The 2025 Hemp Shake-Up: Congress Tests the Limits of “Hemp”

By: Fatima Afia, Esq., Jessica F. Gonzalez, Esq., and Lauren Rudick, Esq. 

In the final hours of negotiations to end the longest government shutdown in U.S. history, lawmakers inserted a major hemp-related provision into the funding bill (a “‘Continuing Resolution”) that could significantly alter the federal regulatory framework for hemp.

What are the key changes in the Continuing Resolution? Here is Rudick Law Group’s assessment of the hemp ban, insight into what hemp and cannabinoid operators should be thinking about now, and how these federal developments may influence state-level policies across the U.S., including, in particular, New York's cannabis and hemp markets.

Key Takeaways: What the New Hemp Language Means

Hemp redefined based on THC

The 2018 Farm Bill defined hemp as cannabis sativa containing less than 0.3% delta-9 THC on a dry-weight basis. Under the new language, that threshold applies to all forms of THC, not just delta-9. This includes THCa and every THC isomer, such as delta-8 and delta-10.

Sets a strict THC cap per product container

No product could contain more than 0.4 milligrams of total THC (including THCa) per “container” (in its final form). Note that this is an extremely low threshold that most products currently available, including beverages, vapes, and gummies, cannot meet.

Bans viable cannabis seeds from non-hemp cannabis plants

This could significantly affect seed sales across the U.S. and globally.

Bans cannabinoids that do not naturally occur in the cannabis plant

This would eliminate lab-created cannabinoids that do not naturally occur in the plant, such as THC-O, HHC, and HHCP.

Spares textiles and other industrial products

Notably, hemp for textiles, feed, and industrial uses are spared from this legislation.

Prohibits any cannabinoid with THC-like effects

If a cannabinoid produces (or is marketed as producing) physiological effects similar to THC, it would be banned, regardless of how it is made.

Newly prohibits “intermediate hemp products”

This provision prevents the production of products that are intended to be mixed with, or added to, another product, in order to create an infused final product (e.g., sugar-packet style additives, sprays, dissolvable tablets).  

Introduces additional FDA rules

The Food and Drug Administration (“FDA”) would be required to issue additional rules, including standards related to THC content. They also need to define “container.”

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When Will The 2025 Hemp Ban Take Effect?

The hemp industry has roughly one year from the bill’s passage to prepare before enforcement is supposed to go into effect in November 2026. In addition, within 90 days from the bill’s passage, the FDA must publish a list of natural vs. synthetic cannabinoids, along with additional information and specificity around the term “container. These definitions will further shape compliance standards and future regulation.

Now is the time for hemp operators to assess inventory, contract obligations, state law discrepancies, and supply chain risks in the event that a legislative (or other regulatory) fix is not implemented over the next year.  Operators should be prepared to navigate their business plans if the ban stays in effect; and if exceptions are made.

High Stakes: The $28 Billion Hemp Industry Is At Risk

The U.S. hemp industry has grown into a major agricultural and consumer sector, with estimates pegging it at around $28 billion. According to the trade group U.S. Hemp Roundtable, the new federal language could “wipe out 95% of the market,” costing states roughly $1.5 billion in tax revenue and jeopardizing up to 300,000 jobs.

The impact spans multiple segments:

• Agriculture and farming: Hemp cultivation rights, contracts, and value chains may face abrupt collapse if market demand evaporates.
  
• Manufacturing and processing: Facilities that extract, refine, package, or transform hemp grown for cannabinoids will face regulatory invalidation. They may be forced to recall beverages, edibles, topicals, and other consumer packaged goods.
• ‍Retail and consumer goods: Products on shelves today, like gummies, vapes, and topicals, could be rendered illegal by November 2026.

Put simply, this is a major shift for a sector that has grown quickly in both farming and consumer goods.

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What The Hemp Ban Means for Non-Intoxicating CBD Products

Many industry stakeholders, advocates, and opponents predicted that federal lawmakers would soon take action against the proliferation of unregulated, intoxicating hemp-derived products sold on shelves in grocery stores and gas stations if states did not implement and enforce sensible regulation. However, the general consensus was that THC-free CBD products, such as those marketed for wellness, insomnia, or pain relief, and which provide medicine to millions of patients who lack access to state-legal medical and/or adult-use cannabis, would be spared.

Surprisingly, because the Continuing Resolution is written so broadly, some CBD products may not be safe. According to Jonathan Miller, general counsel for the U.S. Hemp Roundtable, “U.S. Senators were promised that this bill protects nonintoxicating CBD products, which is manifestly untrue — the large majority of nonintoxicating CBD products on the marketplace feature more than 0.4 mg of THC per container.”

Unless Congress replaces the ban with sensible regulation that includes a clear carveout for non-intoxicating CBD hemp products, many small businesses in the wellness industry could be forced to exit the market.

According to Pamela Epstein, Chief Legal and Regulatory Officer at Nexus Agriscience:

“The new hemp language marks a substantial shift in how Congress is approaching hemp, specifically cannabinoids, but it should be seen as a catalyst, not a conclusion. 

