I’ve been talking about this day since 2019, back when I did my first “hemp is legalized” bit and walked through the THCA loophole that blew that video up. Now it’s here in black and white. Congress has finally rewritten the federal definition of hemp in a way that doesn’t just “tighten” the rules; it quietly wipes out the intoxicating hemp industry that grew out of the 2018 Farm Bill.
If you built a business on THCA “hemp” flower, delta-8 drinks, “hemp delta-9” beverages, or full-spectrum gummies that give people a real buzz, this is the federal hemp law update you’ve been dreading. You have 365 days from enactment before the new definition takes effect. On paper, you get a year. In practice, if you have a bank, a lender, or a payment processor, you’re not going to feel like you have that long.
This isn’t a theoretical policy blog. I’ve been a bank lawyer for about a decade, and a cannabis lawyer since Illinois rolled out its adult-use market. I’ve lived through FinCEN 2014 SAR memos, MRB risk matrices, and the joy of paying $400 a month plus a $500 application fee just for treasury services at a cannabis-friendly bank that still won’t touch e-commerce or lending. With this new law, hemp operators are about to find out what real MRB treatment looks like.
Let’s walk through what Congress actually did, using their language, and then talk about what it means for your company.
The five-page definition buried in a minibus
The new hemp definition doesn’t show up in a big, clean “Hemp Reform Act.” It lives in Section 781 of an agriculture appropriations “minibus” that the Senate and House passed and the President signed. The operative language looks something like this:
“Effective 365 days after the enactment of this Act, section 297A of the Agricultural Marketing Act of 1946 is amended to read as follows…”
Then it replaces the core definition of hemp and builds out an entire structure of inclusions, exclusions, and new defined terms. It’s only a few pages of statutory text, but it does more to the hemp industry than the last seven years of guidance, lawsuits, and conference panels combined.
The key date is simple: the new regime kicks in 365 days after enactment. That’s late 2026. On that day, a whole universe of products that have been hiding under the word “hemp” will no longer qualify as hemp at all. They don’t get moved into a regulated hemp bucket. They fall straight back into “marijuana” under the Controlled Substances Act.
From delta-9 to “total tetrahydrocannabinols” – THCA finally gets counted
Start with the headline change. Under the 2018 Farm Bill, hemp was defined as cannabis and its derivatives with “a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Lawyers and labs took that literally and left THCA out. That’s how we got “hemp” flower testing at 0.19% delta-9 and 25% THCA sold legally in states that otherwise banned adult-use cannabis.
The new definition rewrites that phrase to cover “a total tetrahydrocannabinols concentration (including tetrahydrocannabinolic acid (THCA)) of not more than 0.3 percent on a dry weight basis.” The statute now uses “total tetrahydrocannabinols,” calls out THCA by name, and ties it to the new definitional work at the end of the section.
That one parenthetical kills the THCA flower game as a “hemp” play. If your bud decarbs into real-world marijuana potency, it can’t hide behind a delta-9-only test anymore. At the plant level, the THCA loophole is over.
The real kill shot is in the exclusions, not the definition
The part everyone is talking about is the total THC language. The part that should really keep operators up at night is what follows under the heading “Exclusions.”
After defining hemp, Congress tells you what “such term does not include,” and this is where they burn down the modern hemp processing model.
The law creates a term, “intermediate hemp-derived cannabinoid product,” and then proceeds to say that hemp does not include any intermediate product that meets any of these conditions:
It contains “cannabinoids that are not capable of being naturally produced by the plant.” That is where all of your clearly synthetic and semi-synthetic creations live.
It contains cannabinoids that can be natural, “but were synthesized or manufactured outside the plant.” That’s your CBD-to-delta-8 conversions, your lab-built delta-10, and a huge chunk of so-called “hemp delta-9” that started life as CBD isolate.
It contains “more than 0.3 percent total tetrahydrocannabinol, including THCA, and any other cannabinoids that have similar effects” as THC, with that last part to be fleshed out by the Secretary of Health and Human Services and the FDA.
Those conditions are written in the alternative. Hit any one of them, and your intermediate is not hemp.
