Hemp Industry Alert: Federal Ban on Hemp-Derived THC Products – Immediate Action Required

As reported in MJBizDaily, President Trump signed legislation on Nov. 12th, that effectively bans most consumable hemp-derived THC products nationwide. The provision was included in the spending bill that ended the historic government shutdown and will take effect one year from enactment. This reverses the hemp industry framework established under the 2018 Farm Bill and threatens a multi-billion-dollar industry; estimated to be an $11 billion in 2025 and anticipated to grow to $47 billion by 2032.

Obstacles in the hemp industry are not new and this latest development is just another obstacle to hemp cultivators, distributors, processors and retailers. Over the next year, the hemp industry will need to re-formulate policy change strategies or prepare to exit the industry altogether.

KEY PROVISIONS

New THC Limits

The new ban outlaws  hemp products containing more than 0.4 milligrams of total THC per container. For context, a typical hemp gummy or beverage contains 2.5 to 10 milligrams of D9-THC which exceeds the total THC limit.

Redefinition of Legal Hemp

The legislation specifies that the 0.3% threshold will apply to total THC—including delta-8 and other isomers—rather than just delta-9 THC on a dry weight basis. This fundamentally changes what qualifies as “legal hemp” under federal law. Hemp products that fall outside the qualifying limits are federally classified as marijuana and illegal under federal law.

Prohibited Products

The ban covers:

• Any intermediate hemp-derived cannabinoid products marketed or sold as a final product or directly to consumers for personal or household use.
• Products containing cannabinoids that are synthesized or manufactured outside of the cannabis plant or not capable of being naturally produced by it.
• All natural and converted THC forms (Delta-9, Delta-8, etc.) in consumable forms including gummies, drinks, vapes, and topical creams.

Agency Requirements

Within 90 days of enactment, the FDA and other agencies must publish lists of all cannabinoids known to be naturally produced by Cannabis sativa L. plants and all tetrahydrocannabinol class cannabinoids.

IMPLEMENTATION TIMELINE

Effective Date: One year from November 12, 2025 (November 12, 2026)

The one-year implementation period provides a window for potential legislative corrections or alternative regulatory frameworks.

INDUSTRY IMPACT

Economic Consequences

Industry executives estimate that the threshold will wipe out 95% of the $28 billion hemp retail market. More than 300,000 jobs are at risk, with economic impacts expected in states with large hemp sectors, including Kentucky, Texas and Utah. In an already teetering economy this reduction in GDP is an unwelcome change for many.

SCOPE AND EXCEPTIONS

CBD Products Affected

Industry experts posit the ban will apply even to non-intoxicating CBD products that people use for medical reasons. This extends the prohibition beyond intoxicating products to encompass many wellness and medical-use items.

State Regulatory Override

The ban overrides the regulatory frameworks of several states and effectively preempts state hemp programs established over the past seven years.

RECOMMENDED ACTIONS

Immediate (Next 30 Days)

1. Inventory Assessment: Conduct comprehensive review and testing plan of all hemp-derived product lines and determine which products exceed the 0.4 mg total THC threshold or total THC standard.
2. Supply Chain Analysis: Evaluate supplier contracts and inventory commitments.

Contract Review:  Analyze all existing contracts for change of law provisions and other impacted terms and conditions.

1. Financial Planning: Model revenue impacts and assess liquidity needs for the transition period.
2. Employee Communications: Prepare workforce for potential business restructuring.
3. Internal Compliance Officer:  Assign personnel to monitor legislative and policy changes.

Short-Term (30-90 Days)

1. Regulatory Monitoring: Track FDA guidance development and any corrective legislation
2. State Compliance: Review state-specific regulations that may provide temporary safe harbor.
3. Business Alternatives: Explore pivoting to state-licensed cannabis operations where feasible.
4. Industry Coalition: Engage with trade associations advocating for regulatory alternatives.

Long-Term (90 Days to Implementation)

1. Product Reformulation: Develop compliant product lines if viable under new thresholds.
2. Licensing Strategy: Evaluate state adult-use cannabis licensing opportunities.
3. Legal Preservation: Document compliance history and business losses for potential legal challenges
4. Exit Planning: Prepare orderly wind-down procedures if business continuation becomes untenable.

This legislation represents a fundamental shift in federal hemp policy with far-reaching consequences for manufacturers, retailers, farmers, and consumers. The one-year implementation timeline provides a critical window for advocacy, business restructuring, and potential legislative correction. Companies in the hemp industry should take immediate action to assess their exposure and develop contingency plans.

The Clark Hill Cannabis Industry Group will provide periodic updates as the FDA and other governmental agencies issue guidance on compliance. For further updates, information or assistance with compliance planning, please contact:

Clark Hill PLC

Craig Bennett Small, Esq.

csmall@clarkhill.com