models and market dynamics

The broader cannabis industry is also bracing for potential disruptions, as the ban could exacerbate existing challenges such as taxation, banking, and interstate commerce. Rod Kight, a hemp law expert, noted that the ban might create opportunities in hemp-friendly states but also introduce legal uncertainties. These developments underscore the ongoing complexities in aligning federal and state cannabis regulations, highlighting the need for a unified approach to hemp and cannabis policy

As the industry awaits the ban’s implementation, the debate over hemp-derived THC continues to evolve. Stakeholders from various sectors are keenly observing how the legislative landscape will shift and what it means for the future of both hemp and cannabis industries in the United States. The next steps will likely involve continued advocacy and negotiation to ensure a balanced regulatory framework that supports innovation while maintaining public safety