That is a direct hit on the industry’s favorite legal fiction since 2018: the idea that it’s okay if you “go hot” while processing as long as your final retail product tests under some threshold. Under the new law, once your intermediate extract crosses 0.3% combined THC and THC-likes, it loses its hemp status right there in the lab. Legally, it isn’t a hemp extract you’ll fix later; it’s marijuana extract unless you’re operating as a DEA-registered manufacturer.
If you know how extraction works, you see the problem immediately. Any real extraction process concentrates cannabinoids. Even with very conservative genetics, crude and distillate come out far north of 0.3% THC. Under this text, the “we’ll dilute it back down by bottling time” theory is dead. The process itself creates a non-hemp substance the moment it goes hot.
There is no remediation clause. There is no “as long as the finished goods are compliant” safe harbor. There is “hemp does not include” a long list of intermediates that look exactly like the products hemp processors make every day.
The 0.4 milligrams per container rule and the end of intoxicating hemp products
Congress then turns the same scalpel on finished consumer products. It defines a “final hemp-derived cannabinoid product” and immediately excludes any such product that contains:
Cannabinoids that are not capable of being naturally produced by the plant.
Or cannabinoids that could be natural but “were synthesized or manufactured outside the plant.”
Or “greater than 0.4 milligrams combined, per container” of total tetrahydrocannabinols (including THCA) and any other THC-like cannabinoids.
Again, those conditions are in the alternative, and that 0.4 mg limit is per container, not per serving.
Read that against the products you actually see on the market. Five and ten milligram “hemp” delta-9 seltzers. Ten to twenty-five milligram delta-8 gummies. Full-spectrum CBD tinctures where the bottle contains several milligrams of THC over thirty or sixty servings. All of those blow past 0.4 mg combined THC and THC-likes in a single can, bag, or bottle.
The law also defines “container” as the innermost wrapping or vessel in direct contact with the product that is enclosed for retail sale – the jar, bottle, bag, packet, can, carton, or cartridge. Bulk shipping cartons and outer wraps don’t count.
That definition matters if you’re selling multi-packs. If you treat and label each can as a separate retail unit that just happens to be sold in a four-pack, you have an argument that the container is the individual can. If the carton is the only retail unit, the whole four-pack may be the container. FDA is specifically directed to issue more detail on “container” in the next 90 days, so we may get clarity on whether you can still do four-packs of CBD-only seltzers or whether the entire pack has to stay under 0.4 mg combined THC.
Either way, if each individual can in that four-pack is capped at 0.4 mg, consumers are no longer buying the product for its THC content. At that level, “hemp beverages” are non-alcoholic beer with trace THC at most. The entire “feel it from hemp” category is gone.
Put those two moves together and you see the design. Intoxicating hemp products are not “regulated” as hemp; they are simply written out of the definition so they revert to their default status: marijuana or THC-like drugs under federal law.
Industrial hemp is what survives: fiber, grain, microgreens, research
It’s not all destruction. Congress finally wrote down what it clearly wanted in 2018: a clean lane for industrial hemp. The statute carves out “industrial hemp” and specifically includes hemp grown for the stalk and fiber, and “any other non-cannabinoid mixture, preparation, or manufacture” of that stalk. It includes hemp grown for whole grain, cake, nut, hull, and other non-cannabinoid uses of seed. It includes hemp grown “for the purposes of producing microgreens” and edible hemp leaf products for human consumption, as long as the plants are grown from seed that doesn’t exceed the total THC threshold. It includes plants grown for non-commercial research at universities and independent research institutes, and plants grown to produce viable seed used solely to produce that fiber, grain, microgreens, or research hemp.
That last piece is interesting if you like chasing loopholes. Microgreens and edible leaf products are now explicitly contemplated. Given how many players in the hemp space chased every interpretive crack they could find, it’s not hard to imagine someone trying to build “hemp microgreen” products that flirt with psychoactivity. I don’t like that part of the culture – the constant hunt for the next loophole – but it’s predictable.
Still, you can see the congressional intent when you read the old 2018 definition against this 2025 rewrite. They wanted rope, textiles, building materials, hemp hearts on cereal, maybe low-THC greens. They did not want gas-station weed.
Seeds, genetics, and why enforcement is ugly but real
One of the brand-new exclusions that jumped off the page to me is the one aimed at seeds. The statute says hemp does not include viable seeds produced from a cannabis plant that exceeded the 0.3% total THC threshold.
