Federal THC Beverage Regulations: Legal Framework and Compliance Guide

Executive Summary

Federal regulators are moving to impose new restrictions on hemp-derived THC beverages, threatening a market that reached $2.8 billion in U.S. sales in 2025. The Drug Enforcement Administration and Food and Drug Administration announced coordinated rulemaking in June 2026 that would classify certain hemp-derived intoxicating cannabinoids as controlled substances and establish strict manufacturing standards for any remaining legal products. The proposed regulations target delta-8 THC, delta-10 THC, THC-O, and THCP—compounds that beverage manufacturers have used since the 2018 Farm Bill created a legal pathway for hemp products containing less than 0.3% delta-9 THC. Industry stakeholders estimate that more than 12,000 retail locations nationwide currently stock hemp-derived THC beverages, with major distribution through convenience stores, gas stations, and specialty retailers in states without adult-use cannabis programs. The rulemaking process includes a 90-day public comment period and could result in final rules by early 2027, forcing manufacturers to reformulate products, halt production, or pivot to state-licensed cannabis markets.

Why This Matters

The federal crackdown on hemp-derived THC beverages affects a supply chain spanning farmers, processors, manufacturers, distributors, and retailers across all 50 states. Unlike state-licensed cannabis products, hemp-derived beverages have operated in a regulatory gray zone since 2018, creating a parallel intoxicating product market accessible to consumers in states like Texas, Georgia, and Florida where adult-use cannabis remains illegal. The economic stakes are substantial. According to the Hemp Beverage Alliance, the sector employed approximately 47,000 workers as of December 2025, with manufacturing facilities in 34 states producing seltzers, teas, energy drinks, and functional beverages containing 5-10 milligrams of hemp-derived THC per serving. Major beverage companies including Molson Coors, Pabst Brewing, and Lagunitas entered the market between 2023 and 2025, investing more than $400 million in production capacity and distribution networks. For consumers, the regulatory shift could eliminate access to legal intoxicating products in the 27 states that have not legalized adult-use cannabis. Public health officials have raised concerns about inconsistent labeling, variable potency, and lack of testing standards in the hemp-derived market, supporting federal intervention. However, industry advocates argue that prohibition will push consumers toward unregulated black market products rather than state-licensed dispensaries, which remain inaccessible or unaffordable for many Americans. The rulemaking also tests the boundaries of the 2018 Farm Bill, which legalized hemp and its derivatives while maintaining cannabis prohibition under the Controlled Substances Act. The legal question centers on whether Congress intended to permit intoxicating hemp products or merely non-intoxicating compounds like CBD. Federal courts in multiple circuits have issued conflicting rulings, creating uncertainty that the DEA and FDA now seek to resolve through administrative action.

Background and History

The hemp-derived THC beverage market emerged from a legislative gap created when Congress legalized hemp in the 2018 Farm Bill without fully addressing intoxicating cannabinoids.

The 2018 Farm Bill and Hemp Legalization

On December 20, 2018, President Donald Trump signed the Agriculture Improvement Act of 2018 into law, removing hemp from Schedule I of the Controlled Substances Act. The legislation, championed by Senate Majority Leader Mitch McConnell of Kentucky, defined hemp as Cannabis sativa L. containing no more than 0.3% delta-9 THC on a dry weight basis. This definition, based on a 1976 taxonomic paper by Canadian scientists Ernest Small and Arthur Cronquist, established an arbitrary threshold that would later enable the intoxicating hemp market. The Farm Bill explicitly legalized "hemp" and "any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers" meeting the THC threshold. Congress intended to support American hemp farmers and legitimize the CBD industry, which had grown to approximately $600 million in annual sales despite existing in legal limbo. The legislative history contains no discussion of intoxicating hemp derivatives, suggesting lawmakers did not anticipate the market that would develop.

