Congress Introduces Bipartisan Bill to Regulate and Tax Hemp THC

The Legislative Framework

The bill establishes a federal regulatory structure for hemp-derived intoxicating products while imposing a tiered excise tax based on THC concentration. Products containing hemp-derived delta-8 THC, delta-10 THC, THC-O, THCP, and other intoxicating cannabinoids would remain legal under federal law but subject to FDA labeling requirements, state-level distribution controls, and a federal tax ranging from 10% to 25% of wholesale value depending on potency.

The framework mirrors alcohol regulation more than cannabis. States keep authority to ban or further restrict hemp THC sales within their borders. This approach avoids preemption fights while capturing federal revenue from a market Congress accidentally created in 2018.

Cosponsors include Rep. Mary Miller (R-IL), Rep. Chellie Pingree (D-ME), Sen. Rand Paul (R-KY), and Sen. Jeff Merkley (D-OR). All four represent states with significant hemp cultivation or processing infrastructure.

Tax Structure and Revenue Projections

The bill imposes a three-tier federal excise tax: 10% on products with less than 5mg total THC per serving, 18% on 5-15mg servings, and 25% on servings above 15mg. Revenue projections from the Congressional Budget Office estimate $4.2 billion in federal collections over the first five years, with $890 million in fiscal year 2027 alone.

That math assumes current market size holds steady. Industry groups have argued that high tax rates will push consumers back to unregulated gray-market sellers or state-licensed cannabis dispensaries in adult-use states. The 25% top tier matches the federal tax rate proposed in past marijuana legalization bills, but it applies at wholesale rather than retail.

For context on the broader federal hemp debate, see the CannIntel topic hub on Federal Hemp THC Regulation.

Industry and Enforcement Implications

The legislation requires all hemp THC manufacturers to register with FDA within 180 days of enactment and comply with Good Manufacturing Practice standards by January 2028. Failure to register or pay excise taxes triggers federal penalties identical to those in the Alcohol and Tobacco Tax and Trade Bureau enforcement regime, including product seizure and criminal referral for willful violations.

The bill doesn't create a standalone hemp THC agency. FDA handles product safety and labeling. TTB collects excise taxes. DEA retains authority over synthetic cannabinoids not derived from hemp, which means lab-made delta-8 THC from CBD isolate remains in legal limbo unless the conversion process qualifies as "derived from hemp" under the statute's definition.

State regulatory agencies including California's Department of Cannabis Control and New York's Office of Cannabis Management have pushed for federal clarity on hemp THC for two years. They argue that unregulated hemp products undercut state-licensed markets. This bill doesn't resolve that tension but formalizes the parallel track.

What Happens Next

The bill has been referred to the House Energy and Commerce Committee and the Senate Agriculture Committee, with no hearings scheduled as of July 22. Congressional leadership hasn't indicated whether the measure will receive floor time before the August recess or be folded into a larger farm bill reauthorization expected in late 2026.

Hemp industry trade groups including the U.S. Hemp Roundtable have endorsed the framework. State-licensed cannabis operators remain split. Some MSOs argue that any federal hemp THC legitimacy undermines the case for rescheduling marijuana, while others see regulatory parity as inevitable.

The political variable nobody can model? Whether Republican leadership prioritizes hemp deregulation or revenue generation. If the bill moves, it'll be because the tax math works, not because of ideological consistency on cannabis policy.