The federal budget bill includes a one-year-delayed ban on hemp-derived THC, sparking a major lobbying push for a regulatory fix in the Farm Bill.
The fight has exposed divisions among hemp, cannabis, and alcohol interests while states move ahead with their own regulated hemp frameworks.
Industry leaders are uniting around the One Plant Alliance, arguing for a single regulated system for hemp and cannabis instead of a federal ban.
The funding bill signed into law last week to reopen the government included language that would essentially outlaw all hemp-derived THC, an industry that’s estimated at nearly $30 billion. But the new rules won’t go into effect for a year — and hemp companies aren’t planning on twiddling their thumbs.
“We have 365 days from the president’s signature to pass a good bill through regular order,” Cornbread Hemp co-founder Jim Higdon said in an interview. He’s not alone in that viewpoint.
“There's an opportunity to fix the issue in the farm bill over the next year that's kind of our best bet federally,” said Clint Palmer, Director of Compliance at the Hemp Law Group.
There was a flurry of activism last week from state attorneys general and both consumer and alcohol lobby groups preceding the final vote on the budget and the standalone on the hemp restrictions. There were also lobbying efforts from alcohol distributors in favor of preserving the hemp industry as they have been able to profit from THC beverage sales, which have become fixtures in liquor stores especially in states without a legal cannabis regime.
“It was partly lobbied for the members of the liquor associations who don't have their hands in the hemp cookie jar already,” said Palmer.
Ironically, the fight over hemp centered on two Senators — both Kentucky Republicans. Mitch McConnell, who was Senate leader when the 2018 Farm Bill made the hemp boom possible, has been attempting to close the so-called loophole that his legislation created seven years ago. Meanwhile, Rand Paul, who has consistently advocated for legal cannabis, fought to replace an outright ban with regulations that could ensure the hemp industry survives.
A split in the industry
The split in rules concerning state-legal cannabis and hemp created tension between the two industries featuring the same plant, but with slightly different chemical compositions. Further complicating the divide was the proliferation of synthetic cannabinoids and products such as Delta-8 THC, some which experts say carry health risks, especially when left unregulated.
Some state-legal cannabis companies began to see hemp as a competitor, resulting in lobbying efforts for state hemp bans, while other companies such as Curaleaf, Stiiizy, and Cookies expanded their offerings into hemp, allowing them to spread beyond the few states in which they were licensed to sell cannabis.
States such as Texas and Tennessee recently passed tighter hemp regulations that would still allow the products to be sold, albeit with limited potency and strict rules that move the industry closer to states with legal cannabis.
"State programs are proving that responsible hemp production works when clear rules are in place, and they’re better equipped to refine those systems than Washington is to eradicate them," Carolindica CEO Chris Karazin said. "This move just punishes everyone who’s played by the rules.” Carolindica is a North Carolina hemp company.
Karazin says a federal ban would erase years of legitimate progress and stall growth. In his view, the responsible move would be to let states set their own regulations rather than the federal government dismantling what he says is a functioning hemp market.
The ‘One Plant Alliance’
Other industry participants and advocates are coalescing on what they call the “One Plant Alliance.”
“We believe the path forward lies in regulation, not prohibition — one that reflects the ‘one plant’ reality and honors hemp and cannabis as part of the same evolving industry,” said Azuca CEO Kim Sanchez Rael.
The One Plant Alliance, which describes itself as a coalition of "industry pioneers" led by cannabis mainstay Steve DeAngelo, announced a campaign pushing for regulations of cannabis and hemp that includes age-gating, mandatory testing, and proper labeling standards.
The alliance argues that the larger goal of cannabis access and legalization has been fractured by two sets of rules regarding hemp at the federal level and state-legal cannabis.
"America's cannabis consumers don't need a patchwork of conflicting cannabis laws," DeAngelo said in a statement. "What we need is one clear set of rules for all industry sectors – Licensed, Hemp and Legacy."