The Delta-8 THC Boom (2019-2021)

Within months of the Farm Bill's passage, chemists and entrepreneurs identified a pathway to create intoxicating products from legal hemp. Delta-8 THC, a minor cannabinoid that occurs naturally in cannabis at concentrations below 1%, can be synthesized from CBD through chemical isomerization. The resulting compound produces psychoactive effects similar to delta-9 THC but technically derives from legal hemp. The first delta-8 THC products appeared in smoke shops and online retailers in early 2019, marketed as "legal THC" or "diet weed." By 2020, the market expanded to vape cartridges, gummies, and tinctures. Sales of delta-8 products reached an estimated $2 billion in 2021, according to data from the Hemp Industry Association. The COVID-19 pandemic accelerated growth as consumers sought legal alternatives to alcohol and state-licensed cannabis, which remained inaccessible in most states. The DEA issued an Interim Final Rule in August 2020 attempting to clarify that "synthetically derived" cannabinoids remained controlled substances under 21 U.S.C. § 812. However, the rule's language created confusion about whether delta-8 THC derived from legal hemp through chemical conversion qualified as "synthetic." Industry lawyers argued that isomerization of naturally occurring CBD did not constitute synthetic production, and the DEA did not take enforcement action against hemp-derived delta-8 products.

State Responses and Market Fragmentation (2021-2023)

As the delta-8 market exploded, states responded with a patchwork of regulations. Alaska, Arizona, Arkansas, Colorado, Delaware, Idaho, Iowa, Mississippi, Montana, New York, Rhode Island, Utah, Vermont, and Washington banned delta-8 THC and similar hemp-derived intoxicants between 2021 and 2023. Other states including California, Oregon, and Michigan allowed hemp-derived products but required testing and labeling standards similar to state-licensed cannabis. Texas became a flashpoint for the legal debate. After the state's Department of State Health Services attempted to ban delta-8 THC in October 2021, industry groups sued and won a preliminary injunction. In Hometown Hero CBD v. Texas Department of State Health Services, Travis County District Court Judge Jan Soifer ruled in February 2023 that the 2019 Texas Hemp Law legalized all hemp derivatives meeting the 0.3% delta-9 THC threshold, including intoxicating isomers. The ruling allowed delta-8 products to remain on shelves in the nation's second-largest state, cementing Texas as a major market. Florida similarly became a hub for hemp-derived products after the state legislature declined to restrict intoxicating cannabinoids despite lobbying from the medical cannabis industry. By 2023, Florida accounted for approximately 18% of national hemp-derived THC sales, with products available in gas stations, convenience stores, and dedicated hemp shops across the state.

The Beverage Category Emerges (2022-2024)

While vapes and gummies dominated early sales, beverage manufacturers identified hemp-derived THC as an opportunity to enter the cannabis market without state licensing requirements. Cann, a California-based cannabis beverage company, launched a hemp-derived line in 2022 for distribution outside licensed markets. Lagunitas, owned by Heineken, introduced Hi-Fi Hops in 2023, a non-alcoholic beverage containing 10 milligrams of delta-9 THC derived from hemp. The beverage category offered several advantages over other formats. Drinks provided faster onset than edibles through sublingual absorption, appealing to consumers seeking effects similar to alcohol. The format also attracted mainstream retailers hesitant to stock products resembling cannabis paraphernalia. By 2024, hemp-derived THC beverages were available in more than 8,000 convenience stores nationwide, according to the National Association of Convenience Stores. Major alcohol companies entered the market in 2024 and 2025. Molson Coors launched Veryvell, a line of hemp-derived THC drinks, in August 2024. Pabst Brewing introduced Pabst Blue Ribbon High Seltzer in March 2025, containing 5 milligrams of delta-8 THC per 12-ounce can. These corporate entrants brought distribution networks, marketing budgets, and lobbying power to an industry previously dominated by startups and regional players.

Growing Regulatory Scrutiny (2024-2026)

As the hemp-derived beverage market matured, federal agencies faced mounting pressure to address the regulatory gap. In July 2024, the FDA issued warning letters to six companies marketing hemp-derived THC products with health claims, citing violations of the Federal Food, Drug, and Cosmetic Act. The letters marked the agency's first significant enforcement action against intoxicating hemp products but did not challenge the legality of the products themselves. Congressional attention intensified in 2025. Representative Earl Blumenauer of Oregon and Representative Nancy Mace of South Carolina introduced competing bills to address intoxicating hemp. Blumenauer's Hemp and Hemp-Derived Consumer Products Market Act would have restricted intoxicating hemp products to state-licensed cannabis markets. Mace's States Reform Act would have established federal standards for hemp-derived intoxicants while preserving their legal status. Neither bill advanced beyond committee hearings. The DEA signaled its position in an internal memo leaked to Marijuana Moment in January 2026. The document, prepared by the agency's Diversion Control Division, argued that delta-8 THC and similar compounds qualified as "tetrahydrocannabinols" under 21 C.F.R. § 1308.11(d)(31) and therefore remained Schedule I controlled substances regardless of their hemp origin. The memo recommended coordinated rulemaking with the FDA to clarify the legal status of intoxicating hemp derivatives. On June 5, 2026, the DEA and FDA jointly announced their intention to publish proposed rules addressing hemp-derived intoxicating cannabinoids. According to a press release, the agencies would seek to "close loopholes" in the 2018 Farm Bill and establish "science-based standards" for hemp products. The announcement triggered immediate stock declines for publicly traded hemp companies and prompted the Hemp Beverage Alliance to organize opposition.

Key Players

Drug Enforcement Administration

The DEA holds primary authority over controlled substance scheduling under the Controlled Substances Act, 21 U.S.C. § 801 et seq. Administrator Anne Milgram, appointed by President Biden in 2021, has prioritized fentanyl enforcement but faces pressure from Congress to address intoxicating hemp products. The agency's Diversion Control Division, led by Deputy Assistant Administrator Frank Tarentino, drafted the internal analysis supporting rulemaking on hemp-derived cannabinoids. The DEA's position centers on the argument that all tetrahydrocannabinols remain controlled substances under existing regulations, regardless of their source material.

Food and Drug Administration

The FDA regulates food, beverages, and dietary supplements under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. The agency has jurisdiction over hemp-derived products marketed for human consumption, including beverages. FDA Commissioner Robert Califf has stated that the agency lacks sufficient data on the safety of intoxicating hemp cannabinoids, particularly regarding long-term consumption and effects on vulnerable populations. The FDA's Center for Food Safety and Applied Nutrition, directed by Susan Mayne, is developing manufacturing standards and labeling requirements for any hemp-derived intoxicants that remain legal after DEA rulemaking.

U.S. Department of Agriculture

The USDA oversees hemp cultivation through its Agricultural Marketing Service, which administers the National Hemp Production Program established by the 2018 Farm Bill. The department has approved hemp production plans for 54 states and territories, creating a regulatory framework focused on THC testing and crop destruction for non-compliant plants. USDA Secretary Tom Vilsack has emphasized that the department's role is limited to agricultural production and does not extend to manufactured hemp products. However, USDA data shows that 15,400 licensed hemp growers cultivated 96,000 acres in 2025, with approximately 40% of production destined for cannabinoid extraction rather than fiber or grain.

Hemp Beverage Alliance

Formed in 2024, the Hemp Beverage Alliance represents manufacturers, distributors, and retailers of hemp-derived THC drinks. Members include Cann, Lagunitas, Molson Coors, and approximately 80 smaller companies. The trade group, led by executive director Jonathan Miller, argues that hemp-derived beverages provide a safer alternative to alcohol and should be regulated as a distinct category rather than prohibited. The Alliance has retained lobbying firm Brownstein Hyatt Farber Schreck and commissioned economic impact studies showing that prohibition would eliminate 47,000 jobs and $2.8 billion in annual economic activity.

U.S. Cannabis Council

The U.S. Cannabis Council represents state-licensed cannabis operators, including multi-state operators such as Curaleaf, Trulieve, and Green Thumb Industries. The organization supports federal restrictions on hemp-derived intoxicants, arguing that these products undermine state regulatory systems and compete unfairly with licensed cannabis businesses that face strict testing, taxation, and compliance requirements. CEO Steven Hawkins has testified before Congress that hemp-derived products create public health risks due to inadequate oversight and should be channeled into state-licensed markets.

National Association of Convenience Stores

NACS represents 148,000 convenience stores nationwide, many of which stock hemp-derived THC beverages. The trade group has taken a neutral position on the legality of intoxicating hemp products but advocates for clear federal standards to protect retailers from liability. NACS has requested that any federal rulemaking include a transition period allowing retailers to sell existing inventory and that enforcement focus on manufacturers rather than retail outlets.

Public Health Organizations

The American Academy of Pediatrics, American Medical Association, and Smart Approaches to Marijuana have called for federal restrictions on intoxicating hemp products. These organizations cite concerns about youth access, impaired driving, and lack of research on health effects. Dr. Kevin Sabet, president of Smart Approaches to Marijuana, has described hemp-derived THC beverages as "Big Tobacco 2.0" and argues that the products exploit regulatory loopholes to market intoxicants without adequate safeguards.

Legal and Regulatory Framework

The legal status of hemp-derived THC beverages hinges on the interplay between the 2018 Farm Bill, the Controlled Substances Act, and federal agency regulations. The Controlled Substances Act, enacted in 1970, classifies drugs into five schedules based on medical use and abuse potential. Schedule I substances, including cannabis, are defined as having no accepted medical use and high abuse potential. Under 21 U.S.C. § 812(c), Schedule I(c)(17) lists "Marihuana" as a controlled substance. The DEA's implementing regulations at 21 C.F.R. § 1308.11(d)(31) further specify that Schedule I includes "Tetrahydrocannabinols," defined as synthetic equivalents of substances in cannabis or found in cannabis plant material. The 2018 Farm Bill amended the Controlled Substances Act by adding a new section 7606, which states that the Act's Schedule I provisions "shall not apply to hemp." The Farm Bill defines hemp as Cannabis sativa L. with a delta-9 THC concentration of not more than 0.3% on a dry weight basis. Critically, the definition includes "all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers" of such cannabis. This language creates the central legal ambiguity. Industry advocates argue that delta-8 THC, delta-10 THC, and other intoxicating cannabinoids derived from compliant hemp fall within the Farm Bill's definition and are therefore legal. The DEA counters that these compounds qualify as "tetrahydrocannabinols" under its existing regulations and remain controlled substances regardless of their source. The DEA's August 2020 Interim Final Rule attempted to address this issue by stating that "all synthetically derived tetrahydrocannabinols remain schedule I controlled substances." The rule defined "synthetically derived" as substances obtained "by chemical synthesis or by a chemical modification of a natural starting material." This definition would appear to cover delta-8 THC produced through isomerization of CBD. However, the rule also stated that it did not create new law but merely conformed DEA regulations to the 2018 Farm Bill, leaving the legal status of hemp-derived intoxicants unresolved. Federal courts have issued conflicting opinions on the question. In AK Futures LLC v. Boyd Street Distro, LLC (N.D. Cal. 2022), Judge Haywood Gilliam ruled that delta-8 THC derived from hemp is legal under the Farm Bill because it qualifies as a hemp derivative. The court rejected the argument that chemical conversion renders the product synthetic, noting that the Farm Bill explicitly includes "isomers" of hemp cannabinoids. By contrast, in Gilstrap v. Honest Marijuana Co. (D. Colo. 2023), Judge Philip Brimmer held that delta-8 THC products violated Colorado's ban on synthetic cannabinoids because the isomerization process constituted chemical synthesis. The court distinguished between naturally occurring delta-8 THC in hemp (which would be legal) and delta-8 THC produced through chemical conversion of CBD (which would not). The FDA's regulatory authority over hemp-derived beverages stems from the Federal Food, Drug, and Cosmetic Act. Under 21 U.S.C. § 331, it is prohibited to introduce into interstate commerce any food containing an unapproved food additive. The FDA has not approved any intoxicating cannabinoids as food additives or granted them Generally Recognized as Safe (GRAS) status. This provides the agency with independent authority to regulate hemp-derived THC beverages even if the DEA does not classify the cannabinoids as controlled substances. The FDA has also raised concerns under 21 U.S.C. § 321(ff), which prohibits adding CBD or other cannabis-derived substances to food if the substance has been approved as a drug or authorized for investigation as a new drug. The agency approved Epidiolex, a CBD-based drug, in 2018, creating a potential bar to CBD in food products. While this provision specifically addresses CBD rather than intoxicating cannabinoids, the FDA could apply similar reasoning to delta-8 THC or other compounds if pharmaceutical companies pursue drug approval. State laws add another layer of complexity. The 14 states that have banned hemp-derived intoxicants rely on various legal theories. Some states, like Colorado and Washington, prohibit "synthetic cannabinoids" and classify chemically converted delta-8 THC as synthetic. Others, like Arkansas and Montana, amended their hemp laws to exclude intoxicating isomers from the definition of legal hemp. Still others, like New York, regulate hemp-derived intoxicants through their cannabis control boards, requiring licensing and testing.

