Are Big Changes Coming for Federal Hemp Regulation?

The U.S. House of Representatives and Senate Committees on Appropriations have approved FY2026 Agriculture appropriations bills (H.R. 4121 and S. 2256) that would dramatically impact dramatically impact federal hemp regulation by redefining the statutory definition of hemp.

The proposed changes would effectively redefine legal hemp cannabinoid products. They would include only those that are naturally occurring, non-synthetic, and nonintoxicating.

The spending bills target a “loophole” in the 2018 Farm Bill. This loophole has resulted in the explosion of intoxicating hemp products. These include edibles and THC-infused beverages. Unlike cannabis, these products can be legally sold in liquor stores, gas stations, and convenience stores.

While proponents of the bills maintain that intoxicating hemp products should be prohibited under federal law, critics disagree. Critics contend that the proposed changes would have a devastating impact on the U.S. hemp industry.Retry

Accordingly, they are calling for stricter oversight rather than an outright ban. Understanding NJCREAMMA provides insights into how states are developing comprehensive regulatory frameworks for cannabis and hemp products.

Hemp Legalization Under the 2018 Farm Bill

As discussed in greater detail here, the 2018 Farm Bill legalized hemp at the federal level. By defining hemp as cannabis plants with a Delta-9 THC concentration of 0.3% or less on a dry weight basis, it effectively removed it from the Controlled Substances Act (CSA).

Accordingly, there are no limitations on the sale, transport, or possession of hemp-derived products, provided that such products are produced in accordance with the law.

The definition created what many view as a “loophole” that allows for the development and sale of hemp-derived products containing intoxicating cannabinoids like Delta-8 THC. This satisfies the legal limit of Delta-9 THC while still producing psychoactive effects.

In recent years, products containing intoxicating hemp-derived cannabinoids (IHDCs) have flooded the market. IHDCs are currently infused into edibles, beverages, and other consumable hemp products and sold by convenience stores, liquor stores, and online retailers. Cannabis law developments in 2024 highlight the ongoing regulatory challenges faced by both state and federal authorities in managing these emerging markets.

Efforts to Ban Intoxicating Hemp Products

Sen. Mitch McConnell, who sponsored the 2018 Farm Bill, is now leading the charge to close the loophole before he retires.

During Senate committee markup, Sen. McConnell expressed that the existing hemp definition has resulted in “an unintended consequence that has allowed for intoxicating hemp-derived synthetic products to be made and sold.” He called for changes to reflect “the original intent of the 2018 farm bill” by closing the loophole.

The fiscal 2026 Agriculture Appropriations Bill passed the Senate Appropriations by a unanimous 27-0 vote. The bill would establish separate definitions for “industrial hemp” and “hemp-derived cannabinoid products.” The Senate language matches a June proposal from House Republicans. That proposal would similarly ban most hemp-derived THC products on the market.

New Definitions Under the Appropriations Bills

Under the appropriations bills, the terms would be defined as follows:

Industrial hemp would be defined as hemp grown for “non-cannabinoid” uses. This includes hemp grown for fiber or grain/seed purposes. Examples include use as whole grain, oil, cake, nut, or hull. It also covers immature plants like “microgreens or other edible leaf products.” Additionally, it includes hemp grown for research purposes. It encompasses viable seeds used to produce industrial hemp.

Hemp-derived cannabinoid product would be defined as “any intermediate or final product derived from hemp.” This excludes industrial hemp but contains cannabinoids in any form. The product must be intended for human or animal use. It covers various means of application or administration. This includes inhalation, ingestion, or topical application.

Additionally, the provisions would exclude from the hemp definition any cannabinoids that are non-naturally occurring and synthesized or manufactured compounds. The provisions also would exclude from the definition “any viable seeds from a Cannabis sativa L. plant” that exceed a total THC (including tetrahydrocannabinolic acid [THCA]) of 0.3% in the plant on a dry weight basis.

Other changes would provide that the allowable limits of THC—the leading psychoactive cannabinoid in the cannabis plant—be determined on the basis of its total THC, including THCA, instead of delta-9 THC. This would codify the regulatory practice established in USDA’s 2021 final hemp regulations. Micro license requirements in New Jersey illustrate how states are creating specific licensing frameworks that could be affected by these federal regulatory changes.

What’s Next?

The Senate provision would delay implementation for one year, with the goal of establishing an alternative regulatory framework. According to Sen. Jeff Merkley (D-OR), there are concerns that the new definitions would be overbroad and impact even non-intoxicating products.

“I would like to continue to work with Senator McConnell to see if we can develop, in the course of this year, a definition that addresses hallucinogenic factors but does not eliminate the CBD product that is non hallucinogenic [and] that is valued by many Americans across the land,” Sen. Merkley said.

The House provision does not include this language. The appropriations bills must pass the full House and Senate, with the hemp provisions intact. Notably, similar action was debated but not enacted in the 118th Congress.

How We Can Help

As the latest federal funding bill makes clear, the hemp and cannabis industries remain in flux, and the legal framework is still evolving.

Scarinci Hollenbeck’s Cannabis Law Group has been at the forefront of the industry since its inception and remains dedicated to helping our clients navigate the challenging regulatory landscape. We encourage impacted entities to contact us with any questions about how the proposed changes will impact the hemp industry.