The hemp boom that rewrote America's cannabis laws is now unraveling

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George Washington grew hemp at Mount Vernon. So did Thomas Jefferson. For the founders, it was an unremarkable agricultural staple, useful for rope, sailcloth and paper.

For a few years, it seemed like the modern American hemp industry was finding its way back to its roots. Farmers who once grew corn and soybeans were pivoting to the crop. The industry grew to an estimated $28 billion.

But this resurrected industry would likely baffle the founders. Hemp had become a cash crop again, but this time it sat at the center of the American drug war, with storefronts selling THC gummies and CBD tinctures spreading across states where marijuana remained illegal, and bars stocking hemp-derived drinks as an alternative to alcohol.

Now much of that is being unwound, fast.

Rewriting the rules

Hemp had been illegal in the United States since 1970, lumped in with marijuana under the Controlled Substances Act despite being far less intoxicating. For nearly five decades, growing it could land a farmer in federal prison.

Congress changed that in 2018. The Farm Bill that year carved hemp out of the legal definition of marijuana and allowed it to be grown and sold commercially. The line it drew was simple. Hemp was cannabis containing no more than 0.3% of a type of THC called delta-9 by dry weight. Anything above that was still marijuana, and marijuana was still a federally controlled substance.

What lawmakers didn't anticipate was how elastic that definition would turn out to be. The law focused on delta-9 THC, the compound that gets you high, but cannabis contains dozens of others. 

THCA is a non-intoxicating compound that exists in hemp in much higher concentrations than delta-9, and was not addressed by the 2018 law. When heated or smoked, however, it converts to delta-9 THC. So a product could be technically legal and still deliver a significant high. 

Heavier products like drinks created a separate problem. Because the threshold was measured by percentage of weight, a 12-ounce can could contain a meaningful amount of delta-9 THC and still come in under 0.3%.

States with no legal marijuana market became hotbeds for this trade. The hemp loophole had effectively created a parallel cannabis market that bypassed the state-regulated marijuana systems that Congress never intended to undermine.

The federal government moved to shut it down last November. Tucked into an agriculture appropriations bill, a provision rewrote the definition of hemp to account for total THC rather than just delta-9. It also capped the amount of THC in any finished hemp product at 0.4 milligrams per container. 

The hemp industry says the math is punishing. The U.S. Hemp Roundtable estimates that 95% of hemp extract products currently on the market would become illegal under the new thresholds, including many products that they say are not intoxicating.

Even CBD products, the non-psychoactive side of the hemp market with no interest in exploiting any loophole, often contain trace amounts of THC simply because the plant does. Under the new rules, that is enough to push them over the limit. Veterans groups, chronic pain patients, and others who have come to rely on these products for medical reasons are now wondering where they will turn.

States pile on

The federal ban does not take effect until November. But states have been passing their own versions of the crackdown, in some cases going further and faster than federal law requires, and businesses are already feeling it.

Texas regulators changed how THC levels are calculated effective March 31, effectively banning smokable hemp flower and extracts. Ohio passed legislation requiring that intoxicating hemp products be sold only through licensed marijuana dispensaries. 

Missouri's legislature sent a similar bill to the governor's desk this week. Pennsylvania's Senate committee advanced legislation to align state law with the coming federal standard.

Across the country, hemp businesses are closing. Farmers are planting less. Workers are being laid off. In Wisconsin alone, the governor estimated that the federal law would eliminate $700 million in production and cost 3,500 jobs.

Supporters of the crackdown point to real harms. Calls to poison control centers related to THC-infused hemp products increased more than 300% in four years. Many of the products were packaged to look like popular candy brands and sold in gas stations and convenience stores with no age restrictions.

Hemp industry advocates have argued from the start that their preferred outcome was a regulated market with age restrictions, testing requirements, and labeling standards — not a ban. That argument has found some bipartisan support in Congress, where lawmakers from both parties have proposed bills to scale back the restrictions.

For now, farmers are left waiting to find out how much of what they built will survive the year.