State-by-State Breakdown

Hemp-derived THC beverage legality varies dramatically across states, creating a fragmented market that complicates manufacturing and distribution.

Texas

Texas represents the largest market for hemp-derived THC beverages among states without adult-use cannabis legalization. The state's 2019 hemp law, House Bill 1325, legalized hemp and its derivatives without explicitly addressing intoxicating cannabinoids. After the Texas Department of State Health Services attempted to ban delta-8 THC in 2021, courts blocked the prohibition. As of June 2026, hemp-derived beverages containing any cannabinoid are legal in Texas if the delta-9 THC concentration remains below 0.3%. No testing or labeling requirements apply beyond standard food safety regulations. Texas accounts for approximately $420 million in annual hemp-derived beverage sales, according to industry estimates.

Florida

Florida permits hemp-derived intoxicating products under its 2019 hemp law, Section 581.217, Florida Statutes. The state's Department of Agriculture and Consumer Services regulates hemp cultivation but has not established standards for manufactured hemp products. This regulatory vacuum has allowed hemp-derived THC beverages to proliferate in gas stations, convenience stores, and smoke shops. Florida law does not restrict cannabinoid content, serving size, or potency, making it one of the most permissive markets. The state's large population and tourism industry have made it the second-largest market after Texas, with estimated annual sales of $380 million.

California

California legalized adult-use cannabis in 2016 and maintains a comprehensive regulatory system under the Medicinal and Adult-Use Cannabis Regulation and Safety Act. The state's hemp law, Assembly Bill 45 (2021), requires that hemp-derived products containing detectable amounts of THC be sold only through licensed cannabis retailers and comply with the same testing, labeling, and taxation requirements as cannabis products. This effectively channels hemp-derived beverages into the licensed market. However, enforcement has been inconsistent, and hemp-derived products remain available in unlicensed retail outlets. California's licensed cannabis beverage market reached $180 million in 2025, with an estimated $90 million in unlicensed hemp-derived sales.

New York

New York initially allowed hemp-derived delta-8 THC products after legalizing adult-use cannabis in 2021. However, the state's Cannabis Control Board issued regulations in 2023 requiring that all cannabinoid products, including those derived from hemp, be sold through licensed dispensaries. The regulations, codified at 9 NYCRR Part 114, establish a "cannabinoid hemp" category subject to testing for potency, pesticides, and contaminants. Products must contain no more than 10 milligrams of total THC per serving and no more than 100 milligrams per package. New York's approach represents a middle path between prohibition and the unregulated hemp market, though licensed dispensaries remain limited in number.

Colorado

Colorado banned hemp-derived delta-8 THC and similar intoxicants in 2022 through regulations issued by the state's Department of Public Health and Environment. The regulations, 6 CCR 1010-2, classify chemically converted cannabinoids as "synthetic" and therefore prohibited under state law. Colorado's position reflects concerns from the licensed cannabis industry, which argued that unregulated hemp products undermined the state's regulatory system. Hemp-derived THC beverages are not legally available in Colorado, though enforcement against retailers has been limited.

Michigan

Michigan allows hemp-derived products but requires compliance with the state's Industrial Hemp Research and Development Act. The Michigan Department of Agriculture and Rural Development issued guidance in 2023 stating that hemp-derived beverages must be tested for potency, pesticides, and contaminants, and must include warning labels about intoxicating effects. Products cannot exceed 10 milligrams of total THC per serving. Michigan's regulations create a legal pathway for hemp-derived beverages outside the licensed cannabis market, though compliance costs have limited the number of manufacturers operating in the state.

Ohio

Ohio legalized adult-use cannabis through a ballot initiative in November 2023, with sales beginning in 2024. The state's hemp law, enacted in 2019, did not address intoxicating cannabinoids. In 2024, the Ohio Legislature passed House Bill 422, which banned the sale of intoxicating hemp products to individuals under 21 and required testing and labeling. The law allows hemp-derived beverages containing up to 10 milligrams of total THC per serving to be sold in retail outlets other than licensed dispensaries. Ohio's approach reflects a compromise between hemp industry interests and public health concerns.

