If the federal ban on intoxicating hemp products takes effect this November, could individual states create hemp markets similar to the marijuana programs that have operated for decades?
That question was posed to panelists during the “State of Cannabevs” session at BevNet Live.
While the concept is certainly possible—particularly in states such as Texas, Georgia and Florida that have not legalized adult-use marijuana—panelists questioned whether a state-by-state system would be viable for many of the companies currently operating in the hemp industry.
“It changes things overnight,” said Jill Johnson, founding partner of Daizy's Social Sodas, referring to hemp effectively becoming a Schedule I substance under the federal ban currently set to take effect in November.
The move would immediately end the interstate commerce and manufacturing freedoms hemp businesses have enjoyed since 2018.
It would also mean any brand, wholesaler or retailer involved in the category would technically be trafficking in a federally illegal substance—a risk wholesalers and retailers that also sell alcohol would be unlikely to take, according to Justin Ashby, chief administrative officer of Southern Crown Partners.
“Cannabis is still a scheduled product,” he said. “If you have a state liquor license in the South, you can't risk that. It's not feasible.”
The challenges extend beyond licensing concerns. Banking and payment processing, for example, become significantly more complicated when products are federally illegal. Credit cards generally cannot be used for federally prohibited products, raising the question of whether retailers would be willing to maintain separate payment systems for hemp products.
“I don't believe many alcohol retailers and distributors would carry that risk,” Ashby said.
“Brands need to understand just how complicated this will be,” Coalition for Adult Beverage Alternatives Chair Diana Eberlein said of a potential state-by-state hemp market.
Instead, many brands are preparing for the possibility that their products could become illegal for what they hope will be a relatively brief period. Some are exploring undosed versions of existing products, others are considering a pivot into functional beverages and some plan to lean on non-infused portions of their businesses to weather the disruption.
Still, Eberlein expressed confidence that any prohibition on THC beverages would be temporary.
“Our target demo is 30-45 year old female,” she said. “Have you ever tried to take something away from a 30-45 year old female? It doesn't go well.”
While some states may attempt to preserve the category by creating state-specific hemp programs in the wake of a federal ban, neither Eberlein, Ashby nor Johnson believes that model represents a viable long-term future for hemp beverages.
“It’s a path,” Johnson said. “But it’s not a preferred path or a deserved path for low-dose beverages.”