Growing Hemp THC Segment Facing More State Regulation Heading Into 2025

As the hemp THC beverage segment continues to expand, regulators across several states are eyeing new restrictions on the category. Illinois, Tennessee, Missouri, and Louisiana are among the states looking to shape their respective markets for hemp-derived THC products, with legislators and governors proposing new regulations and in some cases plans for outright bans.

In Illinois, a notably THC-friendly state since adult-use legalization in 2020, Governor J.D. Pritzker is boosting a state House bill that aims to regulate the hemp-derived industry. The bill, House Bill 4293, would treat hemp-derived THC similarly to how the state treats cannabis, with sales limited to dispensaries and products subject to additional testing requirements and taxes.

“This regulatory gray area has created a loophole that put Illinois consumers of all ages, but particularly children, in danger while an underground market flourished—the exact opposite of what Illinois has done by regulating our cannabis industry,” said Pritzker. “We’re closing that loophole and protecting Illinoisans of all ages by incorporating these products into the regulated and equitable system of dispensaries already in place in the state.”

The hemp industry in the state is against HB 4293, with the Illinois Hemp Business Association asserting that the bill is more of a ban than regulation and that it’s a gift to large cannabis companies at the expense of local Illinois companies.

In Missouri, there are three distinct bills taking aim at the hemp-derived THC market, all with different levels of regulation and restriction, including one proposal that borders on a full ban. Rep. Barry Hovis’s proposal is the most liberal, regulating hemp-derived products and emulating the three-tier system used to regulate beverage alcohol. Rep. Dave Hinman’s proposal expands to include new regulations and restrictions on vapes, edibles, and tinctures, in addition to beverages. The final proposal, from state Senator Nick Schroer, would relegate some hemp-derived products to the state’s licensed cannabis dispensaries, while banning most products.

In Tennessee, hemp producers won a temporary reprieve from new rules on the category when a Nashville judge yesterday issued an injunction blocking them from taking effect until February 18. That delay is intended to allow the court to further examine the issue before making a final ruling. Producers and their advocates are pushing back on new rules that would add additional taxes, sales restrictions, and testing requirements, which producers say will serve as an outright ban on many products.

Specifically, the producers are pushing back on new tests for THCA, a legal substance that converts to THC when heated, creating an intoxicating product that is no longer legal, as THC remains illegal in the state.

Meanwhile, in Louisiana, new regulations go into effect January 1. They ban hemp THC flower, and stipulate that beverages, gummies, and tinctures have no more than 5mg of THC per serving. Additionally, the category will be age-restricted to those over 21 and sales at gas stations have been banned.

In recent weeks, Texas Lt. Governor Dan Patrick announced a new bill to ban all THC products from the Lone Star State, a key market for hemp THC. According to Patrick, the proposed ban is in response to the proliferation of intoxicating products in the state, which he claims are often orders of magnitude stronger than black market cannabis.

And in California, Governor Gavin Newsom issued emergency regulations to restrict hemp THC in September. The rules established a minimum age of 21 to purchase hemp products; banned any detectable quantity of THC from consumable hemp products such as beverages, food, and dietary products; and limited servings of hemp products to five per package.—Shane English

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