Threats to the Hemp Industry: Legislative Changes and Their Impacts

As the U.S. Senate prepared to vote on a funding bill to reopen the federal government, Senator Rand Paul (R–Ky.) raised concerns that the legislation would "regulate the hemp industry to death." A provision within the bill threatens to reverse nearly seven years of progress in the hemp sector, potentially jeopardizing small businesses like Cornbread Hemp, founded by cousins Jim Higdon and Eric Zipperle in 2019. The company, based in Kentucky, specializes in high-quality hemp products, utilizing a flower-only production model that emphasizes organic farming practices.

Reason

The hemp industry has seen significant growth since the 2018 Farm Bill removed hemp from the Controlled Substances Act. The number of licensed hemp growers surged from approximately 3,500 in 2018 to over 21,000 in 2020, although this number stabilized to around 9,700 by 2021. The economic impact of industrial hemp is substantial, with estimates suggesting it supports roughly 325,000 jobs across various sectors, including farming and retail. However, the market value of U.S. industrial hemp production has fluctuated, with figures indicating a decline from about $824 million in 2021 to approximately $445 million in 2024.

Reason

In addition to federal threats, state-level regulations have also posed challenges for hemp businesses. For instance, Tennessee enacted a law in 2025 placing the hemp industry under the jurisdiction of the Alcoholic Beverage Commission, imposing a three-tier system similar to that of liquor sales. Starting January 2026, out-of-state hemp companies like Cornbread must sell their products to a Tennessee-licensed wholesaler before they can reach retail shops, creating significant logistical and financial burdens.

Reason

Cornbread Hemp argues that this law infringes on their right to operate and violates the U.S. Constitution's Commerce Clause by favoring in-state businesses over out-of-state competitors. To combat this, Cornbread has partnered with the Pacific Legal Foundation to challenge the Tennessee law in court.

Reason

The recent federal funding bill introduces a new provision that mandates consumable hemp products contain no more than 0.4 milligrams of total THC per entire container, rather than per serving. This regulation could severely impact the hemp industry, with estimates suggesting it may eliminate up to 95 percent of all hemp-derived cannabinoid products produced in the United States. Critics, including Senator Paul, argue that such regulations threaten the livelihoods of countless Americans and undermine a burgeoning industry that has only recently gained traction.

Reason

Critics of the new regulations emphasize the detrimental effects on small businesses and the broader hemp market. They argue that the combination of state and federal regulations creates an untenable environment for hemp producers, potentially leading to widespread business closures and job losses.

Reason

• “We're farming land that has not had pesticides on it for three years—verified. We're using non-GMO seeds, no pesticides, and no synthetic fertilizers,” — Jim Higdon, Co-founder of Cornbread Hemp

Reason

• “Paul is right: This new rule is a death sentence to the hemp industry.” — Jim Higdon, Co-founder of Cornbread Hemp

Reason

The future of the hemp industry hangs in the balance as stakeholders navigate the complexities of evolving regulations at both state and federal levels.

Reason