Could the New Federal Bill Derail the U.S. Hemp Industry?

Lawmakers in Washington are currently discussing a controversial proposal that puts the cannabis sector in the spotlight for all the wrong reasons.What’s Going On?Earlier this month, Rep. Andy Harris of Maryland introduced a spending bill that, among other things, also seeks to address “the hemp loophole.”The proposal seeks to revise the legal definition of hemp established under the 2018 Farm Bill and covers all products “containing cannabinoids in any form” intended for human or animal use. It does not include industrial use of hemp or products approved by the FDA.According to Harris, this revision is necessary because the current law has “resulted in the proliferation of unregulated intoxicating hemp products” that are being “sold online and in gas stations across the country” under the false guise of being USDA-approved.Why Are Industry Players Opposing the Bill?If passed, the new definition would effectively ban many popular hemp-derived cannabinoids — including CBD, THCA, Delta-8 THC, and other compounds — at the federal level. Under the current law, these products remain legal if they contain no more than 0.3% THC by dry weight.Stakeholders argue that the economic stakes of this ban are significant. Many cannabis and wellness companies have built their entire product lines around these compounds due to their high margins, ease of distribution and broad appeal in states without legal marijuana. Since they are legal at the federal level, these products avoid the heavy taxes and strict regulations tied to marijuana.Per the National Cannabis Industry Association (NCIA), the U.S. hemp industry was valued at $28.4 billion in 2023 — “roughly the same size” as the country’s craft beer industry. The new legislative language wipes out a massive revenue stream for dozens of companies overnight — especially those relying on hemp-derived products to expand beyond limited cannabis markets.Hemp is defined as a cannabis plant that contains 0.3% or less THC, while “marijuana” refers to any cannabis plant with more than 0.3% THC — a technical distinction that carries major legal and regulatory implications.Ambiguity Around Manager’s AmendmentAfter the industry backlash to Harris’ proposal, the House Appropriations Committee adopted a manager’s amendment to the bill last week. While the committee clarified that the revision would not affect industrial hemp or non-intoxicating hemp-derived products, the actual legislative text remains unchanged.Some industry insiders argue that even the amended language is vague, raising concerns that without specific protections, the bill could still be used to restrict widely sold products, such as CBD oils and full-spectrum extracts.Popular Cannabis Stocks in the Hemp SpaceSeveral major cannabis companies, including Canopy Growth CGC, Curaleaf Holdings CURLF and Tilray Brands TLRY, have built significant exposure to the hemp-derived products market — particularly through CBD-based wellness items, topicals, edibles and beverages.Canopy Growth, through its now-separated U.S. arm, Canopy USA, markets hemp-derived products under its Martha Stewart and Quatreau brands, including CBD gummies, oils and softgels. Curaleaf Holdings distributes CBD tinctures and gummies via its Select brand, targeting consumers in both legal and non-recreational states. Tilray’s Manitoba Harvest label focuses on hemp-based foods and wellness supplements, providing the company with broad access to grocery and health retail channels.Revenues from hemp products provide CGC, CURLF and TLRY a federally legal revenue stream in the United States, often with higher margins and fewer regulatory burdens than marijuana. That advantage now faces risk if lawmakers move forward with the proposed redefinition of hemp.Our TakeThe latest House spending bill revives provisions similar to those introduced last year. Though that bill ultimately failed to move forward, the new proposal has reignited industry concerns for companies operating in the hemp space.Investors should exercise caution and closely monitor how the legislation evolves in the coming weeks. The outcome of this proposal won’t just affect hemp-based revenues — it could also reshape the broader trajectory of cannabis reform and legalization efforts across the United States.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canopy Growth Corporation (CGC): Free Stock Analysis Report Tilray Brands, Inc. (TLRY): Free Stock Analysis Report Curaleaf Holdings, Inc. (CURLF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks