The hemp-derived THC market exploded after the 2018 Farm Bill cracked the door open. What followed was a gold rush—millions made, thousands of products launched, and a new category of legal intoxicants quietly gaining ground across the U.S.
Now that door is swinging shut.
About a dozen states are slamming the brakes with new bans or crippling regulations. That’s got operators, retailers, and industry advocates in panic mode, as the once-booming sector finds itself suddenly cornered.
The boom started with a loophole
It wasn’t supposed to happen like this. The 2018 Farm Bill legalized hemp, defining it as cannabis with less than 0.3% delta-9 THC by dry weight. It seemed harmless at first—hemp for rope, CBD oils for grandma. No big deal.
Then came the loophole.
Smart processors figured out they could extract other intoxicating compounds—like delta-8 THC—from legal hemp. Chemically similar to delta-9, delta-8 could still get you high. And it was legal. Technically. That technicality turned into an industry.
Suddenly, hemp-derived THC products were on gas station shelves, in boutique stores, and even in vending machines. Gummies, vapes, sodas—you name it.
Sales soared. So did scrutiny.
California’s ban lit the fuse
California didn’t tiptoe. The state banned intoxicating hemp-derived products outright in 2023. That move sent shockwaves through the market, especially given California’s long history as a cannabis trailblazer.
What worried operators even more was that other states started following suit. One by one.
Jonathan Miller, general counsel for the U.S. Hemp Roundtable, says the tide is turning fast.
“We’re under fire from a lot of different sources,” he told MJBizDaily. “There are a number of states that are looking at completely banning retail sales of our products.”
In many places, it’s not even clear who’s leading the charge.
More than just cannabis players behind the crackdown
It’s easy to blame the marijuana industry. After all, licensed cannabis businesses pay taxes, deal with tight regulations, and can’t sell across state lines. Meanwhile, hemp-THC operators run more freely—and often more profitably.
But there’s another group with skin in the game: alcohol.
Younger consumers are drinking less. Alcohol brands see the writing on the wall. Some hemp advocates believe lobbyists from the booze sector are helping nudge lawmakers toward tougher rules.
That’s what’s so frustrating for hemp business owners. It’s not just one opponent—they’re getting hit from multiple sides.
- One industry insider summed it up like this:*
- “Big cannabis wants us gone. Big alcohol doesn’t want us here. And regulators don’t know what to make of us.”
A patchwork of policies, and no federal clarity
The chaos is amplified by the fact that there’s still no clear federal guidance on hemp-derived intoxicants.
Every state is left to interpret things their own way. Some allow these products with age restrictions. Others treat them like marijuana. And some, like Idaho and South Dakota, ban them outright.
Here’s a quick look at where things stand:
| State | Status on Hemp-Derived THC |
|---|---|
| California | Banned |
| Minnesota | Regulated, allowed |
| Texas | Legal, pending court cases |
| Idaho | Fully banned |
| Florida | Under review |
| New York | Proposed restrictions |
The result? Businesses operating legally in one state could face felony charges in another.
Small businesses brace for the fallout
For many small operators, this isn’t just a policy shift—it’s a death sentence.
Some have poured their life savings into building hemp brands. Others have leased storefronts, hired staff, and invested in product lines now deemed illegal overnight.
A Tennessee-based retailer said she had to pull thousands of dollars worth of gummies off her shelves last week. “We followed every rule. And now it’s like the rug’s just been yanked out.”
One business owner in Georgia said he’s thinking of moving his entire operation to Minnesota. “It’s not sustainable to play whack-a-mole with state laws.”
And for consumers? Confusion reigns. Some think hemp THC is the same as CBD. Others assume it’s the same as marijuana. Most don’t know the difference—and now, many aren’t even sure what’s legal.
The next Farm Bill could make or break everything
The 2023 Farm Bill, originally expected last year, has been delayed multiple times. But when it lands, it might be the most consequential yet for hemp-THC operators.
Advocates are lobbying hard to protect the status of hemp-derived cannabinoids. But with increasing pressure from multiple sectors, the odds of a friendly bill are shrinking.
One idea gaining traction is creating a federal definition of “intoxicating hemp”—something that didn’t exist before. That could lead to new classifications, new rules, and potentially a national age restriction for sales.
But even a clear federal rule might come too late for some.
Big brands adapt, while mom-and-pops flounder
Ironically, the big hemp players are finding ways to survive. Some have already shifted to fully regulated cannabis markets. Others are pushing products into friendlier states or pivoting to non-THC lines like CBD and functional mushrooms.
But smaller brands don’t have that luxury.
- No capital to retool
- No legal team to fight new rules
- No cross-state supply chain to pivot
One small brand in North Carolina said they’re just trying to make it to summer. “If they ban us, we’re done. Simple as that.”
For now, the hemp-THC industry is holding its breath. And watching the map. Because the next state to ban might be theirs.