Some states are moving ahead with bans on intoxicating hemp products while broader federal restrictions remain a month away. The first stage of the federal ban took effect November 12, but industry representatives say it will barely change the marketplace. State measures, including Missouri's, are already having consequences for businesses.
In Kansas City, Prohibition Cannabis closed because of Missouri's ban. Owner Melissa Eigenmann said the change means letting all her employees go. Products she could legally sell a day earlier now expose her to fines she cannot afford, she said, including a $5,000 penalty for each transaction. Selling a $12 pre-roll would not justify that risk, she said.
The dispute traces back to the 2018 Farm Bill, which sought to give struggling tobacco farmers another crop to grow. Congress deregulated cannabis plants with very low THC levels weeks before harvest. But plants produce most of their THC, the substance responsible for intoxication, late in the growing season. The law also left hemp companies able to concentrate large quantities of THC in beverages, gummies and vaping products.
Cory Harris, who lobbies for state-licensed dispensaries, said hemp sellers can offer products more potent than those available through dispensaries without comparable requirements for testing, labeling or childproof packaging. He attributed a documented increase in pediatric emergency room visits involving THC to easy access to hemp products. Harris also said those sales undercut heavily regulated and taxed dispensaries operating in 41 states and the District of Columbia.
Congress acted last year to close the hemp loophole effective November 12. The hemp industry subsequently persuaded lawmakers to introduce the federal restrictions in two stages, postponing the full ban until December 11. The initial stage prohibits only entirely synthetic intoxicants that a marijuana plant cannot produce naturally.
Josh Glasstetter of the American Trade Association for Cannabis and Hemp said that first stage covers substances such as K2 and Spice, which were already illegal. Those products were never covered by the hemp loophole, he said. As a result, he expects the intoxicating hemp market to remain essentially unchanged for another month, except where states have imposed their own restrictions.
Economist Beau Whitney estimates that the full federal ban will eliminate about 38,000 businesses and $28 billion in sales. He said those sales generate substantial state sales tax revenue and support thousands of jobs, making the potential effects extend beyond the businesses selling hemp products.
Whitney is among those pressing members of Congress to postpone and reconsider the December 11 ban. For businesses already affected by state restrictions, however, that federal timetable offers no immediate reprieve, as the closure of Eigenmann's Kansas City shop illustrates.
