What A Federal Ban On THC-Infused Drinks And Snacks Could Mean For The Hemp Industry

Minneapolis : The production lines at Indeed Brewing moved quickly, filling cans not with beer but with THC-infused seltzer. The product, which contains the compound that gets marijuana users high, has been a lifeline for Indeed and other craft breweries as alcohol sales have plummeted in recent years.

However, this boom seems to come to a screeching halt. The bill that ended this month’s federal government shutdown included a provision to ban those drinks, along with other harmful drinks and snacks made from hemp, which have proliferated across the country in recent years. Now the $24 billion cannabis industry is trying to save itself before the provision goes into effect in November 2026.

“This is a big deal,” said Ryan Bandy, Indeed’s chief operating officer. “That would be a complete mess for our breweries, our industry, and of course the many people who love this stuff.”

Here’s what you need to know about the ban on hemp-derived products.

Congress opened the door in 2018

Marijuana and hemp are the same species. Marijuana is grown for its high levels of THC in its flowers. Low-THC hemp is grown for its tough fibers, food or wellness products. “Rope, not drugs” has long been the slogan of farmers supporting the legalization of hemp.

After states began legalizing marijuana for adult use more than a decade ago, cannabis advocates saw an opening at the federal level. As part of the 2018 farm bill, Congress legalized the cultivation of industrial hemp to provide a new cash crop for farmers, including in Republican Senator Mitch McConnell’s home state of Kentucky.

But the law’s definition of hemp as having less than 0.3% of a specific type of THC called delta-9 has opened a huge loophole. Beverages or snack bags can meet this threshold and still contain enough THC to make people drunk. Businesses can further take advantage of the law by extracting a harmless compound called CBD and chemically converting it into other harmful types of THC, such as delta-8 or delta-10.

Conclusion? E-cigarette oil, gummy candies, chips, cookies, sodas and other unregulated, untested products loaded with hemp-derived THC have spread across the country. It is sold in many places, at gas stations or markets, even to young people. In states where marijuana is legal, cuts are made on products that are heavily taxed and regulated. In others, they evaded the ban on recreational use of weed.

Some states, including Indiana, have reported spikes in calls to poison control centers due to children being exposed to THC.

A mix of state regulations

Since then, dozens of states have taken steps to regulate or ban harmful cannabis products. In October, Democratic California Governor Gavin Newsom signed a bill banning the sale of intoxicating cannabis products outside the state’s legal marijuana system.

Texas, which has a huge cannabis market, is moving to regulate harmful cannabis sales by, for example, limiting it to people over 21. In Nebraska, lawmakers instead considered a bill that would criminalize the sale and possession of hemp-based products containing THC.

Washington state has adopted a program to regulate hemp cultivation. But the number of licensed growers has decreased since the state banned intoxicating cannabis products outside the regulated marijuana market in 2023. Five years ago, that number was 220, said Trecia Ehrlich, cannabis program manager for the state’s agriculture department. This year there were 42, and he expects that number to drop by about half next year because of the looming federal ban.

Minnesota made brewed beverages and foods legal for people 21 and over in 2022. The products, which must be legally derived from certified hemp, have become so popular that Target now offers THC drinks at some of its stores in the state.

They’re also a boon for liquor stores and small Minneapolis brewers like Indeed, where THC drinks account for close to a quarter of the business, Bandy said. At Bauhaus Brew Labs, a few blocks away, THC drinks account for 26% of revenue from distributed products and 11% of revenue at the brewery’s taproom.

A powerful senator is taking action to close the loophole

None of this was what McConnell intended when he helped craft the 2018 farm bill. He eventually closed that loophole by adding the federal hemp-THC ban to the measure to end the 43-day federal government shutdown approved by the Senate on Nov. 10.

“It will keep these dangerous products out of the hands of children, while also protecting the hemp industry for farmers,” McConnell said. “Industrial hemp and CBD will remain legal for industrial applications.”

Some in the legal marijuana industry celebrated the ban because it would put an end to what they see as unfair competition.

Prohibitionists also joined them. “There really is no good argument for allowing these dangerous products to be sold in our country,” said Kevin Sabet, president and CEO of Smart Approaches to Marijuana.

However, the ban is not valid for one year. This gave the industry hope that there was still time to pass regulations that would improve the hemp THC industry (such as banning synthetically derived THC, mandating age restrictions on sales, and banning marketing to children) rather than eliminating it.

“We are very hopeful that cooler heads will prevail,” said Jonathan Miller, general counsel of the industry group U.S. Hemp Roundtable. “If they truly thought it was a health emergency, there wouldn’t be a year-long period.”

The group says the federal ban would jeopardize more than 300,000 jobs and cost states $1.5 billion in lost taxes.

Drew Hurst, president and chief operating officer of Bauhaus Brew Labs, has no doubt his company will be among the casualties.

“If this continues the way it’s currently written, I don’t see any way Bauhaus will stay on the market,” Hurst said.

What’s next?

Some lawmakers say they will push for regulation of the hemp THC industry. Kentucky’s second senator, Republican Rand Paul, offered an amendment to remove McConnell’s hemp language from the landmark government funding bill, but it failed on a lopsided 76-24 vote.

Minnesota’s Democratic U.S. senators, Amy Klobuchar and Tina Smith, are among those implementing a strategy to save the industry. Klobuchar noted at a recent press conference that the ban was added to an unrelated shutdown bill without a hearing. He suggested that the federal government could allow states to develop their own regulatory frameworks, or that Minnesota’s strict regulations could be used as a national model.

Kevin Hilliard, co-founder of Insight Brewing in Minneapolis, said the cannabis industry needs a solution before planting time next spring.

“If a farmer is indecisive, he will not plant,” Hilliard said.