AWG legal takeaways: State restrictions on hemp heat up

Editor’s note: This is a regular column written by attorneys with the law firm Amin Wasserman Gurnani LLP.

Although the weather is (finally) cooling down, states around the country are turning up the heat on hemp products. Most notable is a recent emergency regulation in California that prohibits hemp food and supplements from containing detectable THC (delta-9-tetrahydrocannabinol) or having more than five servings per package. The regulation also restricts sales of hemp products to those 21 and older (hemp seed products are excluded).

The hemp industry, led by the U.S. Hemp Roundtable, vowed to challenge the basis for the regulation and filed a temporary restraining order (TRO) to block enforcement of the regulation.

On the East Coast, New Jersey Gov. Phil Murphy signed into law legislation that classifies hemp products with more than 0.5 milligrams (mg) of total THC per serving or 2.5 mg per package as “intoxicating hemp products” that can only be sold by licensed cannabis retailers, with 21-plus age restrictions for products containing any detectable THC. However, a last-minute amendment to the bill introduced confusion as to whether it applies to products produced outside the Garden State, which the governor noted would thwart the intent of the bill.

In the Midwest, Missouri Gov. Michael Parson’s attempt to ban intoxicating hemp products also faced a battle, while legal challenges have been filed in several states, including Arkansas, Iowa, Maryland, New York, Virginia and Wyoming (with the hemp industry successful in only a few of these). State attorneys general have also stepped in, issuing a variety of legal opinions and even filing lawsuits against distributors of allegedly illegal hemp products.

Since the passage of the 2018 Farm Bill, states have taken an increasingly active role in regulating hemp products. Approaches have been varied, with states like Minnesota, Tennessee and Utah allowing a wide range of products and THC levels of up to 5 mg per serving. Other states have taken approaches similar to California, Missouri and New Jersey (and Alaska and Washington state) by prohibiting any THC in hemp products or setting very low THC limits. Products exceeding these levels are classified as “cannabis” or “marijuana” and could be deemed a controlled substance if the product is sold outside the regulated cannabis market (in states that have one in place).

Regulators in these more restrictive states point to public health concerns associated with potentially intoxicating products and synthetically-derived cannabinoids such as delta-8 THC, and in particular minors’ access to such products. While sales-related age restrictions can help address this issue, one important player (the marijuana industry) has raised concerns about the equity of state laws related to cannabis — especially in states where the adult-use cannabis/marijuana industry is struggling.

Although marijuana remains a Schedule I controlled substance at the federal level, for many years, marijuana companies have operated in states that have established frameworks for regulating these products. As long as activities don’t cross state lines, the feds have been mostly hands off. With the rise of hemp — and specifically products that may mimic some of the effects of marijuana but are arguably legal at the federal level — these products have been subject to a different standard of regulation that allows for a free flow of products across state lines, or no regulation at all depending on the state. The 2018 Farm Bill also included language that protects interstate transport products that are lawfully produced. In the various lawsuits challenging state-based hemp product restrictions, industry has argued that such restrictions violate the Farm Bill’s language as well as other federal protections for interstate commerce.

Marijuana operators have seen sales go down, and the unequal (or, in some cases, lack of) regulation at the state level hasn’t gone unnoticed. The rise in more restrictive approaches to hemp products and especially restrictions on THC is in part being driven by the marijuana industry seeking to level the playing field. However, some in the hemp industry would say it’s marijuana seeking to protect its monopoly in the states.

While it’s possible we could see federal legislation on the horizon that sets guardrails around intoxicating levels of cannabinoids, that isn’t likely to happen soon. In the 2025 state legislative session, it’s likely we’ll see a continued push by states to restrict THC-containing hemp products in key states like Illinois, Ohio and Texas.

Finally, given the lack of clarity around the overlap of state and federal regulation of hemp products and the lack of consensus regarding how hemp products should be regulated, we may also see an additional wave of legal challenges to follow. In fact, following a lawsuit filed by the hemp industry, a federal judge in New Jersey has enjoined enforcement of the state’s new hemp law prohibiting the sale of “intoxicating hemp products” after determining that it violates both the dormant Commerce Clause and the 2018 Farm Bill preemption provision, as it discriminates against “otherwise compliant out-of-state hemp and hemp products.” The 21+ age restriction was not challenged and will remain in place.

However, just a day later, a judge in California denied the U.S. Hemp Roundtable’s TRO after considering similar arguments. In that case, the judge found the emergency regulation was not preempted by the 2018 Farm Bill, and “the State of California can prohibit the manufacture, storage and sale of final form food products containing THC within its borders.”