Hemp Market Braces for Disruption as Federal Scrutiny Intensifies
WASHINGTON — After years of explosive growth in hemp-derived intoxicants sold in convenience stores, smoke shops, and online, federal officials are taking steps that could redraw what counts as “legal hemp” in the United States and squeeze a fast-moving marketplace.
The most consequential move came in late 2025. Congress and President Donald Trump enacted a full-year FY2026 agriculture appropriations law that, according to a Congressional Research Service (CRS) brief, changes the federal definition of hemp and “reimposes federal controls over certain hemp products.” Supporters cast it as a response to products marketed as hemp yet delivering marijuana-like effects under the 2018 Farm Bill’s 0.3% delta-9 THC-by-dry-weight threshold.
That threshold, critics say, encouraged “dose engineering,” where tiny percentages can still translate into potent servings in edibles and drinks. Manufacturers also embraced novel cannabinoids such as delta-8 THC and THCA, helping intoxicating hemp products spread nationally with fewer guardrails than state-licensed cannabis. Major reporting on the 2025 provision described a shift toward stricter THC restrictions and a clearer separation between industrial hemp and intoxicating hemp products, with lawmakers citing concerns about unregulated sales and youth access.
Regulators have also been building a record to justify enforcement. The Food and Drug Administration has issued warning letters to firms marketing cannabis-derived products, including CBD and delta-8 THC, often citing unapproved drug claims, misleading labeling, and consumer safety risks. The posture has been especially sharp where products appear designed for children: in July 2024, the FDA and Federal Trade Commission announced a second wave of joint cease-and-desist letters to companies selling delta-8 edibles in copycat packaging.
Drug enforcement policy adds another layer of risk for manufacturers and distributors. A CRS report explains that the Drug Enforcement Administration’s interpretation of the 2018 Farm Bill does not change the status of “synthetically derived” tetrahydrocannabinols, which the agency says remain Schedule I controlled substances regardless of delta-9 THC concentration. That matters because many hemp intoxicants rely on chemical conversion—turning CBD isolate into other THC isomers—creating legal exposure where production methods may matter as much as potency.
USDA’s rules shape the crackdown’s mechanics, too. The agency’s hemp production program sets federal expectations for sampling and testing, plus disposal or remediation requirements when crops exceed legal THC limits. For growers, the compliance burden can be significant; for downstream brands, tighter oversight upstream can narrow supply, increase documentation demands, and raise costs.
Industry reaction remains split. State-licensed cannabis operators argue that intoxicating hemp products function like adult-use marijuana without comparable age gates, lab standards, or tax structures. Hemp businesses counter that they served demand in states without legal cannabis and that overly broad limits could sweep up non-intoxicating CBD tinctures and topicals alongside high-THC lookalikes.
What happens next turns on implementation. The CRS brief frames the 2025 change as an enforcement pivot, but outcomes will depend on how agencies define covered products, how aggressively interstate commerce is policed, and whether Congress creates a clearer pathway for lawful CBD. For now, retailers and consumers are getting a clear message: the federal government is moving to shrink the “hemp THC” gray market, and the compliance stakes are rising fast. Companies are now reviewing COAs, supply contracts, and state shipping rules, bracing for seizures or reformulation as federal definitions tighten and enforcement priorities shift quickly nationwide today.