Federal Hemp Ban Signed Into Law: Enforcement Timeline, Impacts, and Strategies

On November 12, 2025 the President signed the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (H.R. 5371) into law. Embedded within this legislation are amendments that fundamentally redefine “hemp” under federal law and close the regulatory gap that has permitted delta-8, delta-10, THCA, HHC, THC-O, and similar products to be marketed as legal hemp since the 2018 Farm Bill. The new provisions take effect on November 12, 2026, after which products excluded from the new hemp definition could be subject to enforcement under the federal Controlled Substances Act.

Key Points of the Amendments

The amendments will introduce the following critical changes to the federal definition of hemp and the regulation of cannabinoids, effective November 12, 2026:

• Total TCH Will Become the Controlling Standard: The amendments will replace the prior delta-9 THC-only test with a total tetrahydrocannabinols standard measured after decarboxylation (heating). This will include delta-9 THC, THCA, delta-8 THC, delta-10 THC, THCP, and all other THC isomers and analogs. Any material exceeding 0.3% total THC on a dry-weight basis will be classified as marijuana under federal law, thereby rendering nearly all THCA flower, high-THCA biomass, and “hot” pre-rolls federally illegal marijuana.

• Synthetically Derived or Chemically Converted Cannabinoids Will Be Entirely Excluded: Any cannabinoid produced by chemical synthesis or conversion (including isomerization of CBD into delta-8 THC, THC-O, HHC, etc.) will be expressly excluded from the definition of hemp, even if the resulting molecule is structurally identical to a naturally occurring Phyto cannabinoid. This will eliminate the entire category of semi-synthetic intoxicating cannabinoids that has dominated the market since 2019.

• Intermediate Hemp Materials Will Be Effectively Restricted to Business-to-Business Sales: Distillates, isolates, crude extracts, resins, and other concentrated cannabinoid intermediates will be prohibited from direct-to-consumer packaging or sale and will be effectively limited to business-to-business transactions. The widespread practice of purchasing bulk distillate and manufacturing branded consumer gummies, vapes, tinctures, or edibles will therefore become federally unlawful.

• Finished Consumer Products Will Be Limited to 0.4 mg Total THC Per Retail Container: The immediate container presented to the consumer (jar, bottle, can, blister pack, etc.) will be restricted to contain no more than 0.4 milligrams of total intoxicating cannabinoids in aggregate. Given that current market products routinely contain 20–50 mg (or more) per serving, virtually every existing intoxicating edible, beverage, vape, tincture, topical, or other consumable will exceed this threshold by several orders of magnitude and will be non-compliant.

• FDA to Publish Authoritative Guidance by February 10, 2026: The FDA will issue definitive lists identifying (1) permitted naturally occurring cannabinoids, (2) cannabinoids producing similar effects as THC, and (3) cannabinoids known or marketed for intoxicating effect, as well as a formal definition of “container” for purposes of the 0.4 mg limit. These lists and clarifications will serve as the primary enforcement reference documents going forward.

Potential Practical Implications

The amendments will have profound and far-reaching consequences across the entire supply chain.  Some of these effects may include:

• Revenue Collapse for Intoxicating Hemp-Derived Product Lines: The vast majority of current product SKUs and associated revenue in the multi-billion-dollar “alt-cannabinoid” sector will become federally illegal on November 12, 2026.

• Immediate Triggering of IRC § 280E Tax Treatment: Businesses will lose ordinary business-expense deductions upon reclassification, resulting in significant effective tax rates.

• Banking and Payment-Processing Termination: Financial institutions and merchant processors may de-risk or terminate relationships with any entity associated with Schedule I substances.

• Contractual Illegality Clauses Activated: Leases, loans, distribution agreements, insurance policies, and supplier contracts containing federal-law compliance or illegality provisions will become terminable at counterparties’ option.

• Supply-Chain Disruption and Freeze: Processors and manufacturers of intermediates will be unable to sell to non-licensed entities; many will pivot entirely to state-licensed cannabis markets or exit the industry.

• Massive Inventory Write-Offs and Forced Liquidations: Billions of dollars in existing inventory will become unsaleable after the grace period, perhaps triggering distressed sales at steep discounts.

• Significant Consumer Migration to State-Regulated Markets: In adult-use jurisdictions such as New Jersey, licensed cannabis operators may see substantial increased demand as consumers shift from unregulated hemp channels to dispensaries (assuming licensed supply can scale accordingly).

• Existential Threat to Hemp-Only Retailers and Ancillary Channels: Standalone CBD/hemp stores, smoke shops, convenience stores, gas stations, and similar retailers that depend heavily on intoxicating hemp products may face severe disruption, probable closure, or forced pivots to non-intoxicating alternatives.

• Complete Cessation of Interstate and Online Sales: All mail-order and interstate commerce in intoxicating hemp-derived products will likely be severely scaled back if not eliminated, and remaining activity will be confined to intrastate, fully compliant non-intoxicating products.

• Dramatic Investor and Valuation Impact: Private and public companies in the intoxicating hemp space may experience sharp valuation declines, and many will likely become acquisition targets, face restructuring, or enter bankruptcy.

• Heightened State-Level Enforcement Pressure: Certain states may accelerate enforcement against intoxicating hemp products even during the grace period in anticipation of the federal shift.

Recommended Immediate Actions

The majority of existing intoxicating hemp-derived product lines will become federally prohibited on November 12, 2026. Application of Internal Revenue Code § 280E, termination of banking services, and invocation of contractual illegality provisions will occur upon reclassification.

Operators holding adult-use or medical cannabis licenses in New Jersey may experience increased consumer demand as individuals transition from unregulated hemp products to the state-regulated market, provided licensed supply is sufficient. Hemp retailers, specialty stores, and out-of-state suppliers face considerable uncertainty.

New Jersey’s statutory framework affords regulatory flexibility not available in most states. Enterprises that act promptly will be positioned to maintain market access, secure consumer migration, or acquire assets under favorable terms.  Operators in New Jersey or the broader hemp-derived cannabinoid sector are encouraged to contact us without delay for a confidential evaluation tailored to their circumstances to enhance available strategic options and reduce risk.

If your business is navigating the impact of the new federal hemp restrictions, the attorneys in Scarinci Hollenbeck’s Cannabis Industry Group are ready to assist. Our team advises manufacturers, distributors and retailers on regulatory compliance, enforcement risk and strategic planning in a rapidly evolving legal landscape. If you have questions or need guidance tailored to your operations, contact us to speak with an experienced attorney.