A rapidly expanding market for hemp-derived THC beverages and snacks—long considered a legal gray zone and a lifeline for struggling breweries—now faces an existential threat. A provision quietly inserted into the bill that ended the recent federal government shutdown includes a sweeping ban on impairing hemp products, poised to shut down hundreds of companies and eliminate hundreds of thousands of jobs by late 2026. For an industry born from a loophole in the 2018 farm bill, the coming year has become a race for legislative survival.

A Loophole Industry Meets Its Reckoning

The 2018 farm bill legalized industrial hemp by defining it as cannabis containing less than 0.3% delta-9 THC. That left ample space for companies to create beverages, gummies, cookies, vape oils and snacks that complied with the definition while delivering psychoactive effects. Through chemical conversion of CBD into compounds like delta-8 and delta-10, manufacturers scaled a booming, lightly regulated industry that often skirted state cannabis laws and taxation regimes.

The unintended consequences were far-reaching. Hemp THC drinks appeared in convenience stores, gas stations, and even big-box retailers. Some states reported spikes in pediatric THC exposures. In legal cannabis markets, operators complained about competition from a parallel industry free of the strict testing and tax burdens they faced. The new federal ban is designed to close that loophole by outlawing intoxicating hemp derivatives nationwide.

Economic Fallout Extends Beyond Hemp Producers

For craft breweries—particularly in Minnesota, where THC beverages are legal and tightly regulated—the category has become a critical revenue engine. At Indeed Brewing, THC seltzers now account for roughly one-quarter of business. At Bauhaus Brew Labs, the products represent more than 25% of distributed revenue and 11% of taproom sales. Across the U.S., breweries facing declining alcohol demand increasingly rely on THC-infused drinks to diversify.

Industry groups warn the federal ban could eliminate more than 300,000 jobs and cost states more than $1.5 billion in tax revenue. Many hemp growers have already reduced planting due to tightening state restrictions, and a federal prohibition could collapse the supply chain entirely. As one Minnesota brewer put it, “If this goes through as written, I don’t see a way at all that our business could survive.”

A Divided Political Landscape

The ban was driven by Senate Minority Leader Mitch McConnell, who authored the 2018 hemp provisions and has since argued that intoxicating hemp products were never part of the intent. Legal cannabis operators, long frustrated by uneven competition, have welcomed the crackdown. Prohibitionist groups also support the measure.

But the pushback is intensifying. Lawmakers in both parties—including Sen. Rand Paul and Minnesota’s Amy Klobuchar and Tina Smith—are pressing for regulation rather than eradication. Proposals include age limits, bans on synthetically derived THC, quality standards, and prohibitions on marketing products to minors. Advocates argue that a one-year delay signals Congress may be open to revisiting the issue.

What to Watch

The next six to nine months will be decisive. Hemp growers need clarity before spring planting, retailers need regulatory certainty, and small manufacturers require time to adapt or pivot. Whether Congress opts for a regulatory overhaul or maintains a sweeping prohibition will determine whether the hemp-derived THC market evolves into a mature, compliant industry—or disappears entirely.