A $28B hemp THC industry is fighting to save itself from a looming federal ban

In a commercial kitchen outside Raleigh, North Carolina, Nicholas Hohns spreads a blue-green goo into a gridded mold, making one of his company’s signature products: potent THC gummies, featuring the primary intoxicating compound found in marijuana.

It’s a business he might soon have to give up. America’s multibillion-dollar market for impairing hemp products — from THC seltzers sold at some Target stores to smokable cannabis flowers — faces potential elimination after Congress voted to close a loophole in federal law that has allowed it to flourish.

Advocates for the industry, along with some lawmakers, are fighting to save it. The short-term government-funding bill signed by President Donald Trump last month delayed the effective date of the “hemp THC ban” from Nov. 12 to Dec. 11, giving Congress more time to consider regulating the products rather than banning them.

“It’s such a weird spot to be in,” said Hohns. “You worked 100 hours a week for the past four years, and, yeah, you made some money. But now you might have nothing to show for it.”

Sen. Mitch McConnell closed a loophole in the hemp law he championed

Marijuana and hemp are the same plant — cannabis. Marijuana is cultivated for high levels of THC in its flowers. Low-THC hemp has historically been grown for its sturdy fibers, food or wellness products. “Rope, not dope” was long the motto of farmers who supported legalizing hemp.

To give farmers a new cash crop, Kentucky Republican Sen. Mitch McConnell successfully pushed the legalization of industrial hemp in the 2018 farm bill.

But the way that law defined hemp — as having less than 0.3% of a specific type of THC, called delta-9, by weight — opened a huge loophole. Beverages or snacks could meet that threshold and still contain more than enough THC to get people high.

Vape oil, gummy candies, chips, sodas and other unregulated, untested products laden with hemp-derived THC spread around the country, including in gas stations or convenience stores, where they were available even to teens. Some businesses started selling marijuana under the theory that raw marijuana’s THC is in a form called THC-A, which only turns into impairing delta-9 when heated or burned.

The products evaded state prohibitions on recreational weed or undercut heavily taxed and regulated cannabis where it is legal.

Dozens of states responded by regulating or banning impairing hemp products.

McConnell finally closed the loophole late last year by inserting a hemp THC ban into a measure that ended the longest government shutdown in history.

The ban, which limits the amount of THC in hemp products to 0.4 milligrams per container, wouldn’t take effect for a year.

An industry tries to save itself

The ban “threatens to reduce retail revenues by $28.3 billion, displacing 225,000 jobs and reducing state sales tax potential by $2.1 billion,” according to a report last month from Whitney Economics, which studies the market.

The industry hopes to save itself by restricting impairing products to people 21 and older, limiting how much THC can be in a package, and banning imported cannabis compounds.

The owners of Kentucky’s Cornbread Hemp, Eric Zipperle and Jim Higdon, are prepared to cap their products at, say, 5 milligrams if that’s what it takes to win support from lawmakers. But the 0.4 milligram limit would destroy their business, they said.

“If it goes through in December, this place is toast — it’s gone,” Zipperle said.

They have 105 employees, sell hemp beverages in 18 states and expect to bring in $65 million this year.

The 0.4-milligram cap is so low that it would ban even some non-impairing CBD products, such as topical lotions, said Jonathan Miller, general counsel of the industry group U.S. Hemp Roundtable.

Some consider other work

Hohns, who runs Deutermann Farms in Clayton, North Carolina, entered the hemp industry after losing his job as a personal trainer during the COVID-19 pandemic. North Carolina has not legalized either medical or recreational marijuana, but many of the edibles Hohns makes are more potent than what’s available in states that have.

“When I started seeing THC edibles being sold … I was like, I got 18 months to two years to make money in this industry,” Hohns said. “No way is the government just going to sit here and let us do this when this was supposed to be for fiber, plastics, building materials, rope.”

That was more than four years ago. Hohns kept his capital investments minimal, fearing a shutdown. He has considered making other products, such as creatine gummies, if he has to get out of the hemp THC business.

Things have been more stressful for others. Drinkin’ Buds, a cannabis beverage company in Sheboygan, Wisconsin, has mothballed production. Co-founder Matt Swanson took himself off the payroll on Thursday.

“There’s just so much uncertainty,” Swanson said. “I’m actively looking for employment.”

Allies and opponents line up

Among those who have come to the defense of the hemp industry are alcohol retailers, including Total Wine & More. Sales of cannabis seltzers have helped offset falling alcohol sales.

Opponents include people who say the products are dangerous.

“I have sympathy for people losing their jobs, but I also have sympathy for the many, many more people whose lives are affected by this,” said Kevin Sabet, CEO of Smart Approaches to Marijuana.

The regulated legal marijuana industry, which sees hemp THC as unfair competition, also supports the ban. Cory Harris, a lobbyist for state-legal cannabis operators, suggested that dire predictions about its effect on the intoxicating hemp industry are overstated.

While the ban would end interstate sales of products like THC seltzers and gummies, some could find a home in legal in-state markets, he said. It’s possible THC drinks could be sold at stores in the states where they were produced. States like North Carolina could adopt legal hemp programs.

“If you go from having virtually no rules to suddenly having an awful lot of rules, that’s a buzzkill,” Harris said. “Welcome to our world. But if you establish your whole business within a legally questionable loophole, that’s just sort of the risk you take.”

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Associated Press reporters Allen G. Breed in Clayton, North Carolina, and Dylan Lovan in Louisville, Kentucky, contributed.