This moment pushes lawmakers toward the broader, overdue conversation about comprehensive cannabinoid reform. Preserving loopholes has never been a winning strategy, and it certainly won’t be one now. 

Dangerous synthetics and unregulated allowances are not foundations of sound policy.  However, Congress has repeatedly demonstrated a willingness to protect access to CBD products.  

This is a flashpoint, not the end of the conversation.  The industry, consumers, and policymakers all benefit from a thoughtful, science-based, and safety-focused framework – one that finally aligns federal law with the realities of today’s cannabinoid marketplace and consumer.”

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The 2025 Hemp Ban’s Impact on State-Legal Adult-Use Cannabis Markets

For state-licensed adult-use cannabis operators, the federal hemp crackdown is a mixed bag:

• Reduced gray-market competition. In many states, especially those with mature legal medical and/or adult-use cannabis programs, intoxicating hemp products like delta-8 beverages and gummies have been competing with dispensary products while avoiding the heavy financial burdens associated with taxes, testing, and seed-to-sale tracking to which licensed operators are required to adhere. The new federal cap on THC limit and ban on synthesized cannabinoids are expected to remove most of those products from convenience stores and online channels, likely driving some consumers to licensed dispensaries instead.
  
• More consistent safety and age-gate standards. State programs typically impose safety and security requirements such as lab testing for contaminants and residual solvents, labeling and packaging standards, child-resistant containers, and 21+ sales. Federal removal of intoxicating hemp products from unregulated shelves could reduce youth access and mislabeling cases that have frustrated regulators and public health officials in the medical and adult-use cannabis industries. Many regulators have publicly noted that the proliferation of unsafe, untested, and unregulated products has undermined consumer protections put in place for regulated cannabis products, defeating consumer confidence and stifling policy initiatives rooted in access.
• ‍Price and product mix implications. Licensed markets may see short-term demand increase for entry-level edibles and beverages as hemp alternatives disappear. However, craft breweries and non-cannabis CPG brands that ventured into hemp seltzers lose a category, potentially reducing cross-industry collaboration and retail traffic. Net revenue effects will vary by state tax rates and existing hemp share.

In the end, a clearer separation between (or combination of) regulated adult-use cannabis and intoxicating hemp products could help licensed cannabis markets, stabilize valuations, and promote investor confidence in those markets. Still, states may need to adjust their tax structures, access rules, and keep prices reasonable, or risk consumers turning to unregulated channels rather than licensed dispensaries.

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What Impact Will The 2025 Hemp Ban Have On New York?

New York enters this federal shift with one of the most robust hemp regulatory frameworks in the country and a unique history of leveraging the hemp sector to kick-start adult-use cannabis. It’s also the first state to mandate Good Manufacturing Practices (“GMP”) for its hemp operators, requiring them to adopt the strictest of quality control and safety practices in manufacturing consumer goods.

While more than 40 states have regulated hemp in some fashion, New York is among a much shorter list of states that have implemented robust regulatory frameworks for hemp products.  New York distinguishes between hemp products produced for their cannabinoid content (i.e., “cannabinoid hemp,”), which are regulated through the New York Office of Cannabis Management, and hemp products that are grown for agricultural or textile uses (which are regulated through the New York Department of Agriculture and Markets). Smokable hemp is sold strictly in licensed adult-use cannabis dispensaries. If more states had followed New York’s lead on responsible hemp regulation, the hemp industry may not have found itself in the uncomfortable and untenable position it is now.

In particular, New York has:

• A mature Cannabinoid Hemp Program. The New York’s Office of Cannabis Management (“OCM”)’s Cannabinoid Hemp Program requires licenses for processors, distributors, and retailers (both online and brick & mortar), mandates lab testing and stringent packaging and labeling (akin to medical and adult-use cannabis markets), and imposes explicit prohibitions on synthetic or “artificially derived” cannabinoids and delta-8/delta-10 created through isomerization in cannabinoid hemp products. These guardrails already curtailed the in-state sale of intoxicating hemp items.
  
• Hemp farmers jump-started cannabis adult-use supply. In 2022, New York created Conditional Adult-Use Cultivator and Processor licenses, providing a fast-track for existing hemp farmers and processors who already had authority to cultivate and process hemp for cannabinoids, to convert their hemp licenses into adult-use cannabis licenses and supply the early adult-use cannabis market. This was an express acknowledgment of the state’s hemp capacity and compliance culture.

With this foundation, what does the federal ban mean for New York?

1. Less disruption from intoxicating hemp removal in-state. Because New York regulators already barred delta-8/delta-10 in cannabinoid hemp products, required licensing and testing, and provided a state-legal framework for the sale of smokable hemp, the immediate retail shelf change for New York retailers should be smaller than in states that allowed widespread intoxicating hemp product sales. Out-of-state products entering NY via e-commerce or travel would still be impacted by federal enforcement.
   
