Nick Fede Jr., Executive Director, Rhode Island Liquor Operators Collaborative.

THC Beverages and the Shutdown

By Nick Fede, Jr., Director, Rhode Island Liquor Operators Collaborative

In mid-November 2025, Congress quietly rewrote the rules for America’s hemp industry as part of the government funding bill and short-term continuing resolution that ended the federal shutdown. Buried in the package is a sweeping “hemp ban” that doesn’t outlaw the plant itself, but effectively recriminalizes most hemp-derived intoxicating products — including the booming category of hemp-based THC beverages. For beverage producers, retailers, and distributors who’ve embraced hemp seltzers and THC “social tonics” as an alcohol alternative, this isn’t a subtle tweak. It’s an earthquake.

How the 2018 Farm Bill created the hemp beverage boom.

The 2018 Farm Bill federally legalized hemp by carving it out from the definition of marijuana in the Controlled Substances Act. Hemp was defined as cannabis containing no more than 0.3% delta-9 THC on a dry-weight basis. Anything at or below that threshold was no longer a controlled substance, opening the door to interstate commerce in hemp and all its derivatives.

Congress did not anticipate how aggressively entrepreneurs would use that definition. By focusing only on delta-9 THC content by weight, the law left a “hemp loophole” for manufacturers to create intoxicating products using other cannabinoids (like delta-8 THC or high-THCA products that convert to THC when heated), or to put modest concentrations of THC into low-calorie beverages that still tested under 0.3% delta-9 by weight.

What the new federal hemp ban actually does.

The new law, embedded in the spending bill and continuing resolution, dramatically narrows what qualifies as federally legal hemp. Instead of just a 0.3% delta-9 threshold by weight, Congress now caps THC at roughly 0.4 milligrams of naturally occurring THC per package or container, and explicitly bans products containing chemically converted cannabinoids such as delta-8 and most THCA-based items.

That limit is far below typical doses in today’s hemp drinks, which often range from 2–10 mg of THC per can. A 5 mg THC seltzer that was previously compliant under the 0.3% dry-weight standard will be federally illegal under the new per-container cap.

The law includes a one-year transition period; most provisions take effect in late 2026. But with criminal penalties and federal enforcement now clearly on the table, responsible operators can’t treat that as a grace period. They’ll need to re-engineer products, pivot to non-intoxicating formulas, or exit the market entirely.

How big is the hemp consumables and beverage market?

This crackdown is aimed at a sector that is no longer niche. Estimates put the broader U.S. hemp industry — including fiber, grain, CBD, and hemp-derived cannabinoids — at roughly $28 billion in economic activity, supporting around 300,000 jobs.

Within that, hemp-derived THC and CBD beverages have been one of the fastest-growing categories:

• One market analysis pegs U.S. hemp beverages at about $127 million in 2023, with projections reaching $1.57 billion by 2028 (roughly 76% compound annual growth).
• Other research focused specifically on hemp-derived THC drinks shows growth from $400,000 in 2020 to roughly $382 million in 2024, with forecasts approaching $600 million in 2025 as products entered bars, restaurants, and mainstream liquor outlets.

In some states, such as Virginia and Texas, hemp-derived THC drinks already represent hundreds of millions of dollars in annual revenue and have become meaningful contributors to hospitality and retail sales.

Impacts and what comes next.

For the hemp consumables sector, and beverages in particular, the impacts will be stark:

• Product lines: Most current THC dosages will be illegal. Brands face the choice of pivoting to very low-dose products (likely too weak to satisfy consumers), reformulating with non-THC functional ingredients (e.g., adaptogens, mushrooms), or abandoning the category.
• Retail channels: Liquor stores that treated hemp drinks like a trendy new RTD may have to clear shelves, losing both direct sales and the halo effect of being seen as “on-trend.”
• Supply chain: Farmers, extractors, co-packers, and logistics providers who specialized in hemp-derived cannabinoids will face sudden demand destruction with limited time and capital to pivot.

At the same time, the political backlash is already building. Lawmakers from both parties, as well as industry groups, argue that a more sensible path would be to regulate hemp beverages like alcohol: clear potency caps, age restrictions, labeling rules, and taxation, rather than an effective ban. The next 12–18 months will determine whether this federal hemp ban stands as written, is softened through follow-on legislation or rulemaking, or becomes the catalyst for a broader national framework for low-dose THC beverages.

Nick Fede Jr. serves as RILOC’s Executive Director, American Beverage Licensees’ Vice President (Off-Premise) and is a third-generation liquor retailer.