Will States Defy the New Federal Hemp Ban?

The federal budget bill to reopen the government includes a new definition for hemp that threatens to shake the industry to its core. But with an established hemp economy already booming, some states are exploring ways to change the ban or find ways to work around it.

Under the legislation, the definition of legal hemp will be changed to include only cannabis with less than 0.3% THC by dry weight. Unlike the 2018 Farm Bill’s definition, which only included delta-9 THC, the new legislation adds other isomers of the compound, such as delta-8. More troubling to many operators is a new regulation that caps total THC in consumable products at 0.4 milligrams per package, a threshold most hemp products available today would exceed.

The threat to the hemp industry is raising the ire of operators, policymakers, and state leaders.

Economist Robin Goldstein wrote in an opinion piece for the Houston Chronicle shared by High Times that Texas should “forget the Trump-signed THC ban.”

Arguing that “hemp is still as legal as ever,” Goldstein said Gov. Gregg Abbott’s rejection of a state hemp ban and executive order regulating intoxicating hemp products means that “THC hemp products have already been explicitly legalized under Texas law.”

With the federal ban, Texas “is therefore now in conflict with U.S. federal law,” Goldstein wrote.

Noting that recreational marijuana is also illegal under federal law despite legalization in California and two dozen other states, Goldstein said that “Texas and its THC industry simply join the conflicts-with-federal law club.”

“I see no more reason that THC hemp businesses should stop operating in Texas than that THC cannabis businesses should stop operating in California,” the economist concluded.

Opposition to Hemp Ban Builds

Kentucky Gov. Andy Beshear told reporters that “hemp is an important industry in Kentucky,” and that “we should have appropriate safety regulations around it, but we should make those regulations here in Kentucky —talking to the industry and making sure that we get that balance right.”

“I think that we can protect our kids,” Beshear added. “I think that we can do the right thing to protect all of our people while not handicapping an industry that supports a lot of people.”

Lawmakers in Congress are also exploring ways to avoid the federal hemp ban. Minnesota Rep. Ilhan Omar told Marijuana Moment that some representatives in Congress are seeking “exemptions” from the ban “for states that have already rolled out their hemp policies.”

Cannabis Industry Reaction

Some hemp operators are also exploring ways to avoid the federal THC ban. Cameron Clarke, CEO of Sunderstorm, a company with both hemp and regulated cannabis products, says that “the hemp industry is aggressively working at the state level to make this a states-rights issue.”

“The implication is to put hemp cannabis in a similar situation to licensed cannabis, legal at the state level, illegal at the federal level,” Clarke writes in a statement to IgniteIt.

Paula Savchenko, founding partner of Cannacore Group and PS Law Group, says that the coming year “will determine how the market is regulated, and whether it continues to exist in the form we know today.”

“Early indications suggest that state-by-state responses could produce a cannabis-style patchwork of frameworks, limiting interstate commerce and heightening compliance risks,” Savchenko tells IgniteIt. “At the same time, continued federal advocacy and lobbying may still shape the final contours of national policy.”

Jasmine Johnson, CEO of GŪD Essence, says that “In the absence of clear federal guidance, states are stepping up to protect both their economies and their consumers.”

“Hemp has become a critical agricultural and retail sector, and an abrupt federal ban would destabilize thousands of small businesses overnight,” Johnson wrote in a statement to IgniteIt. “What we’re seeing now is states signaling that they are prepared to continue regulating hemp responsibly on their own terms. In many ways, it mirrors the early cannabis landscape—states aren’t willing to wait for federal clarity when livelihoods and public safety are on the line.”

But not everyone in the cannabis industry supports state-level defiance. Steve Reilly, head of government relations for Massachusetts-based cannabis MSO Insa, commented on the possiblity of hemp companies defying the new federal ban while complying with state regulations.

“Federal law supersedes state law; it is a constitutional law violation for a state to draft more permissive hemp laws now that the federal government has acted,” Reilly wrote in an emailed statement. “Anyone pushing this narrative is trying to muddy the water to benefit untested, unregulated, intoxicating hemp products that appeal to children.”

The Countdown Has Begun

Whatever their position, those in the cannabis industry have time before the ban takes effect. Under the budget bill, the hemp provisions are scheduled to take effect one year after passage.

“Our advice to operators is to stay engaged and closely monitor both state and federal developments, because decisions made over the coming year could define the industry’s trajectory for years to come,” says attorney Savchenko.