State Responses to the Federal Loophole Surrounding Intoxicating Hemp Products

Jun 26, 2025

By: L. Alexis Whitley, Esq., and Matthew J. Schiller, Esq.

Seven years ago, Congress passed the Agriculture Improvement Act of 2018, more commonly known as the Farm Bill, which included “provisions intended to facilitate the commercial cultivation, processing, and marketing of hemp.” As part of this goal, the Farm Bill defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.” Congress implemented the dry weight percentage test to distinguish between federally legal hemp and intoxicating cannabis, believing delta-9 THC was the primary psychoactive in cannabis. Despite this attempt to draw a functional line, the Farm Bill created a legal loophole for intoxicating hemp products that states are now scrambling to address. This article explains the relationship between hemp and cannabis, how the Farm Bill inadvertently legalized intoxicating hemp products, and how states are currently attempting to correct this federal loophole.

Hemp and cannabis are both varieties of the cannabis sativa plant, but they are distinguished by their amounts of naturally-occurring delta-9 THC. Although Congress believed the dry weight percentage test would properly distinguish intoxicating cannabis from hemp, the law failed to consider the effect of other cannabinoids.

The dry weight percentage test is based on delta-9 THC, but there are multiple other alternative forms, including delta-8 and delta-10. While delta-9 THC is the most potent form, delta-8 and delta-10 THC can be intoxicating in large quantities, and the Farm Bill had the unintended effect of legalizing hemp products with unlimited amounts of these forms of THC. Even though hemp plants do not have high levels of naturally occurring delta-8 or delta-10 THC, the high levels of CBD can be chemically converted to these forms of THC, resulting in the production of federally legal intoxicating hemp products.

This federal loophole has left states to regulate intoxicating hemp products, which could include consumables containing one or more cannabinoids such as delta-8 THC, delta-9 THC, delta-10 THC and HHC, among others, on their own, resulting in a patchwork of laws and regulations. Some states, including states that have legalized cannabis such as California and Colorado, have made intoxicating hemp products completely illegal. California is even auditing hemp retailers for past years and taxing them under existing cannabis statutes and regulations, despite conceding there was no specific regulatory framework in place to address these products. Other states have followed the Farm Bill and left intoxicating hemp products legal and unregulated, while some states have legalized these products and implemented regulations.

A number of states regulate intoxicating hemp products in the same manner as cannabis, while others may permit certain intoxicating cannabinoids and form factors while prohibiting others. In other states, intoxicating hemp products are permitted, but due to legal disputes or conflicting regulatory guidance, their status is contested. Most recently, Governor Abbott vetoed Texas Senate Bill 3, which would have banned intoxicating hemp products in Texas. Instead, he called for a special legislative session later this summer. The categorization of states and their approach to intoxicating hemp products is nuanced, so it is important to consult with an attorney for more information on state-specific laws.

Although the Farm Bill is federal law, which would normally preempt conflicting state laws, the Bill included a preemption clause permitting states to regulate hemp more strictly than the federal government, resulting in the patchwork of laws and regulations enacted by states across the country.

Whether Congress will address the intoxicating hemp loophole it created remains to be seen. The Farm Bill has been extended through December 31, 2025, but prior to its extension, the US House Agriculture Committee approved an amendment to ban all non-industrial uses of hemp and prohibit the manufacturing of cannabinoid products. In the meantime, states continue to implement new laws and regulations surrounding intoxicating hemp products. For example, the California Department of Public Health recently proposed a rule to codify prior emergency regulations issued in September of 2024. This rule would solidify California’s ban on intoxicating hemp products.

Individuals and entities engaged in the manufacturing, processing, production, and distribution of intoxicating hemp products should carefully review state laws and regulations surrounding these products to ensure compliance. Additionally, individuals and entities undergoing an audit, such as a sales and use tax audit, might experience a shift in the auditor’s focus to intoxicating hemp products, making compliance with state laws a key factor. Greenspoon Marder attorneys have experience with state laws and regulations surrounding intoxicating hemp products and are available to assist you with your matters.

Contact Nick Richards at [email protected], Matthew Schiller at [email protected], or Alexis Whitley at [email protected] for more information and assistance.

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State Responses to the Federal Loophole Surrounding Intoxicating Hemp Products

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