Hemp farming is booming again. A federal ban on hemp-derived THC products puts the crop in jeopardy

From Harvest Public Media:

Raw hemp plants from farms near and far come in by the super sack to Sweetwater Hemp Company in rural Nebraska.

The hemp is weighed, placed on pallets and then spends a few weeks in an industrial freezer before it goes through an ice-water extraction process to produce concentrates. Those concentrates will go into a variety of products from topical creams and tinctures to edibles.

It’s a business model that became legal after the 2018 Farm Bill removed hemp – a type of cannabis plant from the same genus as marijuana – from the federal Controlled Substances Act. That made hemp and all its derivatives legal, so long as it contains less than 0.3% of delta-9 THC, the main psychoactive compound in marijuana, by dry weight.

Often referred to as the “hemp loophole,” the law change inadvertently legalized a host of intoxicating and non-intoxicating hemp-derived THC products, and created a multi-billion dollar industry.

Now that industry is at risk.

Without legislative intervention, the vast majority of the products sold by Sweetwater Hemp and companies like it will become illegal in November. The bill that ended the longest government shutdown in U.S. history contained a provision to close the loophole. It would redefine hemp to limit the amount of any THC – not just delta-9 THC – to 0.3%, and limit the total amount of THC to 0.4 milligrams per container.

“The federal hemp bill would basically eliminate full-spectrum products,” said Brett Mayo, Sweetwater’s chief extraction officer, as he walked through the warehouse. “You would be working with broad-spectrum products with no THC, which with my process you can’t really do. Everything we do takes everything from the plant – and the plant, naturally, is gonna have some THC in it.”

Also impacted by the change would be the small but growing contingent of farmers who have adopted hemp into their crop rotations. Jonathan Miller, an attorney for national hemp advocacy organization U.S. Hemp Roundtable, said about 65% to 75% of all hemp farmed in the country is used for cannabinoid extraction. Most of the remaining hemp is grown for fiber and seed.

While those smaller markets for hemp are emerging, Texas Hemp Business Council President Cynthia Cabrera said growing the crop for extraction keeps hemp farming profitable.

“Everyone loves the idea of, you know, hemp world, where all the sidewalks are made out of hemp and all the houses are made out of hemp,” Cabrera said. “Realistically, however, that’s the future, right? If you want to keep farmers around so they can survive and contribute to that hemp future, you have to be able to allow them to be able to sell into these end markets.”

Alternate markets?

While most hemp is grown for extraction, that isn’t the case in South Dakota, which has emerged as dominant in production of hemp fiber.

Ken Meyer is the former president of the South Dakota Industrial Hemp Association, and he owns and operates a hemp processing facility outside of Winfred. The facility contracts with hemp farmers to process the raw bales into fiber and hurd.

“The fiber, the stringy material from the outside of the plant, is used for textiles,” Meyer explained. “It’s also used for bioplastics, biocomposites, and also as a building material. It’s used to make insulation. And then the hemp hurd is sold and used for animal bedding and used also for building materials.”

Meyer said South Dakota could be somewhat insulated from the impacts of the new highly restrictive hemp laws because of its dominance in the fiber market. But he worries that any large-scale prohibition on hemp would have trickle-down impacts on the parts of the industry that remain legal. And it comes at a time where farmers across the U.S. are showing increased interest in growing hemp for fiber – the amount of fiber hemp harvested across the country jumped by 56% between 2023 and 2024.

With two full-service hemp processing centers, South Dakota is strides ahead of other states in its hemp processing capacity. For three years straight, the state grew the most industrial hemp of any state in the country. That faltered last year after farmers grew more hemp than processors could handle.

Meyer said that shows that there’s still a long way to go before a robust supply chain is built up for the production of hemp goods.

“It’s not like taking your corn or soybeans to the local elevator,” he said. “Whether you like the price or not, at least there’s always a place to go with it. We’re building those supply chains, and we’re optimistic, but it’s not perfect and all ironed out by any means.”

Hope for a fix

Few people in the hemp industry believe that the ban will go into effect as written.

“I don’t think [hemp] is going to be eliminated,” Mayo, of Sweetwater Hemp, said. “It’s just not feasible that you’re going to get rid of a multi-billion dollar business, and the taxes and everything that it brings in – especially since the administration that made it legal took it away.”

In addition to the thousands of shops and hundreds of companies that would be forced to close under the ban, much of the hemp currently grown by farmers would become illegal overnight under the new total THC limit. U.S. Sen. Rand Paul (R-Kentucky), a consistent opponent of the ban, said in a November hearing that every hemp plant and hemp seed would have to be destroyed under the provisions.

That’s at the same time as hemp acres – for seed, fiber and floral hemp – are rebounding after years of smaller harvests. Between 2023 and 2024, there was a 64% increase in hemp acres harvested across the U.S.

The recent executive order from President Donald Trump rescheduling marijuana also includes language that hemp advocates see as promising. It orders Congress to update the definition of hemp-derived cannabinoid products to allow people to continue using “appropriate full-spectrum CBD products.” It also says agencies will work to develop a “regulatory framework” and expand research into the products.

Many in the industry have been urging both state and federal lawmakers to enact basic regulations, like age restrictions and testing requirements, for years. Miller said federal lawmakers are already working on bills that would ensure good manufacturing practices like truth in labeling and third-party testing. One bill, introduced in early December, would set a cap of 50 milligrams of THC per container and 5 milligrams per serving.

“We’re hopeful that one of those vehicles – or maybe a vehicle to be named later – will be helpful in getting this ban reversed and replaced with a full regulatory system,” Miller said.