Hemp provision in shutdown bill would ban many products, potentially shaking up LI's cannabis industry

A provision in the federal spending bill to end the government shutdown could cause a shake-up in New York’s cannabis industry, experts said.

The provision, passed by the Senate earlier this week, would ban most hemp-derived THC products in late 2026.If signed by the president — the bill was passed by the House late Wednesday night — the legislation would change the definition of hemp that can be legally sold under the 2018 Farm Act.

Cannabis products with less than 0.3% of total THC — the psychoactive component of the plant — would be the only kind of hemp product allowed to be sold under the proposed law.

The new definition would mean products with synthetic marijuana , as well as those with more than 0.4 milligrams of THC, would not be legal under the provision.

Experts say implementation is ultimately up to each state, including New York, which legalized recreational marijuana in 2021. But Long Island cannabis sellers have already expressed concern about how the proposed ban would impact sales, especially to out-of-state customers.

“When Congress legalized hemp, it created kind of a second market for cannabis ... that was much less tightly regulated" than markets for legal marijuana, said Robert Mikos, a law professor at Vanderbilt University and an expert in federal drug policy.

“If the plant was classified as hemp, the federal government didn’t regulate its sale pretty much at all. It fell upon the states to do that," he added. Many states followed the federal government’s lead, not anticipating the resulting psychoactive hemp product industry, he said. 

Mikos added, however, it’s unlikely the federal government will have the resources to implement the ban, meaning enforcement will likely fall to the states.

Industry group U.S. Hemp Roundtable has said the ban would wipe out 95% of a $28.4 billion industry that employs more than 330,000 people across the country.

“Recriminalizing hemp will force American farms and businesses to close and disrupt the well-being of countless Americans who depend on hemp" wellness products, said Jonathan Miller, general counsel at U.S. Hemp Roundtable, in a news release.

Businesses in the industry like Delta Beverages, a North Carolina-based THC beverage company, are already working with lawmakers on bills that would protect the hemp industry, said Jack Sherrie, founder and CEO of Delta.

The legislation would make it effectively illegal for New York producers to sell products over state lines, said Jason Klimek, an attorney who works with New York cannabis companies.

There are a lot of New York cannabis processors “who also are in the hemp space and they've been expanding nationally through hemp beverages" and similar products, he said. “This shuts it all down."

Some may now be overbuilt or have made investments into the hemp market that won’t be able to play out, he added.

The state Office of Cannabis Management will need to decide how to fit the legislation into New York’s laws, he said. A state spokesperson said the office does not comment on pending legislation.

Lisa Ripi, co-owner of The Long Island Cannabis Club in Deer Park, was granted a license in 2023 and went through a “grueling" yearlong process to obtain a building permit before opening her doors in 2024.

She’s not sure yet how the legislation would impact the products she sells, she said.

“It’s going to devastate a lot of businesses that spent millions to get where they are now," she said. “I would love to know how the state is going to back us up on this."

Dave Falkowski, owner of Open Minded Organics in Bridgehampton, has been in the industry since 2018. He said it’s been a “struggle" for many operators to survive.

The federal legislation would impact even “benign" wellness products like hemp-based oils by limiting him to operating just within the state.

“I would lose all of my out-of-state customers," he said.

The proposal seems sudden in a way that “breaks from the spirit of policy progress with cannabis and hemp," which has slowly progressed over the years, he said.

“There’s not even time for industry experts or stakeholders to really have meaningful conversations let alone contact their representatives to let them know how they feel," he added. “It’s an ambush."

NewsdayTV's Virginia Huie contributed to this story.

By Brianne Ledda

brianne.ledda@newsday.com@brianne_ledda

Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.