States with Bans

The following states have banned hemp-derived intoxicating cannabinoids through legislation or regulation: Alaska, Arizona, Arkansas, Colorado, Delaware, Idaho, Iowa, Mississippi, Montana, North Dakota, Rhode Island, Utah, Vermont, and Washington. In these states, hemp-derived THC beverages are not legally available, though enforcement varies. Some states, like Idaho and North Dakota, have pursued criminal charges against retailers selling delta-8 products. Others, like Vermont and Washington, have focused enforcement on manufacturers and distributors rather than retail outlets.

Market and Business Implications

Federal restrictions on hemp-derived THC beverages would reshape a supply chain that generated $2.8 billion in revenue in 2025 and employed tens of thousands of workers. For manufacturers, the proposed regulations present an existential threat. Companies that have invested in production facilities, formulation, and distribution networks face the prospect of shuttering operations or pivoting to state-licensed markets. The transition to licensed cannabis markets requires substantial capital for licensing fees, compliance infrastructure, and facility upgrades. In California, a cannabis manufacturing license costs $1,000 to $75,000 annually depending on facility size, plus compliance costs for testing, track-and-trace systems, and security. Industry analysts estimate that fewer than 30% of current hemp-derived beverage manufacturers have the capital to transition to licensed markets. Multi-state operators in the licensed cannabis industry stand to benefit from federal restrictions on hemp-derived products. Companies like Curaleaf, Trulieve, and Green Thumb Industries have argued that hemp-derived beverages create unfair competition by avoiding the taxes, testing, and compliance costs that licensed operators face. If hemp-derived intoxicants are banned or restricted, MSOs could capture market share from consumers who currently purchase hemp products in states without legal cannabis. However, price disparities between licensed and hemp-derived products may push some consumers toward illicit markets rather than dispensaries. Beverage alcohol companies face strategic decisions about their cannabis investments. Molson Coors, which launched its Veryvell hemp-derived line in 2024, would need to either exit the category or pursue state-by-state licensing. The company has indicated that federal restrictions would not necessarily end its cannabis beverage ambitions but would require a different market approach. Constellation Brands, which invested $4 billion in Canadian cannabis company Canopy Growth, has avoided the U.S. hemp-derived market due to regulatory uncertainty, a decision that appears prescient given the proposed federal crackdown. Retailers, particularly convenience stores and gas stations, face inventory and liability risks. The National Association of Convenience Stores has estimated that its members hold approximately $180 million in hemp-derived THC beverage inventory as of June 2026. If the DEA classifies these products as controlled substances, retailers could face criminal liability for possession with intent to distribute. Industry groups have requested a safe harbor provision allowing retailers to return unsold inventory to manufacturers without penalty. The proposed regulations also affect hemp farmers, though the impact is less direct. Approximately 40% of U.S. hemp cultivation in 2025 was destined for cannabinoid extraction, with much of that material used in delta-8 and other intoxicating products. If demand for these products collapses, hemp biomass prices would decline, potentially forcing farmers to exit the market. However, demand for CBD and other non-intoxicating hemp products would likely remain stable, providing an alternative market for some growers. Capital markets have reacted negatively to the regulatory threat. Publicly traded hemp companies including Hempacco and Greenlane Holdings saw stock prices decline 30-45% in the week following the June 5, 2026 announcement. Private equity investors who funded hemp-derived beverage startups face potential write-downs on their investments. By contrast, cannabis MSOs saw modest stock price increases on expectations that they would capture market share from hemp products.

