A federal ban buried within recent government legislation threatens to dismantle the booming market for THC-infused beverages and snacks, placing thousands of jobs and a £24 billion industry at risk.
The provision, hidden within the bill that ended last month's federal government shutdown, targets impairing drinks and food products derived from hemp. This comes as a devastating blow to craft breweries and businesses that have increasingly relied on cannabis-infused products as alcohol sales decline.
The unexpected boom and looming bust
At Indeed Brewing, production lines hum with activity, but instead of beer, they're filling cans with THC-infused seltzer. For many craft breweries facing declining alcohol sales, these cannabis products have become a financial lifeline.
Ryan Bandy, Indeed's chief business officer, described the potential impact as "a big deal" that would create "a mess for our breweries, for our industry, and obviously for a lot of people who like these things."
The ban doesn't take effect until November 2026, giving the industry approximately one year to mount a defence or seek alternative solutions.
How the legal loophole emerged
The current situation stems from the 2018 farm bill, which legalised industrial hemp cultivation. The legislation defined hemp as containing less than 0.3% of a specific THC type called delta-9.
This created an unexpected loophole. Beverages and snacks could technically meet this threshold while still containing sufficient THC to produce psychoactive effects. Businesses further exploited this by chemically converting non-impairing CBD into other THC variants like delta-8 and delta-10.
The result was an explosion of unregulated, untested products including vape oils, gummy candies, cookies, and sodas containing hemp-derived THC. These became widely available at gas stations and convenience stores, sometimes even to teenagers.
In states where recreational marijuana remains prohibited, these products effectively circumvented legal restrictions, while in legal marijuana states they undercut heavily taxed and regulated cannabis markets.
State responses and industry impact
Dozens of states have taken independent action to regulate or ban impairing hemp products. California Governor Gavin Newsom recently signed legislation banning intoxicating hemp products outside the state's legal marijuana system.
Texas is moving to restrict sales to those over 21, while Nebraska considers criminalising hemp-based THC products entirely.
The impact on licensed hemp growers has been severe. In Washington state, licensed growers plummeted from 220 five years ago to just 42 this year, with further declines expected.
Meanwhile, in Minnesota where infused beverages became legal in 2022 for adults over 21, the products have proven enormously popular. Target now stocks THC drinks in some stores, while local breweries have come to depend on them.
At Bauhaus Brew Labs, THC drinks account for 26% of distributed product revenues and 11% of taproom sales. Drew Hurst, the company's president, expressed grave concerns: "If this goes through as written currently, I don't see a way at all that Bauhaus could stay in business."
Political manoeuvring and industry response
Senator Mitch McConnell, who originally championed the 2018 farm bill, inserted the hemp THC ban into the government funding measure that passed on November 10.
"It will keep these dangerous products out of the hands of children, while preserving the hemp industry for farmers," McConnell stated, adding that "industrial hemp and CBD will remain legal for industrial applications."
The ban received support from both legal marijuana businesses, who viewed hemp-derived products as unfair competition, and prohibition advocates.
Kevin Sabet of Smart Approaches to Marijuana declared: "There's really no good argument for allowing these dangerous products to be sold in our country."
However, the industry remains hopeful that the one-year delay before implementation provides opportunity for compromise. Jonathan Miller, general counsel of the U.S. Hemp Roundtable, noted: "We are very hopeful that cooler heads will prevail. If they really thought there was a health emergency, there would be no year-long period."
The industry group estimates the federal ban could jeopardise over 300,000 jobs while costing states £1.5 billion in lost tax revenue.
What comes next for the industry?
Several lawmakers are already strategising to save the industry. Minnesota's Democratic senators, Amy Klobuchar and Tina Smith, are among those seeking alternatives.
Klobuchar highlighted that the ban was inserted into unrelated legislation without proper hearings, suggesting states could develop their own regulatory frameworks or Minnesota's strict regulations could serve as a national model.
For farmers and businesses, timing is critical. Kevin Hilliard of Insight Brewing in Minneapolis emphasised the need for resolution before spring planting: "If a farmer has uncertainty, they're not going to plant."
As the November 2026 deadline approaches, the £24 billion hemp industry faces an uncertain future, with thousands of jobs and businesses hanging in the balance.
