The hemp and CBD industry is experiencing significant disruption as individual states implement varying restrictions on hemp-derived products, creating obstacles for businesses throughout the supply chain.
Industry stakeholders describe the current regulatory landscape as unpredictable and fragmented. The lack of federal oversight has resulted in a complex web of state-level regulations, with some jurisdictions embracing the industry while others impose strict limitations or outright bans.
The regulatory confusion stems from the aftermath of the 2018 Farm Bill, which legalized hemp production nationally and removed it from the Controlled Substances Act, provided products contain no more than 0.3% THC. While this legislation opened new opportunities for hemp-derived supplements and beverages, the FDA’s limited involvement has left a regulatory vacuum that states are filling in different ways.
California Implements Strict Measures In a significant development, California recently emerged as one of the most restrictive markets following Governor Gavin Newsom’s emergency regulations. These measures, effective October 2024, prohibit the sale of hemp-based food, beverages, and dietary supplements containing detectable amounts of THC or other intoxicating cannabinoids. The regulations also mandate a minimum purchase age of 21 and restrict package sizes to five servings.
The California Department of Public Health framed these temporary regulations, scheduled through March, as child safety measures. However, the restrictions have created a peculiar situation where THC-containing products remain available through licensed marijuana dispensaries while hemp-derived alternatives face severe limitations.
Impact on Local Businesses San Francisco-based natural food retailers report significant disruption to their operations. Many have been forced to remove popular products from their shelves, particularly those in larger package sizes. The restrictions have left retailers struggling to meet customer demand, especially from those who rely on hemp and CBD products for wellness support.
Supply Chain Disruptions Kentucky-based CBD suppliers are feeling the impact of California’s restrictions, with some companies reporting lost business opportunities in what was previously a key market. The regulations have particularly affected companies targeting natural food stores and supplement retailers rather than dispensaries.
The restrictions are also impacting industry events. Several CBD product manufacturers have canceled plans to exhibit at the 2025 Natural Products Expo West in Anaheim, citing the inability to offer product samples under the new regulations. While topical products and THC-free items remain unaffected, companies offering edible products containing THC face significant exhibition challenges.
Push for Federal Framework Industry advocates, including the U.S. Hemp Roundtable, are supporting federal legislation to create consistent regulations nationwide. The Cannabinoid Safety and Regulation Act, proposed by Senator Ron Wyden (D-Ore.), aims to establish standardized quality controls and age restrictions while maintaining product accessibility.
The proposed legislation represents a potential solution to the current state-by-state regulatory approach. However, some industry stakeholders suggest modifications, such as increasing the allowed THC percentage to 1%, indicating ongoing debate about appropriate regulatory parameters.
Other State Actions Beyond California, several states have recently proposed or implemented hemp product restrictions, including North Dakota, Illinois, Ohio, Tennessee, and Massachusetts. These actions add to existing regulations in other states, creating a complex regulatory environment that businesses must navigate.
Legal Challenges Continue Industry groups have initiated legal challenges to some state restrictions, though with limited success so far. The U.S. Hemp Roundtable’s request for a temporary restraining order against California’s emergency regulations was denied, but advocacy groups continue to pursue legal and legislative solutions.
Looking Ahead The industry’s immediate future remains uncertain as stakeholders await potential federal action while adapting to evolving state regulations. The situation highlights the challenges of developing a new industry within a fragmented regulatory framework, particularly for products that intersect with complex policy issues around cannabis regulation and public health.