2. Pressure on NY-made CBD and wellness products. The 0.4 mg total THC per container federal cap is stricter than New York’s cap and operates at every stage of production. Even compliant New York CBD brands may be forced to re-formulate, undergo tighter batch controls, or retire certain SKUs — especially for small-format tinctures, gummies, and beverages — if the total THC creeps above the new federal threshold.
   
3. Interstate distribution of hemp products will be constrained.  Prior to the new federal ban, hemp products that were produced in compliance with the 2018 Farm Bill could legally be transported across state lines in interstate commerce. In New York, hemp retailers are permitted to sell hemp products that are produced both in the State of New York and outside the State of New York, provided that such hemp products are distributed and sold by licensed hemp distributors and hemp retailers, respectively (both of whom must attest to statutory and regulatory compliance throughout all aspects of the supply chain). Under the new federal ban, non-compliant products will be federally illegal, and it will be a federal offense to transport them across state lines.
   
4. Potential boost for licensed adult-use cannabis retailers. With intoxicating hemp largely off unregulated shelves nationwide, New York’s licensed dispensaries may recapture price-sensitive consumers who previously opted for cheaper, hemp-derived low-dose beverages and edibles, provided that licensed products remain competitively priced and accessible.
   
5. Hemp-to-cannabis workforce and infrastructure. New York’s early decision to involve hemp operators in the adult-use cannabis industry positions the state to absorb some hemp-sector capacity into regulated cannabis or non-intoxicating hemp lines. Policymakers may still need to evaluate transition support for small processors and retailers focused on CBD. 

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The new federal ban validates New York’s stricter hemp stance while creating potential compliance problems for some New York CBD brands and offering opportunities for New York adult-use cannabis retailers to better compete.

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Practical Next Moves: What Should Hemp Operators Do?

Hemp cannabinoid industry stakeholders should prepare in anticipation of this changing regulatory landscape by:

• Reassessing product portfolios. Conduct an inventory of current product lines and identify those that contain synthesized cannabinoids like HHC and those that contain more than 0.4 mg of THC per container in their final form, even if “container” has yet to be identified as of November 2025.
  
• Reviewing state and federal law. Some states already have permissive regimes for consumable hemp-derived products, some have already banned such products completely, and others may still create comprehensive intra-state regulatory pathways for hemp-derived products in light of this federal ban. Industry participants should carefully review their desired states’ laws, as well as the federal hemp ban language, as they prepare to carefully navigate the conflicts between state and federal law. This is the start of the process to assess the risks and legal exposure of maintaining current business models or any multi-state distribution model.
  
• Contractual risk. Farmers, processors, and retailers with multi-year contracts should review their current agreements to determine whether they can be terminated under clauses such as force majeure, termination rights, or product obsolescence. Contracts should also be reviewed to see if they can be pivoted into compliant revenue lines.
  
• Evaluating their intellectual property protection plans. Right now, it’s still uncertain how the United States Patent and Trademark Office will treat trademark applications and registrations for hemp-related goods and services. Given this lack of clarity, operators should consider strengthening their brand protection strategy by securing federal trademark protection for their hemp ancillary goods/services while pursuing state-level trademark registrations to safeguard their marks and the goodwill they’ve built.
  
• Advocacy and policy monitoring. There will undoubtedly be efforts to implement legislative amendments, carve-outs, and other rule-making in response to pushback from the hemp industry prior to the effective date of the hemp ban. Stakeholders should stay engaged by joining hemp trade groups and lobbying their members of Congress.
  
• Cross-state commerce caution. After the law goes into effect, hemp-derived products shipped across state lines will trigger federal enforcement, even if compliant under state law.
  
• Labeling, packaging, and testing architecture. Supply chain protocols must ensure “total THC per container” remains under the threshold once that is defined. Manufacturers may need to redefine units, container sizes, and batch testing to adhere to the new standards.
• ‍Exit strategies. For small-scale businesses lacking the capital to reformulate or retool, planning an orderly wind-down or sale (of the business or its assets) may be advisable. Not every exit means a loss.

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Final Thoughts

The inclusion of this sweeping hemp-derived THC prohibition in a must-pass government-funding bill underscores how cannabis policy issues impacting large swaths of the industry can surface in unexpected legislative corners. Attorneys and business clients alike should treat this not as a “regulatory hiccup,” but as a stark reminder that the laws governing cannabis, hemp, and related industry participants are constantly in flux, ever-changing, and stakeholders must always be prepared to adapt and pivot.

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Contact Rudick Law Group For Legal Guidance On The 2025 Hemp Ban

At Rudick Law Group, we’ve spent years navigating the complexities of cannabis and hemp regulation across multiple jurisdictions. Our team is already analyzing the proposed changes and advising clients on risk, compliance, product strategy, and business transition planning.

If your company is unsure how these developments may affect your operations, products, or long-term plans, we can help. Whether you need immediate guidance, a compliance review, or support in restructuring your product portfolio, our attorneys are ready to assist.