On paper, that makes sense. In practice, enforcing it is a mess. A seed weighs something like one one-hundredth of a gram. “Oh no, officer, I’ve been caught with 0.01 grams of marijuana.” Testing seeds at that granularity, tying them back to parent plants, and policing international seed commerce is easier written than done.
But the enforcement reality is less about lab work and more about categories. Today, a lot of seed companies ship what are effectively high-THC genetics and slap “hemp seed” on the website because the 2018 definition only cared about delta-9 in a growing plant. Under the new text, if the parent plant is hot, the law says its seeds are not hemp. That gives banks, payment processors, and platforms a simple rule: if you’re selling drug-type genetics, you’re not a hemp seed company, you’re in the marijuana business.
That matters because licensed dispensaries like ours already have explicit permission in many state programs to sell seeds. If serious genetics can’t travel under the hemp umbrella anymore and e-commerce platforms start de-risking that category, the natural home for selling seeds becomes licensed cannabis operators who already live with MRB treatment. That’s one of the quiet shifts here: genetics start migrating into the regulated cannabis supply chain instead of hiding in hemp commerce.
Genetics like Tatanka Pure CBD can’t save the extraction model
That doesn’t mean genetics are irrelevant. There are cultivars on the market – Tatanka Pure CBD is one that gets mentioned – that are bred to stay under 0.3% THC, with breeders claiming the line “always” tests compliant if grown correctly. Those genetics are useful for reducing the risk of hot crops and passing pre-harvest tests. They fit nicely in the industrial hemp lane and even in low-THC smokable flower niches where those are still allowed.
But read the statute carefully and you see where their value ends. The law is not just about the field test. It is about what happens to cannabinoids as you extract, concentrate, and formulate them. The moment your intermediate goes over 0.3% total THC and THC-likes, it is no longer hemp. The moment your final product carries more than 0.4 mg per container, it is no longer hemp. Those thresholds don’t care that the original cultivar was “pure CBD.”
In the real world, any meaningful extraction process is going to produce a THC fraction that is, by definition, non-hemp. The law doesn’t tell you how to handle that fraction; it just says it’s not hemp. You either destroy it, handle it under DEA registration as a controlled substance, or pretend you didn’t read the statute. There is no “remediate THC and it becomes hemp again” clause.
So yes, genetics will evolve. Breeders will sell you new “compliant” strains. But at the extraction and product level, breeding can’t undo a definition that treats any concentrated THC as outside the hemp bucket.
FDA’s 90-day cannabinoid homework and the moving definition of “THC-like”
Buried near the end of the section is another important piece: within 90 days of enactment, the FDA, in consultation with “other relevant federal agencies,” has to publish three lists and some additional guidance.
First, a list of “all known cannabinoids that are able to be naturally produced by the plant.” That’s going to be a long list: CBD, CBG, THCV, dozens of minor cannabinoids, and a host of compounds most consumers have never heard of.
Second, a list of all naturally occurring THC-class cannabinoids. That’s where they map delta-9, THCA, probably delta-8 in the tiny amounts the plant makes on its own, and any other cousins they want in the “tetrahydrocannabinol” family.
Third, a list of “all other known cannabinoids with similar effects to tetrahydrocannabinol-class cannabinoids.” This is where the delta-8, delta-10, THCP, HHCP type molecules get swept in, especially when they’re marketed as “the new high” or “stronger than THC.”
And then FDA has to provide “any additional information and specificity about the term container” as defined earlier.
This is how Congress future-proofs the clampdown. The law doesn’t try to enumerate every molecule the plant or a clever chemist can produce. It hands FDA the job of mapping cannabinoids into buckets and telling everyone which ones count toward that total tetrahydrocannabinols concentration and which ones are “THC-like” for the 0.3% and 0.4 mg calculations. As new variants get discovered, or as marketing gets more aggressive, FDA can expand those lists.
Your ability to argue “this particular analog isn’t mentioned in the statute, so it’s legal hemp” expires in about 90 days.
