A federal ban is coming. Hemp brands are on the clock to find a resolution.

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Lobbying efforts are mobilizing, legislative proposals are under discussion, and hemp-derived THC beverage sales are surging in the wake of Congress’ surprise move last week to ban most consumer hemp products in a funding bill that reopened the federal government after a record 44-day shutdown.

But the clock is ticking as the ban is set to go into effect on November 12 of next year.

Finding consensus to upend the prohibition will be difficult on Capitol Hill and among a diverse constituency, which includes small, independent suppliers, national THC hemp brands, the influential alcohol sector, third-party manufacturers, retailers  and others.

Yet optimism persists, largely because of the incredible success of hemp-infused drinks now enjoyed by millions of Americans, as well as the industry’s economic impact and job creation, and the growing normalization of accessing intoxicating hemp products at mainstream outlets such as bars, music venues and liquor stores.

“I think we'll end up seeing THC beverages having to play by the same rules as alcohol,” said Angus Rittenburg, CEO and co-founder of Wynk, one of the country’s leading low-dose THC beverage brands.

On the same day Congress approved the hemp-product ban, Cheech and Chong received a flurry of orders from distributors. The brand relies on 40 wholesalers to distribute its hemp-infused beverages in 26 states. It also has a partnership with Surly Brewing Co. in Minnesota. 

Meanwhile, search traffic for Wynk products skyrocketed, prompting sales to double last week compared to the same period a year ago. “There's never been more national awareness of this category than there is right now,” Rittenburg told Cultivated. “We're already seeing a surge in sales as a result.”

The category, fueled by changing consumer preferences away from alcohol, has been boosted by national media attention amid the shutdown and conglomerates entering the market, including DoorDash, Edible Arrangements, Total Wine & More, and most recently, Circle K, and Target.  

The influential hemp brands are taking different routes to reverse the impending ban. Cheech and Chong President Brand Harshbarger told Cultivated the company is pushing for a Farm Bill amendment to allow all hemp-infused products but also pursuing a stand-alone bill in the House and Senate.

“We're going to come through the holidays and have a game plan as a category and have language that we're ready to put into a bill,” he said. “We've got authors across the board, on both sides of the aisle that we have support from.”

Startups like Dear Flor have faced numerous challenges since entering the California market in 2023 with cannabis-infused gummies in Filipino inspired flavors. The small, independent New York City-based company was among dozens of brands stiffed by Medmen Enterprises last year amid the retailer’s collapse in California and elsewhere.

The Los Angeles-based company ran up more than $22,000 in unpaid invoices for Dear Flor products, according to CEO and co-founder Lisa Angulo Reid. The brand expanded into hemp-derived gummies and attracted a new customer base immediately.

“Entering the federally legal hemp D9 market in 2024 allowed us to sell nationwide and share our culture with a much broader community of consumers who were excited by our flavors,” Reid told Cultivated.

Dear Flor, similar to several brands interviewed for this story, plans to stay the course.

“We have a year to keep selling our products legally. So that’s what we’re going to do,” Reid said.

Advocate Robb Harmon plans to boost awareness of the ban and the services of his Florida nonprofit, Veterans Cannabis Care, which aims to provide free, natural THC alternatives through the Florida Medical Marijuana program.

He said many veterans cannot afford access in the medical market and hemp-derived products helped fill the gap.

“They are accessible, cost-effective, and most importantly, they’ve helped countless veterans manage pain, anxiety, PTSD, and sleep issues without fear of losing their VA benefits or facing federal consequences tied to Schedule I cannabis,” Harmon added. 

The federal policy shift will affect investor sentiment, capital and business valuations, industry insiders told Cultivated.

“New capital will likely dry up fairly quickly,” said Mitchell Osak, president of Quanta Consulting Inc., a cannabis and psychedelics strategic and financial advisory in Toronto. And the hangover could linger well into 2026, according to Rittenburg.

“It's going to be very hard for anybody to raise money over the course of the next year with investors knowing this ban is coming,” he said.

Meanwhile the valuations of state-licensed cannabis companies, which have cratered nationwide the last few years, should rebound, according to investment banker Darren Gleeman.

That’s because the competitive landscape could change dramatically if sales channels for hemp-derived THC products close at gas stations, convenience stores, vape shops and online retailers, he argues.  

“Now we have a federal rule on the books with a clear one-year runway that will effectively shut down a large slice of that channel,” said Gleeman, managing partner of MBO Ventures, a New York City-based investment bank that helps cannabis companies and other businesses structure and implement Employee Stock Ownership Plans, or ESOPs.

“The moment a rule like this becomes real it begins to affect value today because buyers and investors immediately update their expectations for future revenue and profit,” he added. “Higher expected future cash flow translates into a higher valuation now.”

Despite the rosier outlook, shares of publicly-traded U.S. cannabis and hemp companies continue to slide. The AdvisorShares Pure US Cannabis ETF (MSOS), which is a basket of U.S. cannabis stocks, is down over 12% over the last five days, trading at $2.99 Wednesday’s market close. 

The developments underscore the complex relationship between the hemp industry and the highly regulated and taxed state-licensed cannabis sector.

On one hand, many state-licensed cannabis brands, including Wana, Green Thumb Industries and Curaleaf, have expanded into THC hemp offerings, creating lucrative revenue streams.

Others, like Insa, which has retail and wholesale operations in Massachusetts and Pennsylvania, and stores in Connecticut and Florida, have declined.

Insa executive Steve Reilly applauded Congress for closing the “loophole” created in the 2018 Farm Bill that allowed the sale of largely unregulated and untested hemp-derived THC products.

“This is not a matter of prohibition, as some hemp advocates claim, but rather about correcting a legal oversight that allowed intoxicating, unsafe, and misleading products to be sold in gas stations, vape shops, and even through the mail,” Reilly, Insa’s head of government relations told Cultivated via email. “Intoxicating items are now properly classified as cannabis where appropriate, subject to testing and regulation under applicable state laws.”

Silver Therapeutics plans to court hemp product customers who live near its cannabis dispensaries in New York, Maine, Massachusetts and Vermont.

“We will allocate more marketing and educational resources towards recruiting hemp THC customers to our retail locations across the states we operate in,” cofounder and chief operating officer Brendan Mckee told Cultivated. “The ban on hemp will likely be advantageous for licensed cannabis operators like us.” 

Within the hemp space, a new chasm is forming between smaller, independent suppliers and retailers and large companies that utilize alcohol distributors.

Small business owner Monica Roerig Olano is concerned that beverages will get a special carve out championed by the alcohol industry and certain manufacturers, like Wynk.

“I’m deeply concerned about what this means for edibles, tinctures and the independent retailers who don’t have the scale of a Circle K or Target,” said Olano, founder of Cali Sober Market, which sells a variety of non-alcoholic beverages at its lone store in suburban New Orleans.

Wynk, which is projected to sell more than 400,000 cases of hemp-infused drinks this year, is pushing for a beverage carve-out, Rittenburg says. The company also operates a co-packaging line at its Waverly, New York headquarters, where production is on pace for five million cases of hemp-based beverages this year, up from 700,000 in 2024, an astronomical 614% increase.

Rittenburg believes the industry needs the backing of the alcohol and retail lobby to enact legislative change.

“The hemp industry does not have the lobbying power or money to really make a dent on this,” he said. “We need to align ourselves with the sort of legacy lobbying groups that have so much power, prior success and relationships. 

“It's the only way we're going to get this through.” 

Story edited by Jeremy Berke.