Hemp market growth presents new opportunities, legal challenges for alcohol vendors amid shifting regulations

The U.S. market for hemp products is growing significantly, presenting new opportunities for alcohol vendors. Hemp, a cannabis plant with low levels of delta-9 THC, has been federally legal since 2018. Whitney Economics’ 2023 National Cannabinoid Report estimated the U.S. hemp market to be valued at $28.4 billion. Additionally, younger generations are reporting lower alcohol consumption, making hemp beverages an attractive alternative for those seeking wellness, relaxation and unique experiences.

Despite the burgeoning popularity of hemp beverages, their legality is not straightforward. The absence of federal leadership has resulted in a patchwork of state laws that vary widely in terms of product legality, permits, dosages and labeling.

DEA regulations

Since the legalization of hemp, there has been an explosion of innovation with new cannabinoids in the market that aim to produce similar effects to delta-9 THC but do not cross the federal concentration limit. These products include delta-8 THC, delta-10 THC, Hexahydrocannabinol (HHC) and Tetrahydrocannabinol acetate (THC-O).

Drug Enforcement Administration (DEA) maintains that nonnaturally occurring — “synthetic” — THC strains continue to be illegal. While the administration’s view has been challenged in several courts, sometimes successfully, such cannabinoids may be subject to future federal prohibition in 2025.

Beverage vendors should pay careful attention to Certificates of Analysis (COAs) to confirm the products are within the legal THC limits and that labels are accurate; avoid synthetic cannabinoids, unless such products are expressly allowed under state laws; and monitor legal happenings, including the 2025 Farm Bill that may include changes in the law to restrict a broader range of cannabinoids.

FDA regulations

The legality of ingestible hemp products, especially those made with cannabidiol (CBD) or delta-9 THC, remains a grey area. Food and Drug Administration (FDA) has not approved any hemp cannabinoids as food additives, and maintains that additional laws are required to create a pathway for legal cannabinoid ingestible products.

Meanwhile, FDA has adopted a policy of enforcement discretion — focusing on enforcement of products that make health claims or target vulnerable populations. Vendors need to stay cognizant of these rules and regulations and comply with all applicable state laws.

State law hemp requirements

States have the authority to enact their own laws regarding hemp, as long as they do not impermissibly prevent the transport of hemp through the state. Those state laws vary widely in terms of registration requirements, product legality, dosages and labeling. Some states have imposed restrictions or bans on certain types of hemp products, especially those containing intoxicating cannabinoids like delta-8 THC.

Vendors should be aware of state laws on permitted/prohibited products, merchandising and marketing, as well as any manufacturing/transport/retail licenses, permits or registrations required. Require product manufacturers to provide their license (or the license of their hemp ingredient supplier), COAs and a certification that their products comply with state laws.

State law alcohol requirements

If regulated by a local or state alcohol authority, that authority may have its own position regarding the legality of selling hemp products on your premises. Many authorities, including Alcohol and Tobacco Tax and Trade Bureau (TTB), that have publicly addressed the issue do not permit beverages that combine alcohol with hemp cannabinoids.

Additionally, policies regarding overconsumption should be updated to include guidance on how to gauge the intoxication of patrons consuming hemp beverages.

Vendors should consult relevant alcohol authority websites for guidance relating to hemp or speak with contacts at such agencies to ensure best practices are followed.

The hemp industry is constantly evolving and adapting to frequently enacted new laws, and continues to face legal uncertainty as both agencies and courts at the federal and state level interpret and enforce existing laws.