Hemp-derived cannabinoids and the FDCA problem
There is one small silver lining for the non-intoxicating side. The statute carves out drugs approved under the Food, Drug, and Cosmetic Act. It clarifies that hemp-derived cannabinoid products are not, by definition, those FDCA drugs. That line matters for things like Epidiolex and other prescription-grade cannabinoid products.
For the surviving hemp-derived CBD products that actually comply with the 0.4 mg cap and avoid THC-likes, it may simplify some of the FDCA arguments around misbranded drugs and adulterated foods. But make no mistake: the only beverages and gummies that survive as hemp under this scheme are the ones that are essentially CBD-only or extremely low in THC. The products that are obviously psychoactive are getting pushed out of “hemp” and into some mix of cannabis law and drug law.
Banking, MRB treatment, and why 365 days is not a grace period
Now put your banker hat on for a minute. If you’re a hemp brand that built a big delta-8 drink line, or a processor with a large revolving credit facility to finance biomass and extraction, your lender has a problem. Today, they justify calling you “hemp” instead of a marijuana-related business. In 365 days, under the text I just walked through, your product mix becomes marijuana for federal purposes. Nothing else in their regulatory environment changes. Their risk rating changes because yours does.
You don’t even need a specific “illegality” clause for that to matter. Most commercial loan documents include a “material adverse change” default, a “lender insecurity” default, or a “change in business climate” concept that lets the bank get out when your risk profile shifts. Safe and sound banking principles tell them they shouldn’t sit on a credit secured by inventory that will be contraband under federal law in a year.
The same story plays out with payment processors and e-commerce platforms. Right now, they’re willing to live with “hemp” because the 2018 Farm Bill gave them a colorable argument that this wasn’t marijuana. In 365 days, that argument disappears for intoxicating products. Card brands, PSPs, and platforms will write policies that say “no hemp products that exceed the 0.4 mg THC limit, no synthetics, no converted cannabinoids,” and merchants that can’t make those representations will get cut loose.
You don’t need FinCEN to issue a new SAR memo when the definition of hemp itself has changed. The logic is simple: intoxicating hemp was a definitional mistake. Congress just corrected the definition. Now the financial system adjusts.
What this actually means for hemp operators
If you’re an industrial hemp farmer growing for fiber and grain, your lane just got cleaner. The law now explicitly blesses your use case, separates you from the psychoactive chaos, and gives risk-averse banks something they can point to as “safe hemp.”
If you’re a CBD wellness brand that is willing to strip THC to effectively zero and stay under 0.4 mg per container, you can still play in the hemp-derived cannabinoid space. You’ll look more like a boring supplement company and less like “legal weed in a grocery store,” but you’ll have a path.
If your core business is THCA “hemp” flower, delta-8 vapes, “hemp delta-9” gummies and beverages, or any product where consumers are buying it for the high, the statute doesn’t regulate you as hemp. It deletes you from the hemp definition. You can either shut those lines down, move them into state-licensed cannabis frameworks, or pretend none of this is happening and hope your bank, processor, and regulators don’t read the law.
Seeds and genetics will reorganize. The days of shipping drug-type seeds under the hemp banner are numbered. If you have a dispensary license that allows seed sales, you’re in a much better position than an unlicensed “hemp seed” website trying to stay on Stripe in 2027.
2025 Federal Hemp Law Update: How Congress Redefined Hemp and Closed the THCA Loophole
And the idea that Congress will sweep in and “fix this” before the 365-day clock runs out is wishful thinking. Look at the process that produced this change: the Senate kept it in by a wide margin, it wasn’t even allowed to be debated as a standalone issue on the House floor, and it lived on page 100-something of an appropriations bill. The hemp intoxicant industry was so inconsequential to national politics that they erased it in a footnote.
I’ve been warning clients for years that “hemp as legal weed” was a bad bet. Rule 1.2(d) lets me advise clients about conduct in tension with federal law and help them comply with state regimes, but it doesn’t let me pretend that exploiting a drafting glitch is a stable, lawful business model. A lot of lawyers and entrepreneurs chose to believe that the loophole was “intentional” and permanent. Section 781 is their answer.
If you’re serious about surviving this transition, use the 365 days you actually have. Don’t let a lender or a payment processor give you a much shorter timeline because you were too busy selling out this year’s THCA crop to look at the statute.
