Senate Funding Bill Threatens $28B Hemp Market

Congress just passed, and President Trump has signed, a funding bill that brings the government back online after weeks of shutdown and simultaneously delivers one of the most significant reversals in federal cannabis and hemp policy since 2018.

Buried in the bill is language that will recriminalize most consumable hemp products, restrict the legal definition of hemp and impose a 0.4 milligram cap on total THC per container. It also expands the definition of THC to include delta-8, delta-10 and other isomers, along with any cannabinoids marketed as having similar effects. 

Closing the “THC loophole” threatens the $28 billion cannabis market, with economic impacts expected in states with large hemp sectors and more than 300,000 jobs at risk. 

This policy change is already sparking significant debate among lawmakers, regulators, consumer-safety advocates and businesses. The new restrictions raise urgent questions about the future of hemp, federal cannabis reform, interstate commerce and the economic impact on small and mid-sized operators nationwide.

“You can’t erase a $28 billion market or the millions of consumers who already exist,” says Adam Stettner, CEO of FundCanna. “You can only decide whether those dollars flow through legal, regulated channels or into the shadows. You’re kidding yourself if you think consumers will stop buying hemp beverages, gummies or wellness products because Congress flipped a switch.”

“Dismantling compliant supply chains won’t make these products disappear, it will make them untraceable, untaxed and unsafe,” Stettner continues. “What we need isn’t a ban, it’s balance and logic. If lawmakers want safer products and clearer rules, they need to regulate, not eradicate. The responsible path forward is to regulate hemp like we do alcohol or caffeine at the federal level, with age limits, testing and labeling.”

The Impact of the Funding Bill on Cannabis Beverages

According to the funding bill, a full ban will be triggered in 360 days, which means everything will go into effect on November 12, 2026. Intoxicating hemp-derived products will be barred from interstate commerce, but permitted for intrastate sales as regulated by the respective states.

Steven M. Schain, of counsel, Malkin Law, offers a full breakdown on the bill. 

“‘Hemp’s’ definition, and the allowability of ‘Hemp-Derived Intoxicating Products,’ was significantly altered by the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 H.R.5371, Public Law No: 119-37’s (Act) November 12, 2025 enactment imposing federal illegality, prohibiting interstate commerce, but not impacting intrastate commerce which will governed by state and municipal regulation,” he explains. 

Previously, the Agriculture Improvement Act of 2018, or the 2018 Farm Bill, both legalized hemp and its derivatives and removed plant Cannabis sativa L. containing no more than 0.3% Delta-9 Tetrahydrocannabinol (THC) on a dry-weight basis from the Controlled Substance Act, 21 U.S.C. §§ 801, Et. Seq (1970)’s (CSA) and Drug Enforcement Administration’s purview.  7 U.S.C. §1639o(1), according to Schain. 

“The Act narrows the Farm Bill’s ‘Hemp’s’ definition effectively banning most commercial hemp products and, providing a 1-year transition period, takes effect 365 days following Act’s enactment,” Schain explains. “To qualify as legal ‘Hemp,’ material must maintain a Total THC concentration (including THCA and any other cannabinoids having a similar effects as THC) of not more than 0.3% on a dry weight basis and final hemp-derived cannabinoid products may not exceed 0.4 milligrams (MGs) Total THC per container.”

According to Schain, at the state level, Hemp-Derived Intoxicating Beverages are either: permitted/regulated as intoxicating Hemp products; banned; permitted/regulated as Cannabis: or treated like any other consumer product:

Legal: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Mississippi, Nebraska, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma explicitly excludes Delta-8 from Marijuana’s legal definition), Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington D.C., West Virginia, Wisconsin and Wyoming.

Illegal: Alaska, California, Colorado, Delaware, Idaho, Iowa, Maryland, Massachusetts, Missouri, Montana, Nevada, New York, North Dakota, Oregon, Rhode Island, Utah, Vermont and Washington.

Legal But Restricted or Regulated: Arizona, Connecticut (only purchasable from a licensed Cannabis retailer), Hawaii (except for edible/inhalable products {gummies, vape, flower and drink), Delta-8 THC is legal), Louisiana (while barring inhalables like flowers and vapes, consumable Delta-8 products like tinctures and gummies up to 8mg THC per serving allowed), Michigan (only purchasable from licensed Cannabis retailer), Minnesota (Delta-8 plants may contain up to 0.3% of any THC type and consumables up to 5 mg THC/serving allowed), New Jersey, and Virginia (except for food/drink THC-containing product).

Over the last three years, hemp-derived beverages sales have exploded, with Texas reporting in a recent economic report $5.5 billion of annual revenue and major multi-item retailers such as Target, Circle K and Total Wine vigorously stocking them. 

“THC products’ dosage is measured by milligrams (MGs) of Delta-9 THC ranging from: 1-2.5 MGs ‘Microdose;’ 3-5 MGs ‘Low Dose;’ 10-15 MGs ‘Moderate Dose;’ 20-30 MGs ‘High Dose;’ 50-100 MGs ‘Acute Dose’ and 100-500 MGs ‘Macrodose,’” Schain says. “As hemp-derived intoxicating beverages are sold exclusively to those 21 and older usually at the Low-Dosage and Microdose level, the Act wildly overshoots its target and obstructs a safe and profitable business.”

How Can Hemp Brands Prepare?

Although enacted, the hemp-related provisions in the federal funding bill don’t take effect for 365 days, providing a one-year transition period for states, businesses and industry stakeholders. And while this is plenty of time for brands to get acclimated, there’s still a lot of ground to cover. 

THC-infused beverage brand Uncle Arnie’s is planning for innovation, compliance and consumer demand in light of the ban. 

“By planning for multiple regulatory scenarios, developing compliant formulation options, strengthening testing and traceability, educating consumers and partners, and exploring product innovations that keep the brand fun, safe and competitive regardless of federal changes,” according to the brand’s CEO Theo Terris, Uncle Arnie’s is ready to adapt. 

However, Terris brings up an issue that could potentially cause consumers to run back to the illegal market. 

“The real issue is that 0.4mg makes the products essentially non-intoxicating, like an NA beer with trace alcohol, which wipes out the category’s purpose,” he says. 

“In the interim, businesses should closely monitor regulatory developments and enforcement trends,” adds Paula Savchenko, Esq., founding partner of Cannacore Group and PS Law Group. “Conducting internal reviews of product formulations, cannabinoid synthesis pathways, serving sizes and supply-chain documentation will help identify necessary compliance steps. Strategic decisions regarding formulation, licensing, contracting and commercial agreements will be important for risk mitigation. The next year will also be significant for advocacy and lobbying efforts at the local, state and federal levels as the industry seeks clarity and balanced regulation.”

The post Senate Funding Bill Threatens $28B Hemp Market appeared first on Beverage Information Group.