Hemp Industry Has a Year Before 'Extinction Level Event'

The US hemp industry is warning of mass layoffs, lost revenue, and a likely surge in black-market sales after Congress approved a surprise ban on nearly all hemp-derived consumer products. The provision, tucked into the funding bill that ended the government shutdown, will prohibit products containing more than 0.4 milligrams of total THC per container—effectively outlawing 95% of the $28 billion retail hemp market, industry executives say. A single hemp gummy typically contains 2.5 to 10mg of THC, according to the Journal of Cannabis Research.

• The new limit replaces the 2018 Farm Bill's definition of hemp, which was based on THC concentration and allowed products with less than 0.3% THC by weight, CNBC reports. The ban will take effect in a year.
• Hemp and cannabis are the same species of plant, with differing levels of THC, and the legislation essentially expands the definition of marijuana and narrows the definition of hemp, reports Forbes.

• "In effect, this is a total, all out, complete ban on hemp products in the United States," says Jonathan Miller, general counsel for the US Hemp Roundtable.
• "This is an extinction level event for the CBD products industry, and the greater hemp and hemp beverage industry," Jim Higdon, cofounder of Kentucky business Cornbread Hemp, tells Forbes. "If we can't stop it, and we don't pivot, it will destroy our business. Every product that we make currently will become a Schedule I narcotic when it is implemented."
• The ban threatens more than 300,000 jobs tied to the hemp economy, from farmers and extractors to manufacturers and retailers, according to cannabis research firm Whitney Economics. States with large hemp industries, including Kentucky, Texas, and Utah, are expected to see the steepest economic fallout.

• The ban marks a reversal from 2018, when Kentucky Sen. Mitch McConnell championed hemp legalization as an economic driver for his home state. McConnell and other Republicans say the new restriction "restores the original intent" of the 2018 Farm Bill, closing a loophole that allowed for the sale of unregulated and sometimes unsafe hemp-derived products. Boris Jordan, CEO of cannabis company Curaleaf, tells CNBC that the move was a last-minute request from McConnell. Not all Republicans are on board. Sen. Rand Paul, Kentucky's other senator, blasted the provision as an overreach that is "killing jobs and crushing farmers."

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Industry executives warn the ban could drive billions in sales to the black market, where products are untested, untaxed, and unregulated. State and local governments could also lose out on millions in tax revenue tied to hemp sales. Industry leaders are calling for federal standards, rather than prohibition, and are preparing a lobbying push to replace the ban with rules on testing, labeling, and age restrictions.