Lack of federal Farm Bill leaves states to deal with hemp-derived THC chaos

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Hemp-derived THC remains both a billion-dollar opportunity ideal for small businesses and a guarantee of serious trouble for state governments in 2025.

As drastically different situations in California and Florida demonstrate, whether hemp is a golden opportunity or a huge risk all depends on where you live.

And the reality is changing by the day.

On one hand, Gov. Gavin Newsom’s announcement last week that businesses in the California market are almost totally compliant with a blanket ban on hemp-derived THC presents a dream scenario for many in the state’s $32 billion legal marijuana industry: Consumers are steered squarely toward licensed cannabis stores thanks to proactive government enforcement.

The flip side is the situation in Florida, where, unlike last year, Republican Gov. Ron DeSantis will not have to decide whether to sign or veto a bill that jeopardizes the state’s hemp industry, which could be worth more than $5 billion, according to a 2023 estimate.

That’s because, the week before Newsom’s boasts, the Florida Legislature’s regular session ended May 2 without lawmakers passing either of two proposed intoxicating hemp regulatory bills that would have forced many current operators out of business.

‘Federal inaction’ causing state-level ‘battles’

Though hemp regulations are stalemated in Florida, industry operators in other states are anxiously awaiting the progress of bills that could curtail the industry.

These include:

• Alabama.
• Texas, the nation’s largest market for hemp-derived THC products.
• Ohio.

The scattershot situation is the result of Congress’ inability to pass a new Farm Bill or stand-alone legislation that addresses the “loophole” in the 2018 Farm Bill that’s led to the proliferation of intoxicating hemp-derived THC products across the country.

Such products include hemp-derived beverages that many operators, including major marijuana multistate operators, view as a vital, new potential revenue source that’s also a rare opportunity for interstate commerce.

“Delays in federal Farm Bill negotiations have had real-world consequences, creating a fragmented landscape of state regulations for cannabis products due to the absence of federal action,” said Michael Bronstein, president of the American Trade Association for Cannabis and Hemp, a Washington, D.C.-based lobby group.

“Battles are taking place in states due to federal inaction, pitting the desire to preserve the integrity of state-regulated markets up against unregulated, untested and oftentimes synthetically converted products.”

Congress is nearly two years overdue in passing a new Farm Bill.

In the absence of a full bill, partial proposals, including a controversial package of cuts to federal food assistance released Monday, do not address hemp.

More ambitious bills, such as a proposal floated by U.S. Sen. Ron Wyden of Oregon that would have regulated most hemp products while also banning synthetically derived THC, are stalled.

Without clear direction from Congress, familiar struggles play out in states throughout the country.

Prohibition-minded lawmakers are raising alarms about the potential for hemp-derived THC ending up in slushy machines and other consumer products.

Meanwhile, industry advocates bemoan the potential loss of jobs and economic activity if intoxicating hemp products are banned.

Texas’ $5.5 billion intoxicating hemp market at risk

In Texas, considered the largest intoxicating hemp market in the country thanks to a medical marijuana program that’s limited to low-THC CBD oil, Lt. Gov. Dan Patrick is zealously pursuing a California-style ban on hemp-derived THC.

However, despite the Texas Senate’s passage of a highly restrictive bill, Patrick has yet to win over lawmakers in the state House, where lawmakers are pushing restrictions that are far looser.

There are more than 8,500 hemp retailers in Texas, and total revenue might exceed $5.5 billion, according to a March report from Oregon-based Whitney Economics.

The Texas House appears unwilling to ban hemp-derived THC while also pushing an expansion of the state’s MMJ program.

It’s unclear how Patrick, who wields significant power in the state, might proceed if lawmakers can’t compromise.

In Alabama, alarmed hemp interests and their allies – including the mayor of Birmingham, anchor of the state’s most populous metropolitan area – are urging Gov. Kay Ivey to veto a wide-ranging regulatory bill that, if signed, would:

• Ban all hemp-derived inhalable products, including TCHA flower.
• Cap the amount of THC in hemp-derived products at 5 milligrams.
• Restrict products to liquor stores and other retailers that limit access to customers 21 and older.
• Authorize state regulators to require products to be produced and sold by licensed businesses.

And in Ohio, Senate Bill 86 would limit the sale of intoxicating hemp products to state-licensed cannabis stores.

Marijuana MSOs hedge bets by creating hemp lines

The uncertainty is causing headaches for the thousands of small operators, including retailers and manufacturers, that have entered the hemp-derived THC sector.

And it’s also echoing in C-suites.

At least some marijuana MSOs appear to be hedging their bets and preparing for all outcomes, including an indefinite extension of the current, uneasy status quo.

A year after abandoning plans to exit hemp entirely and instead deciding to launch a hemp-derived THC product line, New York-based marijuana MSO Curaleaf Holdings in April opened a dedicated hemp product store in West Palm Beach, Florida, under its brand, The Hemp Co.

In a sign of both the company’s commitment and hemp’s mainstream acceptance, Curaleaf also partnered with DoorDash to deliver gummies, seltzers and other products in markets such as Florida and Texas.

But as the ongoing drama across the country indicates, that all could change.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.

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Lack of federal Farm Bill leaves states to deal with hemp-derived THC chaos