What Experts Say

Legal scholars, industry analysts, and public health researchers have offered divergent perspectives on federal regulation of hemp-derived THC beverages. According to Shane Pennington, a cannabis attorney at Vicente LLP, the DEA's legal theory faces significant challenges. Pennington argues that the 2018 Farm Bill unambiguously legalized hemp derivatives, including intoxicating cannabinoids, and that the DEA cannot override congressional intent through rulemaking. He points to the statutory definition of hemp, which explicitly includes "all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers," as evidence that Congress intended a broad legalization. Pennington predicts that industry groups will challenge any DEA rule in federal court and that courts will likely side with the hemp industry based on the plain language of the statute. Jonathan Miller, general counsel for the U.S. Hemp Roundtable, has emphasized the economic consequences of prohibition. Miller notes that the hemp-derived beverage industry has created thousands of jobs in manufacturing, distribution, and retail, particularly in rural areas where hemp farming provides agricultural income. He argues that federal restrictions should focus on establishing safety standards rather than prohibition, pointing to the FDA's authority to regulate food and beverages as a more appropriate framework than DEA scheduling. Dr. Beatriz Carlini, a research scientist at the University of Washington's Addictions, Drug and Alcohol Institute, has raised public health concerns about unregulated hemp-derived products. According to Carlini, the lack of testing standards and quality control in the hemp market creates risks of contamination, mislabeling, and excessive potency. She points to studies showing wide variability in the actual cannabinoid content of hemp-derived products compared to label claims. Carlini supports federal regulation but argues that prohibition alone will not address public health risks if consumers shift to illicit markets. Beau Whitney, senior economist at Whitney Economics, has analyzed the market impact of various regulatory scenarios. Whitney estimates that a complete federal ban on hemp-derived intoxicants would eliminate $2.8 billion in annual sales and 47,000 jobs. However, he notes that approximately 40% of current hemp-derived beverage consumers live in states with legal cannabis markets and could shift to licensed products. The remaining 60% would face a choice between traveling to legal states, purchasing from illicit sources, or abstaining. Whitney projects that state-licensed cannabis beverage sales would increase by $800 million to $1.2 billion if hemp-derived products are banned, partially offsetting the economic impact. Dr. Kevin Sabet, president of Smart Approaches to Marijuana, has advocated for strict federal restrictions on intoxicating hemp products. According to Sabet, the hemp-derived market represents a failure of regulatory oversight that has allowed intoxicating products to proliferate without adequate safeguards. He argues that the 2018 Farm Bill was intended to legalize industrial hemp and CBD, not to create a loophole for intoxicating products. Sabet supports the DEA's rulemaking and has called for criminal penalties for manufacturers who market intoxicating hemp products. Aaron Smith, co-founder of the National Cannabis Industry Association, has taken a nuanced position. Smith acknowledges that hemp-derived products have created competition for licensed cannabis operators but argues that prohibition is not the optimal solution. Instead, Smith advocates for federal legislation that would establish a regulatory framework for all cannabis products, including hemp-derived beverages, with consistent standards for testing, labeling, and taxation. He notes that the current patchwork of state laws creates confusion and compliance challenges for businesses operating in multiple jurisdictions.

What's Next

The DEA and FDA are expected to publish proposed rules in the Federal Register by late June or early July 2026, triggering a 90-day public comment period. The proposed rules will likely address several key issues. First, the DEA is expected to clarify that delta-8 THC, delta-10 THC, THC-O, THCP, and other intoxicating cannabinoids derived from hemp qualify as "tetrahydrocannabinols" under 21 C.F.R. § 1308.11(d)(31) and therefore remain Schedule I controlled substances. This classification would make possession, distribution, and sale of these compounds federal crimes, regardless of state law. Second, the FDA is expected to propose manufacturing standards and labeling requirements for any hemp-derived cannabinoid products that remain legal. These standards would likely include testing for potency, pesticides, heavy metals, and microbial contaminants, as well as requirements for child-resistant packaging and warning labels. The FDA may also establish serving size limits, such as 10 milligrams of total THC per serving, consistent with standards in several states. The public comment period will provide an opportunity for industry groups, public health organizations, state governments, and individuals to submit feedback on the proposed rules. The Hemp Beverage Alliance has indicated it will submit extensive comments challenging the DEA's legal authority and presenting economic impact data. The U.S. Cannabis Council is expected to support the DEA's approach while advocating for transition periods and safe harbor provisions for retailers. After reviewing public comments, the DEA and FDA will publish final rules, likely in late 2026 or early 2027. The agencies may modify the proposed rules based on comments, but significant changes are considered unlikely given the coordinated nature of the rulemaking and the agencies' stated concerns about public health risks. Industry groups are expected to challenge the final rules in federal court. Potential legal arguments include that the DEA exceeded its statutory authority by contradicting the 2018 Farm Bill, that the rulemaking violated the Administrative Procedure Act by failing to consider economic impacts, and that the rules are arbitrary and capricious. Courts in different circuits may reach different conclusions, potentially creating a circuit split that the Supreme Court would need to resolve. Congress could intervene by passing legislation to clarify the legal status of hemp-derived intoxicants. Representative Nancy Mace has indicated she will reintroduce her States Reform Act,