Hemp Industry Has a Year Before ‘Extinction Level Event’
A hemp plant sits at the Carriage House Hemp Farm in Oxford, Iowa. (Savannah Blake/The Gazette via AP)
The U.S. hemp industry is sounding the alarm over potential mass layoffs, lost revenue, and a surge in black-market sales after Congress inserted a sweeping ban on nearly all hemp-derived consumer products into the funding bill that ended the government shutdown.
The provision limits total THC per product container to 0.4 milligrams, a restriction that industry leaders say will effectively outlaw 95% of the $28 billion hemp retail market. For comparison, a single hemp gummy typically contains 2.5 to 10 milligrams of THC, according to the Journal of Cannabis Research.
This new limit replaces the 2018 Farm Bill’s definition of hemp, which allowed products with less than 0.3% THC by weight, CNBC reports. The ban is set to take effect in a year. Hemp and cannabis are the same species of plant, differing mainly in THC levels, and the legislation effectively narrows the definition of hemp while expanding that of marijuana, according to Forbes.
“In effect, this is a total, all-out, complete ban on hemp products in the United States,” said Jonathan Miller, general counsel for the U.S. Hemp Roundtable.
Jim Higdon, cofounder of Kentucky-based Cornbread Hemp, described the measure as “an extinction-level event for the CBD products industry, and the greater hemp and hemp beverage industry. If we can’t stop it, and we don’t pivot, it will destroy our business. Every product we make currently will become a Schedule I narcotic when it is implemented.”
The ban could threaten more than 300,000 jobs tied to hemp, from farmers and extractors to manufacturers and retailers, according to cannabis research firm Whitney Economics. States with significant hemp industries, including Kentucky, Texas, and Utah, are expected to feel the sharpest economic impact.
The move marks a reversal from 2018, when Senate Majority Leader Mitch McConnell of Kentucky championed hemp legalization as an economic boost for his state. McConnell and other Republicans argue that the new restriction “restores the original intent” of the 2018 Farm Bill by closing a loophole that allowed unregulated and potentially unsafe hemp products. Boris Jordan, CEO of cannabis company Curaleaf, told CNBC the change was a last-minute request from McConnell.
Not all Republicans support the ban. Senator Rand Paul, Kentucky’s other senator, criticized the provision as an overreach that is “killing jobs and crushing farmers.”
Industry executives warn the ban could push billions in sales to the black market, where products would be untested, untaxed, and unregulated. States and local governments could also lose millions in tax revenue from hemp sales. Leaders in the hemp sector are now advocating for federal standards on testing, labeling, and age restrictions rather than outright prohibition, and are preparing a lobbying effort to overturn the ban.
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